Joe Kovanda is Chief Development and Strategy Officer for Compass Ag Solutions.
After a successful career with Bartlett Cattle Co and Five Rivers Cattle Feeding, he now lives on his family farm near Columbus, MT.
Joe specializes in helping beef producers manage price risk with a suite of tools, including Livestock Risk Protection (LRP).
Links:
www.compassagsolutions.com
joe@compassagsolutions.com
970-372-0482
Joe Kovanda is Chief Development and Strategy Officer for Compass Ag Solutions.
After a successful career with Bartlett Cattle Co and Five Rivers Cattle Feeding, he now lives on his family farm near Columbus, MT.
Joe specializes in helping beef producers manage price risk with a suite of tools, including Livestock Risk Protection (LRP).
Links:
www.compassagsolutions.com
joe@compassagsolutions.com
970-372-0482
And we're back. After a little summer break, we are very glad to be back with season three of practically ranching. I don't know exactly what other podcasters do when they take a break, but this one got the opportunity to do some exciting things. I helped install new livestock watering systems. I hauled water to a few hundred head of cattle for. Weeks and continue to do so. Uh, cleaned out ponds. We bailed drought, stress, soy beans, and then did everything else that farmers and ranchers usually do through the summer. So, yeah, it was a phenomenal break. And consequently, uh, I'm a few weeks later than I had hoped to be with this kickoff episode for season three, but I promise it's going to be well worth the wait. Joe Cavanna is the business and risk management consultants at compass ag solutions. Joe has worked for Bartlett cattle company. He's worked for five rivers, cattle feeding, and several other entities. His specialty is price, risk management. And he, as you're about to find out has a great handle on very practical ways that, uh, we all can use the various tools available for managing our, our price risk. As we produce cattle. Uh, we're going to start this podcast with kind of an. Refresher course on commodity futures and options and the terminology that's associated with that. Then we're going to cover a few of the different alternatives that are available for price, risk management. And finally, we're going to discuss. Livestock risk protection or LRP is most of us have heard it called. It's a recently updated government backed program that, uh, will help producers not just manage our price risk at a fairly reduced cost. But also give us some opportunities to maybe benefit from some of today's higher prices. For a longer term into the future. Now as you are about to hear, Joe is a super smart. Very humble. Very faith-filled guy who knows a lot more than just commodity futures options. He's a student of life and he sees experiences that he has had. And then all of us have for exactly what they are. And those are blessings and opportunities for growth. And as evidenced by the company that I like to keep around me and the guests that we've had on practically ranching. I like these types of folks. And I think they're refreshing to have, and our network of, of, uh, contacts. And I know most of you feel the same way as well. Joe is clearly that type of folk. And I know you're going to like him as well. So thank you again for being with us for episode 40, one of practically ranching.
Track 1:Well, Joe, how are things in Columbus, Montana area?
joe-kovanda_3_07-13-2023_130833:Uh, we're very blessed here, Matt. Uh, from a weather standpoint, it's, uh, Green. A lot of, a lot of ests being said by farmers and ranchers, like, you know, wettest June, you know, a number of years, as it relates to cattle, you know, it's a, any man's narrative or any person's narrative. But, uh, I'd say looking around the areas that I travel around Southern Montana, there's more grass than there is cattle.
Track 1:good, well you all were probably due after several dry and lean years and tough winters and everything else. And uh, there's a lot of e s t words being used around here too. It's just a little different adjective or adverb. before'em. And it's more like dry es. And, um, we haven't gotten hot test, but it has gotten doggone warm this week. And for the. For the sake of both you and I and the listeners, I will start out by saying we're recording this on the 13th of July. I can't promise how quick I'm gonna get this one turned around. And we're gonna be talking about some market issues and some prices and anytime we see the volatile nature of, of the beef business and commodity markets and everything else, I have to, uh, start out with that, with that admission that things could change between now and when we finally published this. But yeah, right now we're, we did get a oh, a 10th of an inch of rain last night and, and, uh, we were felt blessed to get it, but uh, what we need is some runoff, moisture, and anybody that's listening to this anywhere close understands it completely that we just grass is, is not. That far off of normal, uh, but stock water and, um, places for the cattle drink is, is definitely about as dry, dry es as, as we would say, uh, that most of us have ever seen. So it'll, it'll come around, it'll come around
joe-kovanda_3_07-13-2023_130833:He usually provides. He does always provide.
Track 1:it's just on, uh, on his time not necessarily on the impatient, uh, humans that we are.
joe-kovanda_3_07-13-2023_130833:That's right.
Track 1:So tell us a little of your story and, and what brought you to here. And you can go as in depth as you want, but, uh, give us, give us a little, uh, passed, I guess.
joe-kovanda_3_07-13-2023_130833:Okay, well, I'll start where I'm at, which is where I began. Uh, my, uh, great-grandfather immigrated from the Czech, or what was Austria Hungary in the Uni Europe, um, in the early 19 hundreds to here in southern Montana in homesteaded. So I grew up, uh, on a diversified cow calf and small grain hay operation here in Southern Montana.
Track 1:I
joe-kovanda_3_07-13-2023_130833:I went away to college, in. Colorado State University, studied agricultural economics. Um, got to view agriculture, you know, couple states away, which was a a unique opportunity. for me, and it's, It's quite a bit different. did, uh, two thirds of a stint of meats judging at Colorado State, two thirds of a season. And, uh, I look back on that pretty pivotal, like important in my career and learning. Uh, that's why I mentioned it. Then I went on to, uh, Kansas State University and got a master's in agricultural economics. Uh, kind of specialized in livestock marketing. Major professor Ted Schroeder should have him on. If you haven't uh, in that time. got married to my wife, Lacey, who's from Eastern Colorado.
Track 1:Colorado.
joe-kovanda_3_07-13-2023_130833:And uh, that's that's the highlight Really, Uh, uh, we have two daughters that are in high school, one coming to K State. This fall at a K state I went to work for Bartlett Cattle Company, headquartered in Kansas City, Missouri. Um, Bartlett, family owned. owned, um, grain elevators, flower mills, and, uh, at the time, three feed yards. Uh, I worked in the office, uh, but I worked with the Cattle buyers and they owned a hundred percent of their own inventory They weren't custom. feeders, even though They had large commercial feed. lots. Um, we got an opportunity then to move back towards closer to Lacey's family, a little bit closer to mine. Moved to Colorado and I worked for Five Rivers for about four years when it was a joint venture between Smithfield Foods and Continental Grain. And then there at the end it was, uh, owned and purchased by jbs. And then, um,
Track 1:um,
joe-kovanda_3_07-13-2023_130833:Just, uh, opportunity that I actually prayed for, not specifically, but uh, came up, um, thereafter where, um, just the, the desire I guess, of my heart and just the things that I'd learned. I just prayed that I'd have an opportunity to do a, do a Job, like my former supervisor had at, uh, Bartlett, and he decided to move to a different operation and they asked me to come back. And so then I, was a retreat then at Bartlett Cattle Company and, uh, uh, led the, uh, the procurement marketing ingredient, procurement and risk management associated with their, their cattle business until they decided to get out of the cattle business in 2018. And then we just Stayed there in Kansas City for a couple years and then Covid kind of happened and it was, a opportunity to move back here to Montana. And So, uh, since then I've, uh, just, you know, I, I I helped predominantly the Bartlett family for a lot of years, to manage price risk associated with cattle ownership. And I, have had a friend for a long time named Jason Craft, that's the principle of Compass Ag Solutions, who I, work for today.
Track 1:today,
joe-kovanda_3_07-13-2023_130833:And, uh, a large and growing team. along with him. And so what we do now is we help cattle owners across the. United States to manage their price risk and associated feed grain risk, um, in, in their operations and hopefully to help them to stabilize their financial returns as it relates to. Um, just the margin of owning cattle and the price risk associated with owning cattle. So I live here and, and work remotely, um, spend a lot of time on, the phone, but work with people all over the country, spend a lot of time traveling around the Montana, and probably the second biggest state that I travel around is Kansas, just because of past history. So That's, that's a little bit, about me.
Track 1:that's a pretty good, uh, pretty good proving grounds for what it is you're doing today, I'd say. And, and, um, your, your comment when you were at Bartlett that you were helping that, uh, company and that family navigate the price risk associated with cattle ownership. Well, today, as we stare down the barrel of what. In my opinion will eventually and, and possibly fairly quickly be$2 fed cattle and$3 caves. And, and the price risk associated with cattle ownership is, is as high today as it ever has been, obviously. And, uh, you know, we, we saw 2014 price levels, uh, an area that I never really dreamt of. And then they happened and went so quickly that I think a lot of us thought we'd never be back there again. The only difference is today is the cost side of the equation is significantly higher. And so now instead of almost apologizing for those types of price levels that we saw in 14, now we're going, yeah, they're right where they kind of have to be to even signal any potential, you know, heifer, retention, expansion, industry, um, health as it is. But, uh, but yeah, that you've seen a lot and done a lot and, and. I don't think that we ever met until, and, and correct me if I'm wrong, but I think, were you on an N C B A live cattle marketing committee somewhere around 20 15, 20 16? I remember sitting next to you. And those, those meetings were always interesting. Um, always tumultuous, always challenging. And I don't know that we actually solved anything, but I learned a ton sitting next to folks like yourself who had seen it from a totally different perspective than a cow calf guy from the Flint Hills, Kansas had. And, um, you know, again, we didn't, we didn't walk outta their arm and arm by any means. In fact, I think a lot of times it was, we were even mad when we left. But it did shine light on the fact that regardless of your perspective of this whole, Price, discovery, uh, risk management, fed cattle, marketing, whatever, whatever you want to term this discussion. there's a lot of moving parts and there are a lot of folks that have a lot of different opinions and, and, um, perspectives on that. And that's why I think that more heads in that arena are, are usually better. Your time there. You mentioned, and, and I want to get to what we're really gonna talk about in, in livestock risk protection and some of the things that you do with L R P today, but your time there at K State. I did just a little research before we got on the podcast and, and I had Dr. Schroer for a couple undergrad classes and, and one of those was commodity futures, Aggie Con four 20, I think it was. Heck, you may have had to teach the dang thing during grad school. I don't know. But, uh, about anybody that was in, on any kind of a production track, I think probably took at least an introduction to that. Sometimes I think we as producers, whether it cow, calf, feed, yard, whatever level, I, I think we're sometimes guilty of taking that class and forgetting about it until it was time to actually see what we really. I needed to know, give us, just, if you can, give us what I would call a, a, a condensed version of Ag Econ four 20 and, and talk through some terms that we hear all the time that we may or may not understand completely, you know, basis, um, the difference between hedging and speculation, all these different things. And then we'll get into how, how we're gonna fix, quote unquote the futures market and, and feeder cattle, live cattle contracts, things like that.
joe-kovanda_3_07-13-2023_130833:Okay. Well, I, I'll, I'll preface it in this way and I want to mention this earlier, like. I, I frequently listen to your podcast. To this podcast, and the reason why I do is because it's informative. And I, I've said in my mind and told myself that like, I want to be a continual learner. And one of the ways, I mean just the title of your podcast practically right, is the, one of the ways that I most, um, engage with my thought of continuous learning is when it's practical, right? And so I just wanted to say before I went into this, like, thank you for doing this, because it's really consumable for a lot of us that are in the industry as a practical, uh, application, of continuous learning, And, uh, really appreciate that And the time and effort that you put into it and, and the, the way that you interview. people. It's, it's very informative and it helps. me Keep going on the treadmill
Track 1:treadmill
joe-kovanda_3_07-13-2023_130833:too.
Track 1:Well, good. Everybody listens to it a different place, I guess.
joe-kovanda_3_07-13-2023_130833:Yeah. But along those lines, um, the the concept of risk management and using tools is, uh, is one of those areas that I would say like, just like you described. it's, it can be learned in theory, but the best way that it's learned is in practicality. And I guess I, I had the benefit prior to college classes of, and I, I didn't realize it at the time, but my dad and uncle, um, they used the feeder cattle futures and options to hedge price risk. Not like they didn't have, like, they, they didn't use it every year, every season, every calf crop. They used it also for feed grains. And so I had the benefit of just having experienced that just a little bit. That didn't mean I understood it leaving home, going to college, but I had the benefit of that and it peaked enough of my interest that here I do it for a career. Um, then, you know, you get some stimulation, like the class there at K State. Um, there's a lot of people that take that class and at CSU and they're like, that was the worst one that I had to take. And, uh, you know, I'm the weird one. Like that was the best one that's, I enjoyed that the most. I probably just because that's the way God's made my mind and also just some of the background. that I had with my dad and uncle on doing this, But it's the, the commodity futures markets, the financial markets are tools for production agriculturalists. Um, that's, that's, how I view them. That's not how all agriculturalists, all cattlemen view them, but they, to me, that's what they are. and I knew a little bit about that before I went to Bartlett, but, you know, then that became really practical They, they were using them as tools and taught me to use them as such.
Track 1:such.
joe-kovanda_3_07-13-2023_130833:But you know, most fundamentally, I think the, the reason why the futures markets. I'll sometimes refer to them as derivatives, right? Because they're derived from a cash market. There's no futures market that has the ability to exist or the right to exist unless it reflects an underlying cash market. It's always derived futures from a cash market. And So in particular, we're talking about live cattle and feeder cattle futures and options, and They're derived from cash. markets. The reason why it can be used as a tool is because those markets, the one that's derived the futures, is derived from the cash for the most part. They move in tandem or in correlation, not exactly, but very similarly, and what I'm about to describe,
Track 1:describe,
joe-kovanda_3_07-13-2023_130833:For most people, I've learned this over the last few years in doing a lot of education, which I enjoy telling people about how. these tools can work for them. Um, what I'm about to describe, Describe is fairly abstract to the most average person But because those two markets are correlated. if If you're a typical cow, you know, cattle owner, you own an asset, right? That asset appreciates in value When the market increases. If in contrast or I should say in tandem, you, uh, taken off, uh, opposing position in a market that's similarly correlated, then no matter where the market moves, up, down, sideways, you're going to receive a net price. um, that's the same as where you decided to offset that. So as an example, if you, I. Sold, uh, August feeder cattle futures to if you, if you own August feeder cattle that are gonna ship in August, you have that asset, Right. That's very highly correlated. with August feeder cattle futures. And if today you sold the August feeder cattle futures at 2 45, then when we get to the end, when you're selling August feeder cattle cash and buying back the futures, which that's the, that's part where it gets abstract. Anything you sell, you must buy back. Anything you buy, you must sell back in the futures market. Um,
Track 1:Um,
joe-kovanda_3_07-13-2023_130833:if the market were to drop between now and the end of August, to$200 per hundred weight, you would have just. Less value than when you started in those cattle buy about,$45 per hundred weight. but because you sold at 2 45, which turns out to be a higher price than where you have to buy it back at the end at 200, you would have a profit. there and it would be about$45 per hundred weight. And you combine the two, a cash sale of feeder cattle of$200 and a profit from your utilization, of the feeder cattle futures listed by the CME as a tool. And you have$245 per hundred weight. And so that's fundamentally how, how the tool of the futures market can be used now, Then options are a derivation of the futures. The Futures derived from the cash, the options derived from the futures fu options become just a layer more complex. Then the, The cash flows associated with a market move up and down. It depends on what kind of option you have. the most common one for cattle producers would be a put option, and that's sometimes referred to as a floor. And if you purchase a put option, you can also sell one. But the most common use for a cattle owner would be to purchase a put put option that's gonna protect you if the market goes down. But it's not gonna lock you in if the market goes up. Because one of the things I skipped there, Matt, was in the, the example of the, the futures where we started at 2 45, if we went the other direction And by the end of August the market was at$300 per hundred weight, you'd have more value in your cattle, by, that's 300 minus 2 45, 50$5 per hundred weight. But you sold the futures at 2 45 and then you have to buy'em back at 300. That's a$55 per hundred weight loss. So the combination of those two,$300 feeder cattle that you sell and a$55 per hundred weight futures loss, you're still at 2 45 Net price. Now, back to the to the put option, which is a floor. What that does is it allows you to be protected down if the market goes down, but not locked in if the market goes up. And that, frankly, in my interaction with cattlemen, that's the most preferred type of, um, risk protection if they choose, if cattlemen choose to price. risk protect.
Track 1:Ok.
joe-kovanda_3_07-13-2023_130833:However, just like everything in life, it comes with a trade off, right? And a put option is a very nice feature if you own cattle to help you sleep well and then potentially eat well. It, to put it that way if the market goes up, but it. But it comes at a cost. you know, it's expensive depending on what you're buying as a put option. I mean, it can be between a few dollars per head and almost a hundred dollars per head in cost that you have to put up front before you know the outcomes of whether the market's gonna go down. or go up. So what, what would you ask me? in, in clarification there? on some of the kind of foundational things?
Track 1:Yeah, I think, I think you hit a bunch of'em. I guess one difference that I would point out, and I think most people that are listening to this are well educated and probably way more educated in it than I am, but the biggest difference I would say between that, that position of going short or long buying or selling the market or a contract as opposed to an option, a put call, whichever it might be, is that you're not paying margin calls on the way up or down, but yet, unlike that position that you may have taken on on a true hedge or short along the market, you have to pay a premium, almost like insurance. On that, on that option, on that put correct.
joe-kovanda_3_07-13-2023_130833:That's correct.
Track 1:correct. And
joe-kovanda_3_07-13-2023_130833:Yep. It's a huge, it's a great, point, right. Margin requirement is a huge,
Track 1:especially today.
joe-kovanda_3_07-13-2023_130833:Yep. And it's a huge potential objection to people managing price risk, um, because it's difficult psychologically, whether it's cattle, grain, uh, any market really for the human mind to deal with the concept of, um, because the market turned out better. Um, I have to send money to someplace that, that is a very difficult thing. But the thing that I remind people that are using these tools to. Protect the price of their cattle always is the thing that's often forgotten. And the reason why it's forgotten, well, the thing that's often forgotten is the change in. the equity of the cattle. If the futures market goes up,
Track 1:up,
joe-kovanda_3_07-13-2023_130833:the value of your cattle, you know, has measured by any auditor worth their salt or banker versus salt has also gone. up. The challenge is no one sends you a daily statement that says like, Hey, your cattle are now worth, you know, 50 more per head than they were yesterday. That's something that you have to construct on a balance sheet or a borrowing base or something, and you do it occasionally, but certain most. people, not every day. But the reality still exists that Like if the futures market went up and you had a a futures hedge, short hedge that lost in value, you also had cattle that increased in values very similarly, if not the same.
Track 1:not the same. So let's touch on one more thing and, and I could spend the entire hour just teaching myself about commodities and futures trading, but I, I don't wanna do that to you or anybody else, but let's talk about one more thing that I think causes a whole lot of heartburn whenever we start talking about using the futures markets to cover or to manage our risk. And that's basis, and that's sometimes what folks would say the lack of convergence as we get to the end of a given contract. Why is it that the cash price of whatever commodity, but let's talk feeder or fed cattle futures, doesn't. Come out closer sooner as we reach that convergence. And so, I guess define basis first, and then maybe give us your perspective and opinion as to why those two aren't converging in a more natural manner.
joe-kovanda_3_07-13-2023_130833:Okay, so as we talked about the, the futures market is derived from the cash market. and That means that if the market moves up, they both move up. the difference in how fast one moves up versus the other is basis. And it's a simple alga equation. Um, fundamentally, like I would encourage people to measure it like this. You can measure it in multiple ways, but the most common conventional way is cash. Like The cash price minus the futures market price, equals basis. So that just measures the differential between the two. And So then if you have. a, if you do that math, the cash price minus the futures price and the resulting answer is a positive number. That means the cash market is higher than the futures market. And if it's a negative number, it means the cash market is lower, than the futures market.
Track 1:market.
joe-kovanda_3_07-13-2023_130833:So that's, that's what basis is. The reason why the basis varies and sometimes to some people's opinion does not converge the futures. I'll say it this way, the futures do not converge to cash. And I say it's, I say it to, in that way, for a reason, because futures are derived from cash, you know, so futures do not converge to cash in opinion is because those futures though, they're Meant to be a derivative of the cash market. The cash market differs in various geographies, in Various kind and type,
Track 1:um,
joe-kovanda_3_07-13-2023_130833:it's, you know, et cetera. Right? So for me to say like the cash price. Is this, I can't, the the cash price for these cattle at this certain moment. Second is certainly this. If it, there was a bid and an offer and a transaction, we can measure that. But you could have the exact same cattle, in the same geography, uh, same zip code trade moments later, seconds later and have a different price. And so that fundamentally is why basis differs from the futures. because the futures market is a very, sp it it, it has specifications, it has to have to be a contract. It's. Hardly different than a, you know, a contract that you might make for future delivery of physical cattle. Th there are very specific terms, location, uh, quality, et cetera. And if your cash commodity that you're comparing to the futures market doesn't exactly equate to that, then there's gonna be a basis difference.
Track 1:run through just. Quickly the high points of those, let's go on Fed cattle 40,000 pound, which I still chuckle at that we're still there, but a 40,000 pound contract steers what on past that they do allow heifers too.
joe-kovanda_3_07-13-2023_130833:Yep. And live cattle futures are still physically, delivered. They're one of few commodities. So it is steers and heifers, um, of a live delivery weight of 1,050 to, I think, 1600 pounds of a par specification. Now, some people that are listening are gonna say like, why isn't Kavana know that? But it changes. I think it's 70% choice, 30% select. And that doesn't mean that you can't deliver or you can't, um, you know what that means by being a physically delivered contract is like at the end, when August live, Cattle futures end, there is no open futures contract, buy or sell left. It liquidates down to nothing. And the reason why is because if there is left at the end that ha, those long contracts have to be converted into actual purchases of physical cattle.
Track 1:cattle.
joe-kovanda_3_07-13-2023_130833:And so you can deliver, um, physical cattle to close out your short feeder or your short live cattle position, and You can take delivery to close your long position out if you hold it all the way to the end. And when you do that, you might receive some cattle. that you know, even though the, the specification of the live cattle futures for delivery is 70% choice and 30% select, you might receive some cattle that are 90% choice, and 10% select. And then what they do is they value the additional 20% that in that case, uh, at a rate that's. that's, uh, the choice select spread. It's an economic spread and the value of choice animals. And then like where is it deliverable, like the, the physical delivery of live cattle happens at Stockyards, even though there's not very many physical live finished cattle that are transacted at stockyards, that's where the physical delivery
Track 1:delivery
joe-kovanda_3_07-13-2023_130833:happens. There is a, uh, alternative delivery that can happen at packing plants upon the option of the buyer of the contract. And those physical locations stretch from Texas, all the way up to uh, south. Dakota. So right there, in the middle of where fed cattle are produced and feeder cattle futures are, are not physically delivered. They're cash settled. And so If you're familiar with the CME feeder cattle, index, that's a compilation in aggregation of actual cash transactions. of feeder cattle steers only. In this case between 700 and 899 pounds, over 12 states, Texas to Montana. And also, uh, th those are transacted in auction barns and indirect trade as well.
Track 1:well.
joe-kovanda_3_07-13-2023_130833:And, uh, the reason why it's called the CME Feeder Cattle Index, is not because it's the CES's data, it's the Cattleman's data. Uh, they, they create it by selling and buying uh, feeder cattle of that specification. It's just that the CME aggregates it all together and then they use it to derive the feeder cattle futures from it. And so that's what the feeder cattle futures at the end. like the August feeder cattle futures will settle to the feeder cattle index on this year, August 31st, and that'll be the compilation of the feeder cattle Cash feeder cattle transactions. um, from August 31st and, and seven days before. Cuz it's a seven day rolling average.
Track 1:that's probably a pretty good segue for us to go in to talk about what I think you spend quite a bit of time these days on in this livestock risk protection or L R p, um, that equates to that CME feeder cattle index, uh, from a price standpoint. So I guess, again, kinda like we did for the last 15 or 20 minutes, give us a stripped down version and then we'll go into a little more detail of what livestock risk protection or the L r P program is and, and how a cow calf producer, how a feed yard owner, manager, someone that's retaining ownership, might be able to use that for some of their risk management.
joe-kovanda_3_07-13-2023_130833:Okay.
Track 1:Okay.
joe-kovanda_3_07-13-2023_130833:let me back up just one step. Like, there are plenty of risks in owning cattle, right? Price risk is, is one of those many risks. Um, That's what we're focused on today. There's multiple ways that people handle, um, price risk on their cattle. One of them is do nothing, and some people choose that, uh, consciously, and some choose it unconsciously, but it's doing nothing with price. Risk is still the majority way that cattlemen deal with it or, or just ignore it. Um, the second one that's most common. to people, and, and this has some correl, some connection to the futures market. It's very similar, is a cash forward contract. There's been hundreds of thousands of cals and feeder cattle sold this week. uh, because of this is a big week, Every year on a cash forward contract that is a form of risk. management. It's also a cash transaction in combination A lot of people don't think about it. as Risk management, but it is. If it's for a future delivery, then you know, time equals risk and, um, If you agree to a price two months in advance of shipment, you've got risk management for two months. And those kind of contracts work very similar to futures contracts because whether the market goes up or down over the two months from when you strike the price to when you, deliver the cattle or receive the cattle, you receive the contract. price. And the, the difference though is like as the market's moving up and down over those two months, there, there's not an entity a clearinghouse like the CME calling you and saying like, you need to make the contract. whole because the market price has, uh, has went up. And so we need to make sure that you're gonna,
Track 1:gonna,
joe-kovanda_3_07-13-2023_130833:um, execute on that contract with the counterparty who, who sold it to you. So it's very similar in that fashion minus margin, calls and, and balancing up. Then what most people think of as an alternative for risk management is what we just talked about, the futures and options market. And then I'd say like, even though it's not new like it's newly being used is livestock risk protection. Now it's backed by the federal government. Why they decided to do this? I'm not quite sure, but it's very similar to a put option, like in the live cattle feeder cattle option market. and um, the, the reason why it's, it's new and it's growing in use is I think o of all those things we talked about over the last 15 minutes and all the objections that a lot of listeners came up with in listening to us, l r p overcomes a lot of those objections, um, where the futures market? and the options market Can't, can't. And, doesn't overcome them. And that's really important. Um, I think, and I'm Biased obviously, because this is what I've spent my career in the cattle business doing. It's managing price risk, but it's really important because like those objections are real and people, they're real. in people's minds And then their decisions. And part of the reason why doing nothing is the dominant answer, dominant use is because the objections are too hard to overcome. And a lot, I'll just list some of those objections, like the cash flow required to have a futures position or an option position in addition to all the things that you have to buy to raise those cattle. Here's another budget item that you have to have. And I've talked to many cow calf producers that want the financial stability of price risk management a put option, but when it really hit rubber hits the road and you, They say like, let's take action. I want that. I need that. And These the answer is like send me X thousand of dollars to do it. It's end of conversation. And that's a real objection and I, and I get it, and there's the, there's another one like trust. There's plenty of people that don't trust the Chicago. Mercantile Exchange. Should they trust them. Well, that's not for me to decide, but the reality is they don't. and so they don't use those tools. Um, Transaction fees, Um, I'm a broker just so that I can help people to manage risk and facilitate, it, but sometimes that's an aversion to pay in somebody to do this or pay in whatever fee is required to do that. And probably the biggest objection, really, and this is true for me in a lot of areas that I hope to learn about even in the cattle business, is just lack of understanding, because risk management to the average person is abstract. Um, the lack of. the lack of understanding causes people to not use the tools. Now, that's not to say that L r p overcomes all of those objections, but it does a better job or to, in, in overcoming many of those, the, the biggest one of those that I listed is still understanding, and that's what I spend most of the hours of my day, is helping people understand what it is. So to put it simply, like, it's a, it's a government subsidized put option, uh, like a put option and it's, it's insurance, But a colleague of mine, says this. It, it's, it's like a C M E option. dressed up in insurance clothes. And so it has all the terms that you're used to in buying typical insurance, like car insurance right? Like one of the biggest ones, whether we kind of think about it or not, is like, perel, right? What's apparel? Apparel is a bad thing that could happen to you. And in car insurance, terms, it's like hail theft collision. they're all on the same policy with Allstate or whoever. So that's really protecting you from many perils at once in livestock risk protection L R P. The peril, it's protecting cattlemen from is the possible drop in market price of their cattle while they own them. That's it. Single peril. So in that, it makes it very similar to a CME put option. Um, it it's only available to uh, US
Track 1:US
joe-kovanda_3_07-13-2023_130833:citizens. that own cattle and that are what the Farm service agencies calls conservation, compliant. and then a fourth thing that the producer has to decide, they have to have a propensity for managing price risk. So there's no speculators in the futures market. You don't have to own cattle. This is certainly tied back to documented back to cattle ownership. Um, and you you have to own cattle to use it. Livestock risk protection. You don't have to use it. But as a citizen, US citizen, uh, As a taxpayer, you're, you're paying for it. So, uh, if you have cattle, it's probably worth evaluating whether you want to use it or not. Um, I call it subsidized because it, it, is cheaper and that's one of the reasons why it's grown in use lately. is back somewhere 2020, they increased the amount of Subsidy. and to put it in terms that cattlemen really relate to, like it's cheaper than what you could alternatively do in the CME market, and that doesn't exist in the
Track 1:in
joe-kovanda_3_07-13-2023_130833:regular, economy. Things like that Something that's cheaper If feed store A has mineral on sale for, you know, a hundred dollars a ton, it's$700 a ton. I'm probably using poor, poor values here and, and feed store B has it for$800 a ton. Like that doesn't last for very long. You know, feed store B doesn't sell very much mineral and then they. Equate their prices. This l r p, it's cheaper than a CME put, and it continues to be day after day. And the reason why is because, uh, in a, in a normal economy you'd have speculators go in and buy the cheap and sell it at a high, you know, sell it at the higher market. But you can't do that. Speculators can't be involved, and you can't, even if it was a cattleman, Like you can't do it unlimited. There's a, there's a maximum amount of head count that you can buy. of l r p per year per cattle owner.
Track 1:How about a minimum?
joe-kovanda_3_07-13-2023_130833:There is a minimum. one head and you have to own it. Yep.
Track 1:So unlike a contract that you have to have so many pounds or head, whatever, um, anybody can play on this deal if you're willing to go through the red tape that it takes to do it for one head. But, uh,
joe-kovanda_3_07-13-2023_130833:Yeah, and it's also for terminal cattle. So it's your four year old cow cannot be insured even though her value will drop, if the market drops. Um, you, you don't have a government product to protect her value. So, You know, the, the, question always is like, well, if I'm raising seed stock bulls, like what point do they become bread stock? And the government understands just enough about the cattle business to make a program, but they don't def they haven't yet and they probably will define the rules a little bit more specifically. But the answer to that question, like seed stock bowls, is. up to 599 pounds they can be insured. on L R P at that. Beyond that, they're considered bread stock on the female, side. Once she's first exposed, uh, intentionally
Track 1:Okay. Exposed.
joe-kovanda_3_07-13-2023_130833:then she's not eligible for L R P.
Track 1:But the minimum weight and age you can ensure an unborn calf. Right. How does, how does that work?
joe-kovanda_3_07-13-2023_130833:Yeah, an unborn calf. that's one of the augmentations that they made in 2020, which really opened this up, including all those objections that it overcomes for cow calf producers and the rules around buying unborn calf protection. Most The easiest one, to describe as like a spring born calf, right as soon as you expose cows that you, own and can document that you own, you can buy l r P on the future. birth from that cow. So you know, that doesn't. mean you can buy it to end when your price risk is gonna end. Like let's say you. you, You, raise or you you have spring born calves and you sell'em through the auction barn in October Today those cows are exposed. Mo you know, most generally, for those spring calving of 2024, you cannot yet. because it's not listed. You can't buy October, 2024 L R P, but you can by May, 20, 24. L R P.
Track 1:Okay. So, so walk us through and you can pick a, a date in the cycle that, that makes it the simplest, but let's say there's a cow calf producer listening today and goes, I didn't even know this existed.
joe-kovanda_3_07-13-2023_130833:Mm-hmm.
Track 1:I want in, um, tell me how I can consider my options here. I hate to use the word options. My, my choices here, my alternatives. Yeah. Um, what, what do I need to do? How. Does this work the best for for me? 250 cow, 500 cow operator, whatever the case may be. I want, I wanna consider these alternatives.
joe-kovanda_3_07-13-2023_130833:Yeah, I appreciate that question. The, the general answer to it is, um, you have to understand it, uh, you have to understand it well enough to Make decisions. because like a lot of things in business, you can't delegate this to somebody just because, like, I help people with L R P, you can't call me up or somebody that's, you know, working like me and say like, handle it for me. And the reason why is because as we described, they're in risk management early on. There's at least two parts to it. You know, it's often thought risk management is futures and options. That and L R P, the tools. That's it No it's not. It's that if you choose to do that, hand the cattle. And I don't have any control over the cattle. And because l r P is directly linked to the cattle and like, Let's say you Matt, you own the cattle, You have control. over When you're marketing the cattle, how you're raising them, what they weigh, all those things you have to, you have to make, the decisions. now I can help you to understand and streamline your learning process to know how the tool works, and to give you some things to think about and consider. But you have to understand it well enough that you make the decisions and uh, you just can't delegate it away. A lot of people would like it to be delegated away cuz that's just a faster way, right? If I don't understand something, just give it away. But it. it. N 99% of the time that'll eventually result in a disaster, something that you didn't like and anticipate. Um, so understanding is the predominant thing. Um, to, to dive Into the details. like If you're a 250 head cow calf producer, the things that I would ask you, um, if you were interested in this, is like, when do you usually sell your, cattle? and most, people answer, well, usually it's this, but it could vary a month, month. and a half, or something. The reason why that's important, and why I'll ask, I ask it again when they give me that first answer, is because you are using a derivative, L r P is a derivative. too to protect the future price and value of your cattle. And so to do that, like you need that to end when you're going to sell your cattle and sell is another important term. Like sell does not mean ship'em, load'em on a Truck get a check. It's when you agree to the price that you're gonna sell'em. So if you forward contracted them this week on a video auction, that's when you sold them. That's when you want your LRP to end. And I jumped over at detail there, but like every day, about three 30 Central time. The government. comes out with new offers for these floors and they move in tandem with the cme. They're most certainly, you know, valued off of the cme. So the CME dropped today, the L R P floors will be lower today. Um, and they offer multiple months. Like today, there'll be, October will be the most nearby coverage that you can buy. All the way out to May of 2024. So then it's your choice, like based on what you know about when you price market cattle to choose what ending date you want. And it's really important, because of what we just described like you want your tool to expire when your price risk is gonna expire on your cattle. Then your choice is amongst any one of those dates. Let's just say November.
Track 1:November.
joe-kovanda_3_07-13-2023_130833:Um, you have various coverage levels they call it, that's an insurance term. but it's basically the level of price risk you want to Protect. beneath. So if it's like$2 2, 2 50 per hundred weight, that's one of your choices for November and it costs oh six. And a half dollars per hundred weight. And also for the same ending date, you can choose like 2 34 per hundred weight. Well, that one's gonna protect you only if the market drops below 2 34. On the November ending date that you bought, and that one's cheaper, but it's again, right, it's, it's about trade offs. Like if you're willing to stomach the loss of. Uh, you know, 18 or$20 more, you, you, the cost. is less for you. So once you look at. that and have understood it, understand how you're gonna market cattle and decide, you know, consciously decide like, I want to floor. The price, on my cattle, then you can use this. And then people often ask like, well, when do I, when do I pay for it? Like it's insurance. I'm used to paying cost for insurance. This is no different, right? There's a cost of insurance. The Answer is, and this is an augmentation since 2020. You pay for it at the end, So if you bought November. l r p, You pay for it either the end of November or the end of December. just depending on exactly when the ending date is. But that is a huge advantage to a lot of cattlemen that, you know, have a lot of their equity and their cash flow. op, you know, operating in the business. They can get price risk protection without having to come up with the cash flow at the beginning. I often tell people, or ask people, you know, who's easier. to write a check to, like the, the mineral salesman when you're buying the stockers to go out on a pasture Or the brand inspector. when you're brand inspecting them away on a sale. And, and, and usually people say the brand inspector, even though they're both costs, but you feel richer when you're, you feel more wealthy when you're selling your cattle and that's when you pay for l r P.
Track 1:Well, and that's a difference that, uh, would be, yeah. Compared to nearly anything we do. Uh, I do liken it to, you know, some folks who started using the, for lack of a better term, the drought insurance. Um, and, and I assume on the farming side, crop insurance and, and things like that would have similar setups. And then anytime you see the government involved in it, sometimes we get that, that benefit. Um, how similar is this for those who are well accustomed to crop insurance or to pasture range and forage insurance? Uh, in terms of working with FSA and things like that, can you use some of the red tape that you've already gone into the FSA office and gone through to be enrolled? And obviously you'd still need to go through an agent like yourself, I, I presume, uh, but I assume you can use some of these same channels, correct?
joe-kovanda_3_07-13-2023_130833:Um, just Barely. Um, the, I don't I'm getting a little over my skis cuz I do not deal with, crop insurance or even drought insurance. The, the, the commonality is the conservation compliance that, that most certainly is amongst all government programs. The Big difference. is those row crop and, um, drought Insurance. There's, you, you buy, you, kind of have one or two times per year that you purchase that, Whereas cattle insurance, you can buy at any business. day as long as you own the cattle. So that makes it, you know, very dynamic. It's, it's, it's a daily, they call it a daily sales cycle It changes every single day. and you can beat yourself up if you,if you spend time watching it e every single day. I should too also note this, right? Like The, the fact that it's subsidized is a huge advantage, the fact that the cost, you know, is kind of free credit for three to almost 12 months if you decide to purchase it. Those are all advantages. Help people overcome the objection of using price risk management. Um, The, the biggest disadvantage and difference from a CME put option is it's LRPs inflexible. So if you decide, well, instead of in November pricing my cattle, I'm gonna price'em in December, you can't sell your November back and buy a December. You're stuck with the November. And unlike a put option, you could buy it today and sell it back next week and not have it. You can't do that. with l R P. you buy it today. And it ends on the, date that you agreed to when you buy it. Um, that's its biggest in its biggest disadvantage, frankly. because, not because we want the ability to get in and get out, which really, if you're getting in and getting out, you're not hedging, you're not price protecting, you're speculating. But because things change. in cattle production, right? And you know you need products and tools that are flexible and this, that's does this by itself doesn't allow for that. Now you can, we can get way out there quickly. You can combine it with CME options to make it more flexible, but one will not offset the other. It'll just neutralize the risk.
Track 1:Right.
joe-kovanda_3_07-13-2023_130833:There's another part about This too, that it's like a bigger picture. thing, Matt, that I really wanted to mention is Like one of the things that I think you've mentioned on this podcast, and, and I see it in our business and my involvement in the cattle. business is generational transfer. Like it is actively going on in the humans that are owning these Cattle that. are managing them, that are part of these, a lot of family businesses. It is actively going on and I have found with some of these younger generations that are increasingly taking more responsibility. That their risk persuasion as it comes to markets and price risk is not the same of their, their forefathers and foremothers and in particular it's less they're more concerned about price risk. And it might be just because of the the world we live in. the Mainstream media, And you you can get all the news you need in a second waking up in the morning. but it also might just be their experiences, of having grown up. I mean, certainly is part of the case for me. Um, and, and then I, I look at that and that that's been ongoing for a number of years. And then recently here I mean I, I've been interacting with the cattle markets, and cattle production, for near 20 years in my career. I've never seen a market rally. this fast over this short amount of time. And so I've often said here recently that like this kind of rally could be and might be.
Track 1:be
joe-kovanda_3_07-13-2023_130833:Uh, in combination. with What I just said, generational. equity into the cattle business and the, you know, I, I'm optimistic. that it'll stay here and, and potentially go higher to those levels that you say, but it, I'm always, because I guess I've been trained in such a way, a little bit cynical about that. Like and I try to ask myself like every hour of the day that I'm working, um, but what if I'm wrong? And That's a really hard human thing to, to, to do, whether it's markets or anything, you know, having an opinion about anything, You, you know, we, we work off narrative. We work off stories, We work off what? we believe to be true and we, we invest in it, right? And We, it's very difficult abstract thought to say like, but what if I'm wrong? and What do I, you know? And then the follow up question is, what do I do about that?
Track 1:that?
joe-kovanda_3_07-13-2023_130833:And that fundamentally is what price risk management is. a route. Like cattlemen want cattle prices. I want cattle prices to go higher, but they don't always go higher. And
Track 1:And
joe-kovanda_3_07-13-2023_130833:despite our fundamental analysis, like there might be something that comes up that takes'em the other way. Unfortunately, cattle markets aren't just a function of beef eaters and, you know, cattle producers, there's a lot of other things that affect them. And So that's what gets me excited about helping people understand L R P is like you can reconcile all those things if you believe those things. If you worry a little bit about what your cattle are gonna be worth over time, there are tools that you can take to remove some of that risk And. pain and unknown. And I, worry I'm I'm different than a lot of people, but like, I try to work off the premise that like, I don't know where the markets are gonna go. I can have an opinion, but I, I don't invest anything in that and I frankly don't think anybody knows where the markets are gonna. go. And so if I work off of that, it's a lot easier for me. to remove from that. And, and it's very logical to me then to come to the conclusion. Like, if I don't know where they're gonna go and I don't have any control over where the markets are gonna go. Like I wanna remove the amount of time that my mind spends thinking about that. because I, I, can't manage something, I can't make it better if I can't, if I know I can't control it.
Track 1:it.
joe-kovanda_3_07-13-2023_130833:And whether we, whether we recognize it or not, like the cattle business is extremely complex. You mentioned it earlier, right? And We only have all so much mind space to. apply to the complexities of what the, the Business. Right? And the more time that we spend on things that we can't control, worrying about'em, thinking about'em,,the less time that we have to spend on things that we can control, like genetics, like nutrition, like marketing, uh, those kinds of things. And So what gets me fired up about helping people understand how they can use these tools is because I believe you, no one person knows where the market's going. Like if you can neutralize that, then you have all this mind space to creatively apply to things that you can control. And I'll go as far as something I mentioned to a cattleman yesterday. and Say like, I think if we did more price risk management, removing the risk of something that we can't control and, and removing the time that we spend on that. I threw something el like this, like instead of a common feed conversion in a feed yard of being six to one. I think the cattle business would be closer to four to one if we'd been doing this for four decades.
Track 1:decades.
joe-kovanda_3_07-13-2023_130833:And I, I use that kind of as an example to stimulate thought, but like if we had the collective minds. of all the educated, informed, intelligent people that are involved in the cattle business applied to the things that they can control and not worried about. the things that they can't, I think we would be so much more competitive, uh, in our in our industry as we compete with other proteins, as we compete with other producers around the world and other, food sources. um, and, and that's, what really gets me passionate about doing this.
Track 1:well, and that's the thing that's interesting to me, and, and I always say that independent cattlemen ca cattle producers in general are the most diverse set of operators around. Uh, and, and you talked about your upbringing and the fact that your dad and your family used price risk protection on their products, whether it be grains or whether it be cattle. Um, I was just having a conversation with a friend of mine and actually a mutual friend of ours, you probably talked to him. More than I even do. or Shane. Tiffany and I were talking this morning and he was, I think the first one that told me, Hey, you gotta have Joe on the podcast. And, and he was the first of many, I think you're the most requested podcast guest I've had yet. But, uh, anyway, he and I were laughing about our upbringing was the exact opposite of yours. Our dads were very focused on exactly what you're talking about, genetics efficiency, making sure we produced the best of our abilities, and consequently didn't spend a lot of time on the marketing side of the equation or even on the risk management side of the equation. And as Shane said it, I, I think I'll get this close. we need to figure out how to not be so focused on operations. And figure out how to be a little more focused on business. I think what you're suggesting is exactly that. We spend a little bit of time in the office instead out in the pasture or on the feed yard or whatever the case may be. and figure out ways that we can, instead of swinging for the fences, figure out how to always be hitting singles and doubles. And, um, and that's, that's a tough one for I think especially cow calf producers. I mean, I had a guy tell me 20 years ago, way before 2014, of course, way before now, that the opportunity to hit a good lick and really make some money for a year or two is gone. We'll never see it again because of the corporate feed yard model, because of, you know, more, consolidation in the, in the packer processor segment. All these reasons that he gave. Well, guess what? There were some folks that either made a. Pile or lost a pile in that run up to 2014 and, and quick fall of 2015. Um, we're seeing it again. I mean, you know, folks, especially before hedges that fed cattle over the last four to five months, um, it's pretty groovy time now. Some of those gave it all back because of some basis woes and things like that on, on hedges. But, this is, is again, like you said, another tool in the toolbox to use to fix it and forget it, you know, set it and then go and focus on, like you said, finding better genetics, finding a better way to, to get through drought or to feed these cattle a little more effectively in, in pri from a price standpoint. So yeah, it, it's, it's one more tool that I think is, is worth looking at. Um, and, and one that frankly is just new enough that I don't. Know a lot of people who do understand it and, uh, I think it's, it's good information. And I assume, I mean obviously I can put your, information in, in the show notes and links and they can contact you. I know that there are others I out there, um, you said not necessarily all crop insurance sales folks are doing this, and like you said, in your case, you aren't also selling crop insurance or draft insurance or anything else. So it, it might be that they, they may need another contact to, to get into the L R P scenario, I presume.
joe-kovanda_3_07-13-2023_130833:Yeah, that, that's right. Like there's plenty of people, like if if it wasn't clear from what we've talked about already, like you can buy this from, from anyone at the same price, at the same coverage level, it's government like, it's not like I come up with the prices or I have any special formula. It's just me regurgitating what the government offers every single day. I would just encourage people that are learning about this to, to work with somebody that can help you explain it, can help you understand like how it applies to your cattle. Because risk Management. like we talked about, is not just the tool, it's also the cattle. And so th those two in combination, like that's the people that understand it from that standpoint use it the best Um, doesn't mean they use. it more profitably. They buy it when it's going to result in a payment to them. It just, they understand it, they integrate it into their business model best. So, and and there's complexities, right? There's a lot of things to understand and nuances. Many more than what we talked about today, have talked about today. And so I just encourage people to, to, you know, work with somebody that can really help you through that,
Track 1:Yep. And there are a lot of them. And, and what makes sense today with the market going the direction that it is, may not seem like it, it is the same when it's going another direction, but quite often we about the time. Like a guy told me one time about the time we know that this market has no place to go but up. It's always what we don't see coming that reaches up and gets us. Um, and you know, we can call'em black swan events, we can call'em whatever we want, but the fact of the matter is, like you said, there's nobody who's crystal ball is completely clear.
joe-kovanda_3_07-13-2023_130833:Mm-hmm.
Track 1:You, um, on, on your resume, again, as I was, uh, checking things out online, I saw a quote that I really liked that is there on, uh, Compass's site and it says that you like to help cattlemen measure and mitigate risk while optimizing the intersection of cattle production and market economics. Th that's a lot. That says a lot. Um, and that seems simple enough. I mean, who wouldn't wanna optimize the intersection between cattle production and market economics, but in a commodity world, especially one that, as we have seen, thankfully in my opinion, turn toward a mo more consumer focused value based mindset and yet still try to base most of its pricing structure off of a commodity mentality. Optimizing that intersection between cattle production market economics, it ain't for babies anymore. I mean, it, it is a challenge every day. And as you used the word nuanced, it is definitely nuanced and more so today and, and I had hoped, uh, we're already Banging pretty close here to an hour in length. So I'm not gonna make you take step three here, but I had hoped to see our conversation go into what I think you did some work on with Dr. Schroeder there at K State, um, in the, you know, actually of grid pricing and, and taking the wholesale cuts and how do we use those to help determine price. We're not gonna get there today. We may have to have a, uh, a part two following up. But all of those things, I bring that up because all those things go into just how risky this business is today, because, like you said, we, we all wanna point to low supply, high demand, everything ought to be groovy. Well, Then we start talking about the global marketplace and imports and exports and, and how we actually, you know, we've got retailers now that are contracting with Packer processors and, and that has a huge effect. So yeah, there's, there's any number of reasons that this thing is a little bit messier and, and add some of that risk and probably points to the fact that we, we need to look at tools like l r p to, to help us balance that and, and hopefully minimize that risk. So, anything else that we've missed or final thoughts?
joe-kovanda_3_07-13-2023_130833:I think my final thought would really latch onto what you talked about there. Like, that's, that's our desi desire. my desire is to help people to optimize those two things, right? And that it's, It's, all a matter, a lot of it is a matter, of like what, what experiences, you've had, right? I call my experiences like they're gifts, they're gifts to me, right? I, I've had tremendous experiences through my career and what they focus on is like all these market things and tools that we've talked about, but like also like actual ownership of cattle, uh, or, you know, a family owning them and me and delegating me to, to Help with, those. and, um, you know, I think this is true. for, for everyone that breathes really every human is, We've all been given some level of experience. and gift, and it's a matter of what we do with that. And so, I guess the ending thought for me is like, what, what has motivated me since I had a big pivot in my life, in my career when Bartlett sold, and, and that's a verse that says uh, each of you should use whatever gift you've received to serve. Others as faithful stewards of God's grace. in its various forms. And So, what I try to do, like, I certainly don't have everything figured out about what I want to learn. I want to be a continual learner, but my experiences have been gifts to me. And I just take motivation from that verse to, you know, share them with others not just so that we can be better cattlemen and better business owners But so that we can share his grace, um, as, as stewards of those gifts. and. uh, that's what just wakes me up in the morning. I, I love working with the, the Various, uh, owners and various different types of cattle um, that are across the. country, and it, it's very stimulating in, in that context and that motivation.
Track 1:Well, I think that sums it up as well as, as I possibly could have because we are, we're, we're blessed to work with the people and the land and the resources that, uh, that God's put in front of us. And I think all too often we forget just how those are blessings. We, we focus on all the challenges and the risks and everything else associated. But, uh, but yeah, I, I appreciate you, uh, sharing those gifts with us today and hopefully we can use them and use the ones that, uh, he has given us to share with others as we go. So Joe, thanks so much for being here and um, like I said, uh, I will have your contact info there in the notes and hopefully folks have got further questions on details. They can, uh, they can reach out directly to you. And like I said, I would hope that maybe we can further this conversation on a future podcast and, and, uh, talk about a few more issues facing all of us every day. So thanks a bunch, Joe. We appreciate it.
joe-kovanda_3_07-13-2023_130833:Thank you Matt, and to your family for, you know, providing this gift too as well through this podcast. We appreciate it.
Track 1:You bet.
Thanks again for joining us for episode 40, one of practically ranching. If you haven't already be sure and follow or subscribe right now, so you can listen again in a couple of weeks when we come out with the next one. And if you're so inclined, give us a five star rating or a comment or do something with whatever app that you're using to listen to these. It helps us spread the word about practically ranching and it satisfies some silly algorithm out there in a network computer land. And isn't that what we're all striving to do anyway. But I do appreciate your, uh, your doing that and it helps us out a bunch. And also mark your calendars for Saturday, November 18th. Dale banks, Angus we'll be hosting our annual bull sale selling about 150 coming. Two year old and yearling bulls. If you'd like to get a catalog on this bull sale. Those will be out in mid-October. I will be sending a newsletter out here in the next week or two. If you'd like to receive these, go to Dale banks.com. And drop your, uh, info there and the contact page, or you can email or text me on the contacts that are on Dale banks.com. Reach out any time and we'd love to get that information to you. Thanks again.