#51 - Stan Bevers, More to Your Bottom Line

Stan Bevers worked for nearly 3 decades as an extension economist with Texas A&M University. He has also served as a professional consultant on hundreds of ranches from New Mexico to Montana.

He helped develop the Beef Cow-Calf SPA (Standardized Performance Analysis) program and uses Key Performance Indicators and accounting fundamentals to help various sized ranches increase profitability by improving their ability to make marketing and purchasing decisions.

www.ranchkpi.com
stan@ranchkpi.com
940.886.7601

Transcript

0:04

Hello, and thank you for joining us for episode 51 of practically ranching. I'm your host, Matt Perrier. Didn't you just love accounting class in high school or college? Yeah. Me neither. But if you're like me, You might sometimes catch yourself saying, you know, I probably learned that in accounting. But cannot remember how to do it. Now before you quit this episode, let me assure you this. Isn't going to be that three credit hour class. Boiled down to 69 minutes. In fact, It might be a little different perspective, even for you smart guys and gals who actually recall what you learned in accounting class years ago. Stan, Beaver's worked for nearly three decades as an extension economist with Texas a and M university. He's also served as a professional consultant to hundreds of ranches from New Mexico to Montana. He helped develop the beef cow calf spa or standardized performance analysis program. He uses key performance indicator or KPIs and accounting fundamentals. To help. Lots of different ranches regardless of size and scale increase their profitability. By improving their. Ability to make. Marketing and purchasing decisions with some real data. Some of our episodes get a bit philosophical as many of you loyal listeners know, but this one. Is going to put some of the practical back in practically ranching. So grab a pan, jot down a few notes if you want and enjoy this conversation. With Stan beavers.

Matt: 1:50

And and to be honest this is a topic that I'm probably going to learn as I'm visiting with you today, as much as anybody that's out here listening on the podcast, because it's something that I believe is, is very important to our place here at Dale Banks Angus and something that I've wanted for years to get a little better at. But haven't taken the big plunge toward, you know, managerial accrual type of accounting system. And so, I guess 1st, give us some of your street cred and what has led you up to today and what makes you, um, able to make some of the decisions in the consulting advice that you've done through the years,

Stan: 2:32

yeah. Okay. So, you know, I'm a, I'm a native of Southwest Oklahoma, but you know, I, I am now back in Texas have been for, I don't know, long time, 1987, I guess. Did my own, ranching, had my own cows kind of got out of that last year. but work for Texas A& M university, uh, you know, and Texas A& M extension, for a number of years, 27 years, I retired in 2016, And so when I. I took the job at, at a and m as an ag economist and, and it was an off campus location in, up here in north Texas, in a little town of Vernon. Uh, there's an a and m center there. Uh, and if, if anybody recognizes like the old ranch country. Uh, of West Texas, that's where Vernon is. Okay. So the Wagner ranch, you know, which has changed hands now, uh, once or twice. Um, you know, it's headquartered here in Vernon. Within. 2 hours, you know, we have the pitch 4, the 6s, what used to be the matador, what used to be the Swensons, uh, you know, and, the discussion here can, can go very rapidly because things are changing pretty rapidly. You know, it was in 1996, uh. There was the old triangle ranch out here, uh, west of town, I say west, about an hour and a half from here. and that's when the, uh, Deseret, the, you know, the Mormon church bought the triangles, Yeah, and, and we should have recognized then, that things were beginning to change. That was the 1st major ranch, uh, in really in Northwest Texas and the old ranch country that started changing hands. Now, you know, you've got all these that, in fact, have changed hands, uh, you know, the Matadors sold, the Swenson sold, uh, the Wagner obviously changed hands and, and, uh, same way with the 6, uh, you know, so all these have started changing. and I'm going to relay a lot of this back to, you know, and it's good accounting and it's good managerial accounting. Uh, in the past, it was, it wasn't easy to make money in a cow calf operation, back in, let's say the, the. 1950s, 60s, 70s, I mean, but, but the grass was, was there, certainly we didn't see the expenses that, like they are now. Well, the problem, that I always try to relate to people is we know for a fact that expenses are going to rise. I mean, for the last 150 years, 200 years, and particularly in the last, you know, 15 years, we've seen such an acceleration in, in, in expenses. now couple that with what generates revenue for us from a cow calf operation, and that's the selling of calves, the, the, the breeding of a cow, her laying down having a calf, finally weaning that calf and either selling the weaned calf or, you know, retaining to some other type of, uh, enterprise. The problem here is that. And anybody that's ever heard me speak before has heard this a cow can only give you 1 calf a year that hadn't changed in the last 100 years. That's probably not going to change in the next 100 years unless we get into the cloning deal. And I don't think that's going to be something the cow calf industry gets into any, in any big way. now, given those 2 things, if I've got rising cost. And yet I have productivity that is maximized. Okay, again, the cow can only give you 1 thing, uh, actually, she gives you 3 things. She gives you 1, a calf, which again, we know it's not 1 calf, it's like 83 calves, so again, you think about it, what's my weaning percentage, and it's 82, 83, 84 percent weaned calf crop, she gives you her life at the end of her productive life as a cull animal, and Three, she gives you half the genetic makeup for that calf to gain, the other half coming from the bull. So those are the only three things a cow can give you. Well, all of those are pretty much maximized. Okay, now couple that though with what the costs are to maintain that cow for a year. Again, bull cost, grass cost, equipment cost, overhead cost, feed cost, all those things are rising. So you end up with the rising, uh, expenses coupled to maximize productivity. And that, that becomes a very difficult situation. The only 3rd thing there that you can master there is what prices are, what do I get from my products and, you know, we're, we're moving in. We know as of, you know, uh, yesterday's cattle on feed report yesterday. Yeah, yesterday's cattle on or not cattle on cattle inventory report. You know, again, we, we've got the lowest cow number in 74 years. And part of that is, you know, everybody wants to talk well, it's drought and all this and. Yeah, uh, but let's be honest, it. you know, the, the age old three legged stool situation. So again, we're not changing. How many calves a cow can have now maximized, weaning weights, maximize productivity, is a big part of this to, we know cost will be rising. So, 3, I tell people, you know, you don't control average prices. If prices, if calf prices decide they're going to be 3. 50 here this afternoon at some market, you're not going to control that. But what you do control is your calves are valued above or below what the market price is. Okay. So, so in all three legs of the stool, you control part of that. Okay. You control. A good chunk of it, but if all those three things start working against you, uh, you know, in the long term, you're going to see cattle cattle expenses continue to go up. So now, with all that said, we start moving into, okay, so how do I actually survive this? Okay. Uh, you know, I've, I want to be a legacy. I want this to go on to my. My offspring, my kids want to do this, you know, and so I want to maintain, this operation for as long as I can. Well, first and foremost, looking at each three of those legs, you know, I better darn well keep my production maximized. Okay. And that means all the little things, not little things, but how do I maintain. a maximum production level. Get as many calves on the ground that I can and have the best quality calves that I can. That means nutrition. Again, that's the point of the spear. But that spear is a long shafted tool, okay, because again, nutrition of the cows, the bulls, you know, the right bulls, all these things, I mean, uh, again, it's huge, okay, and that, and that's where we focus for 90 percent of the time for the last, you know, 100 years. Expenses now, and the third one, we better have a handle on where my expenses are. And when I say that, I mean, what is my greatest expenses in any cow calf operation? I'm going to go ahead and skip to number three because, again, it is what it is, the prices, okay. I just need to make sure that whatever I'm selling in terms of product is sold above the average price, not below the average price. Because, again, cow calf guys don't control what the average price for calves are. They do control whether they're above it or below it. So now let's focus back on, on the productivity and the expenses. Well, where do I start? You know, I, I could come into anybody's operation and, and very quickly, you know, say, okay, well, your expenses are too high.

Matt: 10:35

Right.

Stan: 10:36

And that doesn't tell them squat. Okay. And, and I've done this all over the country. Um, you know, and, and, It doesn't take long for me to drive through a gate of a ranch, you know, at their invitation and, okay, well, the first thing we're going to talk about is the calves and what color calves there are. They're black. They're blue. They're polka dot, you know, whatever. but. It doesn't take long to figure out that, you know, you really need to consider what your, all your expenses are, uh, greatest expenses on any cow calf operation. And everybody wants to say, well, you know, if I, if I was to pose that to an audience of 300 people. You know, what's the greatest expense to keep a cow, uh, more times than not, I hear feed and, and I will tell you feed is not ever, in very small cases is feed the biggest cost, it is not. Number one and number two typically are interchangeable, depending on where you're at. number one typically is labor and management. again, what's it cost me, uh, to run my operation? What's it cost me to hire people? you know, again, their cost of living is going up. And so, you know, they've, they want to hire a wage, too, every year. And so, you know, we have to consider, well, can I give these guys a, 2 percent or 3%, you know, wage increase this year? Is that cow going to give you a 3 percent more calf to sell?

Matt: 12:04

I

Stan: 12:04

Well, that's an obvious no. You know, it's not going to happen. Okay. Yeah, absolutely. We all wish you would. Um, but again, that, that illustrates, you know, the scenario that we have. So Labor tends to be number 1, and again, labor would include, you know, the management of the operation, board or director fees, you know, travel to, to board meetings, you know, those type of things. Um, so, and, and then obviously day labor, um, you know, 1099 labor, W2 labor, uh, all those things. Um, the 2nd one that nobody wants to talk about, but is incredibly important, and, and we hear rhetoric about it, and that's depreciation of my assets. Everybody wants to cash flow or from an analysis standpoint, everybody pretty much just wants to look at cash flow from, you know, okay, well, I started the year with this much in my checking account, uh, 365 days later, I got this. So, you know, it was higher than what it was the previous year. So I must be doing okay. Well, that's cash flowing. Okay. What, what I wanted, what I've always tried to impose upon, you know, true ranchers that, that have that legacy attitude is you don't need to be talking about cashflow, although it's important. Okay. You need to be talking about building wealth. Okay, because that's what's going to make sure you have a legacy, uh, in the ranching industry for your, your offsprings or whoever. Okay, you need to be talking about building wealth, and wealth is measured on the balance sheet, not on the income statement. So, now. What people don't realize, I go out and buy, you know, in, in, in you guys uh, case, you know, wherever, you know, I go buy a bull from you, uh, you know, I, whatever the price is, but I need to understand that that's a multi year expense that I need to depreciate over time. Well, that asset is going to decrease in value every year that I use it. It could be a bullet, could be a pickup, could be a trailer, uh, fencing, employees, homes, any number of things. If my assets are devaluing in the case of depreciation, my balance sheet is decreasing. Okay, I am not building wealth. I am losing wealth. Okay, so how do I, how do I know that I'm actually, uh, building wealth on my balance sheet? And to do that, uh, the best case is to look at managerial accounting for ranching. Now, You know, I've, I've spent 27 years, you know, with extension trying to, you know, do a lot of things. Um, but, you know, 1 of them was trying to build, you know, a ranch program that focused on ranch management. And in this case, ranch business management, um, where. It's not so much going out there and measuring the grass and, and, you know. Testing weight and weights and, and, you know, EPDs and all that stuff, while that's important, no question about it. I also need to say, well, you know, what is my labor cost per cow? What is my total depreciation cost? What is my feed cost and where am I outlying, uh, and, and where can I actually start cutting these things? Okay. Because again, you know, if, uh, you know, if. Again, I can drive into a ranch and a lot of times just looking at the, at the entry gate, you can say, well, this guy's high cost operation because again, uh, you know, if, if somebody's got, you know. Pretty nice entry gate and the fences are all nice and clean. Um, you know, there's money been spent there. What I've always told folks is, you know, if you're trying to decide whether I'm going to spend money at one spot or not, ask yourself, by spending this dollar, is it going to help me get one more calf on the ground or one more pound of weaning weights? And if it's not, I need to kind of scrutinize that expense and say, well, do I really need to do this or not now? Everybody, you know, again, you, you also want to maintain the assets. Uh, so, you know, we do, there is fences that have to be repaired and things like that. That's built, that's, that's maintaining my balance sheet and my asset wealth. But again, I also have to understand that I'm making this much money or I'm losing this much money. And where can I make that change? Okay, and more times than not, if production is maximized, okay, I'm, I'm doing as best as I can on, on getting an 82, 83, 84 percent calf crop or weaning percentage, then, and I'm still not making money, well, it's, uh, it's got to be the other two of the legs. It's either going to be the price that I'm getting, the market isn't valuing my calves as much as I think they should be, uh, again, I'm getting a below average price, or, more times than not, it's my expenses are high. Okay, so, so I, I'll stop right there for just a minute and just see what the thoughts are and, and when we get back, uh, I'll, I'll start talking about, you know, how to, to look at a managerial accounting situation. So any, you know, any comments that you might have?

Matt: 17:33

No, I think that's really good. And I probably should have started out with. Having you explain the difference between managerial accounting and tax accounting, because, you know, here we are when this podcast airs, probably going to be early March, um, late February, you know, if folks are on a calendar year, they're doing taxes, they've hopefully already done some financial analysis of how 2023 went, but I think a lot of ranchers, especially family, Maybe smaller sized farms and ranches are guilty of accounting, the word accounting being just what do I have to do to satisfy Uncle Sam from a tax standpoint, and not how can I use this to improve my bottom line and wealth. So kind of compare and contrast those different styles and needs for accounting systems in today's ranches, and then maybe we can get a little deeper into managerial or accrual accounting.

Stan: 18:32

Yeah, absolutely. So tax accounting, and, and accountants would shoot me for saying this, but tax accounting

Matt: 18:38

That's why I've got you on here.

Stan: 18:40

focuses, strictly focuses on limiting my tax liability. Okay, now, IRS, basically, they are concerned whether you made money or not, uh, if you made money, send it in, right? I mean, that's kind of the tax situation. Well, that's supposed to be funny. That's okay. Uh, so, from a tax accounting standpoint, it is strictly there to satisfy Schedule F. And, the asset sale, the gainers lost a form 4290 or something like that. Okay. I mean, that is what schedule that, that is what tax accounting does. Now, again, it's, it's there. And in a lot of times to try to minimize my tax liability now, yeah, IRS does care whether you make money or not, because that's what they're going to tax you on now, do they care from a schedule F where that money came from? And the answer is no. Okay. They, they're not, IRS is not in the business of trying to manage and monitor where you're really good and where you're really bad. Okay. And again, back to what's my labor cost? Is it high or low? Okay. Again, IRS says, well, just stick us on, on this line on Schedule F. Um, but from my standpoint, from a managerial accounting standpoint, I want to say, okay, that labor cost, if it's just a big number, you know, and I'm just going to use an example here, you know, I spent, you know, a quarter of a million dollars on labor. This past year, labor and management. Okay. What does that mean? Well, the next year, you know, if, if I do do everybody right, and I give a 3 percent increase in wages, you know, then, then instead of a quarter, a million, it's a quarter, a million plus 3 percent for the following year. But again, that doesn't tell me anything. Okay, so in some form or fashion, I need to put that in some type of, of ratio or some type of result that I can actually monitor that number. Well, that's where we come up with what's called the KPIs, the Key Performance Indicators. So, uh, now, how that specific example works between the taxes and the management accounting, I would want to take that quarter of a million dollars from labor. And say, okay, so much of this went to the cows, so much of this went to yearling operations, so much of this went to a wildlife operation, and I'm now going to divide that by the number of cows, everything that's associated with the cows, I'm going to divide that by the number of cows I had as of January 1, and all of a sudden I say my cost of labor is 149. Okay, well that's a number now that I can actually track and look at, because now the two numbers involved in that division is total cost of labor, the quarter of a million, plus the number of females I have. Well, now I'm getting into managerial accounting where I take my isolated data like labor and I apply it to something else. Okay, now again, that's not the accounting part that's done on the analysis part, but now I have taken that schedule left total quarter of a million and I've said, okay, I'm going to allocate this labor costs across different things. And now I'm going to take those specific. Little pieces and I'm going to divide it by some unit to come up with a KPI, my labor cost per wildlife or my labor cost per all the yearlings I'm running. Okay. And that becomes a trackable number. Okay, over time again, if this is going to be a legacy, my guess is that I'm going to start and I'm just using an example here. If I started out with 148 dollars of labor per cow, and I maintain my inventory for the next 5 years. My inventory, my, my labor costs per cow in 5 years from now is probably 155 per cow just because of interest, just because of inflation. Okay. If my inventory stayed the same. So again, I've isolated, you know, the specific expenses. Now tax accounting is not going to do that. It's not going to try to isolate various things. So moving forward then, IRS again, tax accounting tends to focus on one number at the end, and that is net income. Because that becomes your taxable number. Okay, managerial accounting says, that doesn't tell me squat. Okay, I need to break this, all these expenses into what they're responsible for. Okay, because if I'm going to spend a dollar, I need to be spending that dollar to improve or do something to improve or be a catalyst for higher weaning weights. Our productivity or more efficient operation. The example I use is back to, okay, I'm going to scrutinize this dollar, okay, that I'm going to spend on a Kawasaki Mule, okay. I'm old school. I, you know, I'm an older guy now and I'm not going to be horseback. I'm going to be on a gator somewhere. Okay. Can I justify spending those dollars in terms of it increases productivity or increases my efficiency of my operation? And the answer is, well, yeah, I can probably justify that because again, I'd still need to get out there to those heifers. When they're calving and get out there quickly and if one's having a problem get on my knees and get that heifer To go ahead and have that calf and make sure that 500 bill is alive And nowadays it's a thousand dollar bill because that's that calf laying there and that heifer laying next beside it, get them up, get my knees muddy and get that thousand dollar bill alive and breathing. Okay. Now, if that gator, you know, that John Deere gator helps me do that, that's an efficient use of my dollars. Now I can't do that unless I have managerial type accounting because again, now I'm isolating all my expenses to do certain things. Now carrying that on from a practicality standpoint. Okay. How would I actually do this in terms of implementing this from an accounting standpoint? Well, I would start at any beginning year. Okay. Again, this is a great time of year. And, as you mentioned, uh, you know, I'm going to start thinking about doing my taxes or have my account do my taxes. It's a great time of reflection on what happened last year. Well, it may be such that this is a good time to, to really analyze and really change some scenarios. So what I would do. and anybody that's heard me speak about, you know, trying to build this, this accounting system. Here's what you do. I break all my expenses. Now again, thinking about accounting system. Okay. So we're probably doing something in terms of doing some isolation of income and expenses. Okay. Whether it be, well, this was to the cows or this was to the bulls or this was to the wildlife. That's great. Okay. That's a start. You wanted to start isolating and I, I make a very rigid. Okay, rigid methodology, because I call these things centers. and you're going to have profit centers, you're going to have cost centers, and you're going to have support centers. now again, I spend a dollar, and it's got to go into one of those, some people call them buckets. Okay, well, I'm going to drop that into a bucket. Now, let's explore those three things. Profit center, cost centers, and support centers. Let's start at the bottom. support centers. That's exactly what it sounds like. It is there to support my operation. I always use the same four support centers. I will have a GNA or General Administrative Support Center. I will have a Labor and Management Support Center. I'll have a Machinery and Equipment Support Center. And then I will have An interest or a finance support center. Those are the four support centers. So if I pay the, you know, John, you know, John Wrangler here, you know, his monthly salary at that point in time, I'm not going to try to say, well, you know, of this 2000 a month that I've sent, you know, 1500 of it goes to the cows. You know, 600 of it goes to the yearlings and 400 of it goes to the wildlife. I'm not going to jack with that right now. I'm going to put it into a bucket and at the end of the year, I'm going to make my allocations. Okay, so now just thinking about that as the year goes through and as repair costs are made on machinery, as tires are replaced on, on tractors, uh, or trailers, um, as interest is paid on notes, Or, GNA, General Administrative, if I take a subscription to, you know, Working Ranch Magazine or something like that, okay? If I pay a subscription, that goes to GNA. Now, those are all pretty obvious, okay, but, but in fact, instead of what's called the old overhead, okay, that is exactly what you've identified. Those three, the three things of GNA, interest, and machining equipment is the old school overhead. I add labor and management. So now then I've, I've, in fact, as throughout the year, I put all those things in those big 4 buckets. I now have a massive amount of information that I can actually take and turn into results and management information such as I now know if I add all those 4 things together. And it's a big number, Chances are, it's probably up to 65 percent of your total expenses on an operation. Can you believe that? I mean, it can, it typically, half of the total expenses are built into those four buckets. So, now, if I take that big number, The summation of those four and I divide it by total revenue from that is over half. I don't care where the revenue, that dollar of revenue come from a calf cell, a bony cow cell, a broken bull cell, a cell of a pickup, gravel cells, wildlife cells, I don't care. What's my total revenue coming in from this operation? And if I take the total cost and divide it by total revenue, I now know what my overhead cost percent is. And typically it's, it can be up to 65%. Total cost, total support cost divided by revenue. Now, revenue is going to move up and down. We know that the four overhead costs are probably going to slowly increase, maybe except for interest. Hopefully interest is going to come down as I pay off debt. But the other three are going to continue to rise. Okay. So, but now, now I've got a, I've got a picture of my operation. Am I overhead heavy or am I kind of light there? so again, all of a sudden, and you can, you can take then the four and say, well, GNA is probably going to be about 15 or GNA will be about 10. Labor and management is going to be about 25 percent. M& E is going to be somewhere around 15 and hopefully interest is about 5. Now what's that mean? It means for every dollar of revenue that I bring into this operation, if I'm totaling the number, 65 cents of that dollar. 65 percent of that dollar has to go pay those four things, those four buckets. Or, if I want to isolate and just look labor and management, and labor and management is typically about 25. Well, for every dollar that I bring in, in revenue, irregardless of where it comes from, twenty five cents of that dollar, first thing has to go pay all my labor and management. and I focus on this because you're right, it is a big part of the operation. Now, let's, let's delve a little deeper. Okay, so if, if, if it's sixty five percent, the inverse of that is thirty five. Okay, so what's the 35? Well, I haven't paid direct expense yet, have I? cow cost, because again, the four support centers is GNA, L& M, and labor and management, machinery, equipment, interest. So I haven't even talked about Cal cost, vet cost, you know, feed yard cost, anything like that. so out of that 35%, I still have to pay direct, and oh heaven forbid, I might want to keep a penny or two of that dollar in revenue. As net income, that's got to come out of the 35. So all of a sudden you've, you've in a, in a 35, 000 foot view. You have taken a pretty good look at your operation. now again, it's, it's a 35, 000 foot view and there's still lots of, lots of space that we got to look at. Okay, but right off the top, we've, we've kind of identified something. So from a management accounting standpoint, that's exactly what we did. Instead of throwing everything into a bucket to get it into schedule F. And that's the tax accounting standpoint. Now we've taken managerial accounting say, okay, we're still going to satisfy tax accounting. We have to do that because none of us want to be in jail for tax fraud. We still have to do that. But if we're going to do it anyway, let's go a few steps farther and start isolating some of these expenses and now identify Areas that we may need to look at changing. With the end result being, you know, somewhere between a dozen you know, 10, 12, some people use a lot of them getting specific key performance indicator numbers based on accounting numbers and productivity numbers. Now, they don't, they don't have to all have, uh, production components, just like the support center ratio that I talked about. I mean, that's strictly taking numbers strictly the accounting and, and not applying any type of productivity. Uh, but I could, I could take that same support center number, that big 65 percent number, and I could divide it by the number of females I have on January 1. And all of a sudden, I know what my overhead cost per cow is.

Matt: 34:09

And that's

Stan: 34:10

You won't like it,

Matt: 34:12

Yeah. But

Stan: 34:13

You won't like it, okay?

Matt: 34:15

the powerful

Stan: 34:16

But that's the power.

Matt: 34:18

yeah.

Stan: 34:18

If you want a legacy, if you want to continue to run the operation, as I said in in the beginning, you know, I don't want to say it's stacked against you because, but you got to be efficient. And there's reasons why we had big ranches sell out here now. Okay, the oil revenue starts drying up. you know, free grass starts drying up. Mesquite starts being a problem if I don't address it. All these things start happening and all of a sudden our revenues doesn't increase, but the expenses starts increasing. Because a lot of times, you know, the 1st thing we try to do is put more cows on the same place and or we put bigger cows on on the place. And, you know, all of a sudden we are way inefficient on grass versus productivity. And, we, we run ourselves right into the ground. We got to be able to monitor. Now, again, I focus on the accounting and the efficiency of the, the financials relative to the production, you know, grass production is important. All these other people that are doing things are just, I mean, NCBA is going on this week right now. And, you know, um, I mean, The trade, you know, room is full of feed, machinery, vendors, uh, that can help you do lots of things. I've always been surprised at the lack of really good accounting vendors that are there, or really good analyst vendors there, because they just, a good analyst from a cow calf operation just doesn't seem to exist a whole lot, from a financial and efficiency standpoint, so.

Matt: 35:59

yeah, I think that we as producers are probably guilty of driving that through the decades, through the centuries. Um, we chase these shiny things, whether it's equipment or a bull or a ranch horse or a, Whatever the case may be, that's what we're interested in. Instead of, hey, can that make me money? And if so, the answer is yes, I figure out which one I want to buy. And if the answer is no, then I move on to something else. And so let's say that we've got several folks out here listening that have. You've said, yes, I've been thinking about this and Stan, you've convinced me I've, I've, I've got to do this. What step do we take to, and you told us kind of how to do this managerial accounting with isolating our resource and these, these. Profit and cost and support centers. I do that myself through an accounting system or through an Excel spreadsheet? Are there account CPAs out there that we hire? And if so, just to be clear, I think I know this, but we will have. At least minimum of two separate accounting systems, one for tax accounting and one for managerial accounting and making sure that we spend money where it's needed And save money where it's not correct.

Stan: 37:19

And I, and, and, and I do not agree with that at all. Okay. And I'll, I'll tell you why. Um, I, I, I, I hear that a lot. Well, you're telling me I'm going to have to second, have to have a second accounting system. No, you're not. Okay. Because again, you're going to do it. You're going to do accounting anyway. Okay, all I'm asking is, can we isolate these revenue sources and expense sources into different buckets? That's all I'm asking. Now, what you probably will have, okay, what you probably, well, not probably, what you will have is two separate depreciation schedules,

Matt: 37:54

That's what my next question was going to be. Yeah.

Stan: 37:57

Now, and there's not, I mean, and if any accountant out there is using what would be called a fixed asset software, to generate depreciation schedule, depreciation costs and those type of things, uh, if any of the accountants out there that's using a fixed asset software that only gives you one type of depreciation. You really need to question that accountants, uh, actions because any fixed asset software out there nowadays will calculate, you know, with the push of a button. Various depreciation schedules for you now, we all know. Okay. So, I mean, there's all kinds of tax accounting from depreciation standpoint. Okay. So I go spend 6, 000 on a bull. Um, well, you know, if I, if I want to, and my accountant, you know, is probably going to be the one. Well, you know, you can take bonus depreciation on that. You write it off on 1 year. That's that's tax depreciation. And, and I don't get me wrong. I'm not saying. Yeah. Don't do that. I am saying take every stinking tax advantage you can find. Okay, I, I, I abhor. God, I sold a farm last year and it just, I, I, I just cringe, you know, how much tax I had to pay. Okay. So I, I'm, I'm right there leading the charge on paying too much tax. Okay. But if there's an advantage somewhere that I can take that lessens my tax liability, I'm going to take it and I'm going to tell y'all to take it. Okay, now, but that's a push of a button on a fixed asset software. Okay, so in order to do schedule F and, and, you know, my, my, my asset disposal forms and all that, that's tax depreciation. But show me also now what management depreciation would be. I didn't use that bull up in one year. I didn't, you know, I, yes, I cash flowed 6, 000. Okay. I spent 6, 000 on a cash flow statement, but my wealth is still there because I have an asset that's probably going to be, you know, a useful life of, Four or five, six years. Okay. So that's 6, 000 gets spread over. It's useful life. Okay. That now becomes management depreciation. That becomes a push of a button on another fixed asset software. Okay, so the accounting part, the day in, day out, you know, okay, if I wrote a check to Brian's Tires and I'm telling you exactly what's happened to me this week, uh, you know, two tractor tires, uh, repaired, 55 to, you know, which was a cheap deal, um, you know, okay, well, that's a repair to machinery and equipment. Well, in terms of tax accounting, that is strictly a repair. Period. That's it. And unless I've got something noted in the memo line or of my accounting software, I don't know what that is. It's a repair at the end, you know, 365 days later. I just see a repair. Well, it went to Brian. Yeah, that's okay. Well, but I don't know what I do a lot of things with Brian. Okay. But I now said, well, that's repair and I send it to the sports center for M& E. Okay. Well, that tells me something now. Okay. And I can now take that, I made it with all the other repairs and I can actually have some useful knowledge. At the end of the year. Okay. So again, you're not going to have 2 sets of books. Okay. You will probably have 2 sets of depreciation schedules, but not 2 sets of books.

Matt: 41:44

Okay. And

Stan: 41:45

Now, let me take just a minute to kind of follow through. So again, we talked about the support centers. Okay. That is the overhead cost of an operation. We step up then to the cost centers. Okay, now we'll, uh, and again, I'm trying to isolate my income sources and my expense sources into these various buckets. The next one's the cost center, and what's a cost center? Well, a cost center is any activity that goes on on the operation that I believe is entirely necessary. Okay, in order for me to maintain the operation, but it's not going to generate any huge amount of revenues. Okay, now I work with several ranches in the Wyoming, Montana area, and if you, if you've got any knowledge of what cow calf operations are up there, you know, they produce hay all summer long to feed it all winter. That's a necessary evil again. Now, with that case, I could say that my hay enterprise is in fact a cost center. It's a necessary evil. It's not going to generate a lot of revenue, but it could have some. I mean, hey, the neighbor, you know, run out of hay. It's, you know, it's, it's March. I've still got a little extra. Um, I can sell a little bit of hay. I can have small amounts of revenue in these cost centers, but the point is I need to identify what that cost is. And I'll just tell you there's a couple of ranches, one in particular that, that I've worked with for 20 years. And I can tell you that their cost to put up a ton of hay, uh, from, from the field, uh, growing it, uh, irrigated is about 92 a ton. And that's one piece of information, but to know that 5, 6, 7 years ago, that was 85 a ton. I'm seeing a trend here.

Matt: 43:51

Yeah.

Stan: 43:52

And I will tell you, the owner asked me, Well, Stan, would I just be better off? Just selling all my tractors and all my balers and all my swathers and having this custom done. Well, you know, that's a valid question. What would it cost you to have this done, you know, on a per ton basis? Well, and again, I'm not, I'm not trying to answer that question. What I'm explaining here is you now have the methodology, you now have the data, you now have all the information you need to make that financial decision. Would I be more efficient paying somebody to own their own equipment and then come in here with all the little intricacies? Like, well, dadgummit, my hay's ready to cut and he's over there doing so and sos. He ought to be over here on mine. Well, convenience is a big part of it, okay? Again, I'm not trying to convince somebody yes or no to do this. I'm just telling you the fact that I had taken all my expenses and all my small revenue sources and I had isolated them into a bucket and I divided that time by the number of tons that I produced that particular year. Oh my gosh, I now know what it costs me to produce a ton of hay. And now I can take that number and I make all kinds of decisions about that. Well, can I do this? And, and honestly, it comes down to, more times than not, that particular decision comes down to convenience. Well, you know, I'm going to be pissed. Well, I, I'm sorry, I'm going to be mad, you know, if, if my hay is out here two foot tall. And it's not been swapped yet, and he's over there doing somebody else's stuff. Well, I need him over here. Well, go buy your own, and do it yourself. Okay, so again, as I told him, you got the data, I can tell you that from a convenience standpoint, you better be doing it yourself. Now, well, but Stan, these costs continue to rise, and yeah, you know, in a year from now, or two years from now, it's probably going to be over 100 a ton for you to do it yourself. And at some point, it becomes too expensive. Well, what do you do? Well, as I told him, you know, at some point, you have to make your own decision about legacy. Is these 4, 000 cows that's being run in Montana really worth taking a loss over time? Because now my legacy has just ran out. Because cost just got too high. Because if you're gonna farm, if you're gonna run cows in Montana, you're gonna feed them hay. Question is whether you produce the hay or whether you buy it. So, but, so again, it's, it's the power of the information.

Matt: 46:38

right. And that power, I think, comes full circle when you, and you touched on it before about cow size and how many, how many more acres that cow that weighs 1, 500 pounds needs than the cow that weighed 1, 100 or 1, 200 pounds needs. And you know, you can't blanket stand here and say, well, everybody needs to breed a smaller cow, but with data and with information from the accounting side and the. cost side and honest comparisons, you can go, yeah, I can wean a little lighter calf, run more cows and have more revenue per acre or revenue per cow exposed or whatever spa analysis type of data you want to use. You can do that when you have the power of the information like you're talking.

Stan: 47:25

Yep. Absolutely. You know, uh, again, you got to have a calf on the ground before you worry about weaning weights.

Matt: 47:32

Exactly. Exactly. Exactly.

Stan: 47:34

ask, I always ask the question, you know, are you, are you more concerned about weaning percentage? You more concerned about we weight and it's, it's easy to focus on wean and weights. I mean, and every ven feed vendor out here in the world can assure you that they can increase your weaning weights. Well just feed the darn things well. Yeah, but that costs money. Okay. Should I actually be doing, I can wean heavier weights by feeding. But I'm more concerned about having that calf on the ground first, okay? Because if I don't have a calf on the ground, weaning weights don't apply, okay? So, so that's, that's the cost centers. Now thinking through this, you know, other cost centers and the one that's always there is anybody that's raising their own replacement heifers are replacements, a cost center.

Matt: 48:26

Big

Stan: 48:27

And the answer is absolutely yes. I mean, they're, they're cost center. Now, now, again, it's not in terms of something that's sold, but it's something that, again, back to what I said earlier about building wealth. Okay. Those are expenses. That are investment expenses that are being turned into females that now become an asset on my balance sheet. so again, yeah, there are sources of revenue, even though they may be small. So yeah, uh, every, every one of them didn't get bread up like I wanted them to. Uh, well, we know that never happens. so I, in fact, I do have a little revenue. And in this case, it's culled replacements. Okay, they didn't, you know, X number of them didn't get bred up. But I've got this huge amount of expense coming from the cows. this is what it costs me to produce a calf. That calf become a replacement heifer. I've got these big expenses. And the cull income helps to reduce that big mound of expenses. That are replacement heifers. So again, cost center replacement heifers. and, you know, some people use grazing, you know, okay. What's the cost of my grass, you know, as a call center brush control, you know, as a call center, those again, just to reiterate a cost center is just a activity on my ranch that I deemed necessary. I need to monitor it from a cost standpoint from an efficiency standpoint. And yeah. It can have small sources of revenue. Okay. So that's a, that's a cost center. Then we bounce up to the top guy and that's a profit center. And profit centers are, you know, if, if I sell my calves at weaning, then chances are my cows are a profit center if I don't sell my calves at weaning and I retain my cat, you know, down here in North Texas. And even in Kansas, uh, you know, some cow calf operations, you know, also have wheat ground and there were small green pastures. hey, I always wean my calves in, you know, November, about the time the wheat's ready. I'll put these calves out on wheat pasture. Well, cows in that case are not your profit center. Cows are a cost center because all they're doing is producing the calf for you. And again, all I can do from a cost center standpoint is try to maintain And, and lower keep efficiency about my cost. Okay, as the cost center, the calf in this case, which would be a, call it what you want to feeder, uh. Profit center or a year like, I call them yearling profit centers. That becomes the thing that actually sells a product for my operation that generates revenue as a primary source. Okay. Wildlife can be a profit center. uh, I bring this 1 up because, uh, I had this phone call of, uh. Just before I talk to you, my Remuda, is a cost center or a profit center?, My ranch horses. Uh, you know, I mean you, you wanna, you wanna stir some emotion, you start talking about, well, is it a cost center that, well, no, you know, I sell those gildings every once in a while, you know, and got, you know, 24, 000 for that one gilding, uh, well, that's, that's great. So is it a profit center? Well, it's probably both. And in fact, and again, I don't want to get into too much detail, but in fact, a remuda actually has three purposes. I mean, if it's a true remuda on a ranch, it's actually got three purposes. One, it's just like the cow calf operation, it has to regenerate itself by producing, reproducing, you know, or producing mares, in this case fillies, that turn into mares that perpetuate my continual remuda. My mare band. Okay. So that's number one. Number two, it supplies horses. As a tool to the cows. So it's actually supplying tools for us. As a pay enterprise, you might say. Okay. But then 3rd, it also acts as a profit center in that, you know, I do sell a mayor every once. Well, but I do, you know. Try to get my cowboys to train these 2 up to 2 year old building to where, you know, some of the better ones are going to bring, x number of dollars, he's a double bred metallic cat, blah, blah, blah, Joe Wrangler out here has trained him up for 2 years. He's a great cold, uh, you know, 25, 000. so it becomes a profit center as well. So Ramuda can be, you know, and not only Ramuda, but there are, those type of activities are can be more than 1 thing. And you just have to. Ticket into one cost to start with like removed as a, as a profit center or removed as a cost center. So, um, anyway, so, you've taken all your accounting information and again, it's not 2 sets of books, but you have created a bigger tablet, the old chief, you know, columnized paper. I'm old school. I know that. I'm not know. I'm an old fart. Uh, but you, you put all these pails out here and now, instead of just throwing them into 1 that says schedule F. Now you're actually starting to try to classify everything that's done on the ranch. And the fact that I've done that now, and I can divide it by one or the other things, one or two things, or I can take product Productivity numbers and divided by productivity. I now know what my efficiency of my operation is. And more importantly, and again, this, you know, this is, this is, man, this is, this is a huge thing here. This isn't an event. You don't do it once and stop.

Matt: 54:18

Right?

Stan: 54:19

The power then becomes, man, this has been the trend for the last five years, I'll tell you, there's a ranch in Montana I mentioned earlier, about 4, 000 cows, and I've worked with them for 20 some years, uh, rebuilt their accounting system many years ago, and their cost per cow, again, so I take all my cost that's associated with cow calf, Including its share of the support centers, its share of the cost centers, and now I have all these costs associated with the cows, and I divide that by the January 1 inventory of every cow that could have, would have, should have had a calf that year, I now have costs per cow,

Matt: 55:02

Yep.

Stan: 55:04

and about 8 years ago, they were bouncing along at 500, 600, 700 dollars, and all of a sudden, you can't imagine the shock When all of a sudden, we ran all the numbers, did all the analytics, and their costs were over 900 a cow.

Matt: 55:22

Yep.

Stan: 55:23

And it was just flabbergasting. And why that's important, we all knew it was coming. We all knew it was coming. But now, you think about, okay, but what revenue, how much revenue is going to be there to offset that 900? Well Uh, the, the, the telling part was my calves only bring about 900 bucks a calf. Oh, crap. Now what do I do? Now again, the vulgarities of the calf cattle market goes up and down, you know, we're, we're, I mean, I've worked with another Wyoming ranch, just got their data yesterday. I mean, they're, they sold calves for five bucks shy, 1800 bucks a calf. Okay, that makes you feel really, really good. Okay. Uh, particularly for costs are less than say 1, 800 a calf, and they are, but you were getting into a situation and it happens every eight to 10 years. We're going to see good record cattle prices cover up bad management. And it always does. There's going to be about six or seven years where we're all squeamish and we're all wondering how we're going to make it. And then all of a sudden we get about three years of record prices. And again, what I just did, what I just did for you is define a 10 year cattle cycle, you got three years of really good prices and, and hell, this is, I mean, sorry, this is, I mean, everything's okay now. I'm, I'm good. I'm good. We're all good. But what we didn't realize is when we see cattle record cattle prices happened in 2014. When did Ford, when did, when did pickup prices really start shooting up? And it was in 14 and 15 when, and again, I'm, uh, I'm using pickups, so you can use anything, okay? Well, my goodness, if the ranchers are getting record cattle prices, they can pay a little higher prices. Oh, no. Well, here it comes. All of a sudden we get a jolt. We always have the 1 to 2 percent inflation, but then there's always that year or two where we get jolts. You know, where all of a sudden we get 6 percent inflation and then it kind of mediates again. Okay. Well, get ready for the jolt. It's coming because we're, I mean, based on the cattle inventory report. I mean, I, I happened to glance at it early this morning. Um, I mean, cattle up strong, just like they should be because of the, you know, 74 years lowest cattle numbers in, in the country. Yeah, everybody's feeling good. Oh, boy. Cattle prices are going to be great. Yeah, they will. They will. Don't be stupid. Okay. Uh, they're going to come down. Okay. And, and you better have use this. Absolutely. So take it, take this time. Where you feel good, okay, because of the prices. Take this time when you feel good and increase the efficiency of your operation. If you're not doing some type of managerial accounting, if you're not trying to do some isolation of, of expenses and its revenue, do it now, okay, while you feel good, okay, for the next year or two,

Matt: 58:36

So let's say a, let's say a rancher is currently using some outside assistance, a CPA, to do tax accounting. But that CPA sees their books once a year and takes care of what they owe Uncle Sam and makes sure that they didn't mess anything up. Um, is the first conversation, if we say, hey, I want to move and yes, I'm going to make sure and, and do everything I can from a depreciation standpoint, a tax standpoint to pay as few taxes as what I'm obligated to. As far as using it to make better decisions, I want to drill down and I want to use some of these KPIs and I want to put some of these into these, you know, profit support and cost centers.

Stan: 59:17

Right,

Matt: 59:17

That conversation with your current CPA should go, how? Can you do this for me? If so, help me set this up. And if they say, nah, you don't want to worry about that, it might be time to look at a different CPA or is this something that you would say, hey, Get on, you know, I'm sure A& M Extension, AgriLife Extension has things. I know K State and their AgInfo, or agmanager. info has some charts and some setup spreadsheets. Can, can a ranch do this on their own, or do they need to hire somebody like yourself to help them

Stan: 59:51

take, take, take, one page, okay, take, take a blank sheet of paper. And, and, uh, and I'm not being. Silly here. Okay. But the question is, how would I start this? Okay. Very simply, take you one page, right? Profit center, cost center, support center on it. The support center is easy. You're going to do General Administrative or GNA. You're going to do Labor and Management. You're going to do Machinery and Equipment. And you're going to do Interest. so that one's taken care of. Then define your operation as a, by Cost Centers and Profit Centers. Okay. Do your due diligence on that. Really study it. Think througH it really well. Write them down. And, and, and, and, and I'm sure people think, Well, that's simple. No, it is. Absolutely, it is. The hard part is coming. The hard part is either you doing it and you having the discipline because again, you get, you got to do it 365. Okay. You got to do it every day. When I used to teach this, there was about 10 steps that we had to go through. And number one was what we call the daily grind. And that takes up about 90 percent of your time. The other nine items you could do in about 10 percent of your time. But if you don't do the daily grind, you don't get the other two through ten, because the two through ten is the allocations and the analysis, which is what you want anyway, but you got to get to number one first. Now take that and either depending on what your capabilities are in terms of counting, Or if, if you're really relying on your accountant, then take that, sit down with your accountant and say, look, this is what we've been doing in the past, but I need to look at my revenue and expenses sources. In this format. And you're, you're right. There will be that element of accountants that say, well, I mean, in, in 3 fashion. 1, well, you don't need that. You know what I mean? Number 2, you can't do that. You don't have the discipline to do that. Number 3, you don't pay me enough. Well, it's time to find another accountant. I'm going to tell you, it's, it's, it's time to find another accountant. If they are open to, to what you are presenting to them that I need to do this in this format while still maintaining. Well, and the question is going to come. Well, we're going to screw up the taxes. No, no, we're not either. The only thing that's going to change about the whole accounting system in terms depreciation schedule as we talked about. The fact is, I'm just trying to isolate my revenue and income sources so I can take numbers and do some analytics with them. that's all we're doing here. Okay. Uh, but take that to your account and say, is, can you help me do this? Or can you help me set up, you know, my record keeping? Because more times than not, probably what's happening is, the, the operator, the ranch or the ranch wife, or, you know, somebody in the, somebody in the ranching operation is doing the quote data entry. Then that data entry summations are taken to the accountant and the accountant does the rest. so whoever that point person is, that data entry person, I'm going to tell you, number one, they don't get paid enough. Number two, if you got a skilled person in that position, you better fight to keep them. because they will go away very quickly. So whoever that person is, as long as they have a working knowledge of what that structure is, profit center, cost center, support center, this can get accomplished very easily. It's not that,

Matt: 1:03:56

And in

Stan: 1:03:57

is, is,

Matt: 1:03:58

percent of the work, that's the daily grind portion of it is, is a QuickBooks system is, I mean, what do you recommend in terms of accounting

Stan: 1:04:09

you know, uh,

Matt: 1:04:10

I, I don't

Stan: 1:04:11

I, you know, I,

Matt: 1:04:13

anymore, but yeah, what do

Stan: 1:04:14

no. no. you know, I, I hesitate to do this, but, you know, uh, I, I've used QuickBooks all my career, and I know how to make QuickBooks do everything I wanted to do. Okay. And, and I, there was a time, and, and again, as, as I've told you, you know, I've kind of retired from a good part of this. Um, I could, I could. Go up at a ranch, and if they had, if I had sent that one little blank sheet with those three words on it, those three categories on it. Those three classes on it and they had done their diligence. We could have them up and running in about an hour. That sounds really strange, but that could happen. Okay, because again, it's not that difficult. They know their operation.

Matt: 1:04:59

just making those line items in something like QuickBooks though, right?

Stan: 1:05:03

Exactly. Well, uh, so from, uh, from QuickBooks

Matt: 1:05:06

Yeah. Or some

Stan: 1:05:07

the, yeah, again, the, the question is what, what the center is called. Okay. In QuickBooks. There's a feature called class. Okay. I, I would always use classes and I would set up 3 levels of classes and you can have class subclass subclass subclass if you choose to. Okay. You can go as deep as you want. but I would go, I'd create a PC, which is profit center. I'd call a CC and then I'd have an SC. Well, the SC also has GNA, M& E, L& M and interest. And then the cost center, you know, then becomes, you know. 23 replacement heifers, 22 replacement heifers, 23 yearling steers, okay, hay production, whatever, whatever my cost centers are, then the profit centers becomes cow calf, or the profit center becomes wildlife, or it becomes 23 yearling steers. Okay. And the 23 always designates the year that the calves were weaned. So that's, uh, people talk about two year old heifers, year old heifers, you know, my, my heifer calves. I've tried like the dickens to get people to use model numbers. The 22 yearling heifers, the 22 replacement heifers. The 23s, the 24s, Because again, now we can isolate them into groups and, and, and once, once I get past, once I get added to the CALS as a fixed asset, then whatever. I mean, we all know it's first in, first out for the most part after that, but, but still up to that point where I'm still trying to track them as a cost center, you know, use model numbers, use year numbers,? And that's the year that they were either weaned in or the year that they were bought in, okay? So, uh, again, if they've done their due diligence, uh, again, you set up the classes, uh, and then subclasses. Under the PC, CC and SC and again, you just, you just start rocking, uh, uh, you know, you could get through one month and, once you, once one month will take you a little time to get through because they're always going to be those things. Well, Brian's tires. Well, now what Stan say? Well, don't, don't, don't make it difficult. It's a repair. I don't care whether it's on my 2018 5075 John Deere tractor, or if it was on my swather. I don't care, okay? Again, it's a repair that's mechanical? So it's a repair into machinery and equipment as a support center. And you just start going by checks or invoices, and you start dropping these things into these buckets. And We've, we've made it out to be more difficult than it is, and it just ain't that difficult. Ha Ha ha ha

Matt: 1:07:57

Yeah, well, I think probably the hardest part of this whole thing, uh, we haven't even touched on and that is admitting that we have a problem and that's probably the decision that gets the the, most the most difficult and sometimes, one that I want to, I guess, drive home with folks in this podcast that, um, Don't get lost in the details and the minutiae of it. Probably the most important part is saying, you know, we can use this data just like we use EPDs and pounds per calf and, and yield per acre or whatever else, this is probably even more important than any of those in terms of, of truly, as you said, building wealth and building a legacy. And, and, I know that you have, have since retired. You may not know that I've kind of read and watched you for decades. Uh, both when I was working at the American Angus Association and putting together, uh, commercial cow management, and it was a spa analysis type of tool that used benchmarking all those things that you and Dr McGrann and so many others built through the decades. But, um, it's just amazing to me that programs like what you have built both on the Standardized performance analysis, you know, and benchmarking tools on cow productivity, but also on accounting. How few of us in the ranching community are willing to sit down and say, Hey, we need to, we need to look at this and we need to analyze and see these trends year after year, because it's, it's powerful. It's

Stan: 1:09:32

Yeah, absolutely. It's, it's actually, you know, frustrating that, that it, you know, I've, I've, you know, I'm, I'm struggling here because, you know, there's a lot of people at fault here. Why? I mean, this, this is really straightforward. I mean, it truly is. It's, you know, is, is it the university not training the people or is it just a legacy in the, in the past? You know, if you think about how ranching actually started in this country, uh, you know, it was on free grass. It I mean, period. Well, we've, we, we had not realized that things aren't free anymore. I mean, it's, you don't just go out there and find a grass pasture and put cow on it and make money, I mean, but it seems like at times we still hold to that concept, you know, that, well, and, the old, as, as we, most of us know, you know, when, when the ranches were put together in 1870s, 1880s, you know, that was, that was European money, Uh, that, that caused the ranches to, to be created in this country. And where were the accountants?

Matt: 1:10:39

And in

Stan: 1:10:40

They were in England. Uh, they, they, they were somewhere else. Well, you know, again, this is, this is the somewhere else. Well, you know, yeah, you know, it's just most important that I have, you know, get my cows fed. Well, is it? Because well, what'd you spend on, you know, per ton of feed or per pound of protein? you know, what did you really spend? You know, there's a thousand people, in a trade show, they'll tell you, you know, why theirs is the best. Well, I want to know if that pound of feed that I spent, I want to know that it's the best decision to be buying this or this or this and was it the most efficient use of my dollar? Okay. That's the most important thing to me. Did it produce another calf for me? Because that's my revenue source. I spend, I spend dollars not to just be spending dollars. I spend dollars to create revenue and I want maximized revenue. You know, so, um, well, the accountants are over in Europe, so, you know, they only come one a year, once a year and, uh, you know, tell me I'm doing it all wrong, but then they finally get back on the boat and leave. Well, same way here. you know, I have to go show up at the accountant's office once a year. About this time of year, you know, I get tied to the whipping post, and I get, you know, spanked, and I find out that I didn't make as much money as I thought I did, because I hadn't been monitoring my labor cost, or my feed cost, or my vet cost, or whatever. and all of a sudden, you know, he says that, well, you didn't make any money. Well, I don't like that guy. I worked my butt off all year, you know, and, and he tells me I didn't do any, you know, he's calling my baby ugly. Well, no, I'm just saying, you didn't monitor through the year, what was being spent relative to. What you're producing. So, uh, again, it's, it's not just because they're grass, I can make money, uh, now grass is very expensive. I mean, some of these places that are selling now, uh, again, the three legged stool that I, that I talked about to start, you know, you, you better, you better pay attention to all of them and, but recognize which ones you control. And the two that you do integratedly control is my productivity and my expenses. And if I divide those two together, I come up with what my costs are per cow. Or costs per steer, or costs per calf, or costs per acre. Okay, uh, that's, that's the two that I at least partially control. I don't control market price, as we've said earlier. So you better focus on the efficiency of, of those two to, that are integrated together.

Matt: 1:13:21

Yeah. Well, I think that that says a lot and it's interesting, uh, your philosophical reach back to the 1880s and, and we could have another full hour podcast, I think, in, in talking about how those influences have held and, and, built some of the traditions and some might even say a ranch or two that have traded near you. Uh, the accountants may be in, uh, yeah. In Beijing, unfortunately, and that's, a whole other podcast we can talk

Stan: 1:13:51

that, that, boy, that, that's, uh,

Matt: 1:13:52

I think the whole, the whole discussion revolves around knowing more about. What it is that's allowing us to continue this legacy. And, um, hopefully that you've been able to share a lot of good information for us to, to drill down and, and learn a little more about, and, uh, I will include, I know you're, you're retired now, but I may, if it's okay with you, I may include your contact information in the show notes here and, and, um, You know, if, if folks want to talk one on one and you do have a little time still for consulting, obviously, uh, um, you're not working for extension, anymore. And so can't, can't give those fees away, but, uh, or that time away, but no, I, I really do appreciate your time here. And, and, you just, you've done a. A great service, I think, to not only Texas producers, but across the nation for decades. And I think that this is good information for us to all, all to use and implement. So thanks a bunch for being with us today, Stan.

Stan: 1:14:52

Uh, glad appreciate the opportunity and, uh, you know, yeah, share the share the information and, we'll, if, if I don't take care of it, I may pass it on to somebody else that I have confidence in. Okay.

Matt: 1:15:05

That'll be great. That'd be great. Well, thanks again, Stan.

1:15:10

Thanks again for listening to practically ranching brought to you by Dale banks, Angus spring is upon us, and that means it's almost time for the Dale banks, Angus spring, private treaty bull offering. We'll offer over 50 year Ling and coming two year old bulls for sale starting on March 12th. There'll be freeze, branded fertility, tested, vaccinated, and ready for turnout. If you'd like info on these bulls email, Matt perrier@dalebanks.com. Or text 6 2 0 5 8 3 43 0 5. And we'll get you that list as soon as it's available. As always. Thanks for listening. We'll be back again in two weeks.