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ELK PROFITS Part IV
Questions? / Asking your way to bigger Profits
by Rich Forrest, Mountain Velvet, Ltd., an elk business and advisory firm,
Secretary/Treasurer, Colorado Elk & Game Breeders Association COPYRIGHT 2001
uestions? questions, questions! We have lots of them. On every facet of the business. Whenever I buy elk, I’ve got questions. I bet you do too.
Asking questions is a way to get your learning curve rising. An upward curve leads to a broader knowledge base. More knowledge gives better expertise which means wiser decisions. Ah! we all need that ... wiser decisions.
Experience has taught me that better, more informed decisions will bring greater profits from almost any business transaction. The more I know, the better off I’ll be. It’s certainly logical, quite logical, but is it practical? Obviously, we can’t know everything about everything ... so where does one concentrate?
Assuming that one has the basic knowledge of the elk business and is happily running your farm or ranch, where can one make the most improvement in profits for the least amount of effort? ... better nutrition? .... genetics? ... veterinary science? All good areas to focus on. But I’ll suggest one that will help almost everyone, every time. That area of improvement is “Buying Science”
BUYING SCIENCE, ... what the *?!#@%$ is that??? Nothing new, nothing special ... just simply the accumulation of knowledge in an orderly manner to enable a better informed buying decision. Orderly information collected in a uniform fashion provides the best possible basis for making a decision. Only by asking the same questions of different elk sellers at different ranches and diligently recording their answers can you truly compare apples with apples. By eliminating some the numerous variables through questions, the better apple will eventually materialize.
Now, we all have questions when we are looking at someone else’s elk. And being eager to buy, sometimes we move too fast. The seller will almost always tell us all about the good points, about how big that bull’s body is, how calm the animal is in the chute, etc. etc. Maybe sometimes they’ll even tell us some of the bad points.... “she didn’t calve 3 years ago.” But, do you really think he’ll tell us all the bad points? Only if you just fell off the tunip truck! He won’t, plain and simple, he won’t, that’s for us to find out. Can an owner voluntarily tell us enough to properly spend $5,000, $25,000 maybe a hundred thousand dollars or more, wisely? NO! NEVER, we won’t know enough, not unless we get more information. But do we always ask the right questions ..... hmmmmm again surprisingly, NO! We forget to ask some of the most important items, not from stupidity, but just from the excitement of the “buy”. It is always more fun to look and admire the elk than to ask dull ol’ elk questions.
In our previous Elk Profit articles we found that a 24% annual rate of return was possible with just plain jane elk, even with some bad luck and less than satisfactory husbandry. That might mean an $80,000 investment (say 20 bred elk cows) will be worth $99,200 in about one year. A reasonably good rate of return. But, if these animals were to have problems, then that rate of return declines rapidly, perhaps even going negative if many animals die. In one of the worse cases, if five animals died, it would be at least five years before you can even get your original investment money back.
That sounds like a definite bummer... and somewhat hard to believe, killing off half your investment. But, horror stories await the careless farmer. For instance, in a recent nameless transaction involved 10 relatively wild, untamed elk moved cross country into a farm situation here in Colorado. That move and the inablility to properly handle those animals resulted in the loss of five in just a few months time. Wild elk don’t adapt easily to relatively small, confining pens. Woe to the poor buyer of those spirited elk. The animals were cheap and the buyer got what he paid for! Such a disaster could be waiting in the wings anywhere. Don’t let it happen to you!
A bad decision really does cost big bucks. Big enough bucks to wipe out a year’s worth of profits, or more. Fortunately, it is far easier to make a better buying decision and protect your profits by avoiding problems, then it is to try and earn new profits all over again. As the old adage says “ a penny saved is a penny earned”. A wise purchase will more likely retain and enhance its value in time with much less risk to the buyer.
Figure 1. A sire with a problem. Can you find it?
Now, the elk business, like most others, is most certainly subject to caveat emptor, more commonly known as “let the buyer beware”. You are responsible for your own decisions, the good, the bad and the ugly. Obviously, most elk don’t have money back warranties. You make a mistake and you eat it, no ifs, ands or buts. Importantly, in the elk business what is not said is as important as what is said. You must ask questions if you want highly critical information. Ask the right questions and then sternly review the answers. If the answer misses the mark, ask it again until it is answered properly. Sometimes, rephrasing an already asked and answered question, and then asking it again is a good way of checking your source. The second response better produce a similar answer, or watch out!
For example, we all may have noticed the type of advertisement that states “calves available from Master Herd Sire which cut 20 pound of Grade “A” velvet at 4 years of age”. A good cutting bull, eh! But wait, when we check the bull’s registration certificate it says he is almost 7 years old. What’s missing here? What did he cut in year’s 5 and 6? You can almost bet, that his velvet was nothing to talk about ... otherwise the seller would have! So much for that terrific bull, maybe he’s just a rather average 20 pound 7 year old. Nothing to brag about there, so neither are his calves.
Those missing puzzle pieces sometimes tell you something. Something that could be critical. Something you might just need to dig for. Just like the real estate business that uses the “rustic cabin” phase to actually mean an old shack without plumbing, similar catch phrases can spell disappointment in the elk business. No dictionary of sales terms is available for elk, so you must learn these euphemisms yourself by experience ... experience by looking and asking questions.
Well, is there an easier way of keeping track of all these necessary questions? No, not really. You must be disciplined enough to ask the questions and listen for the correct answer, and then record the necessary information. Each situation is different. Be flexible, but diligent. To make life a little simpler, the attached “Elk Buyers Sheet” is one I’ve started using. It will help get you started down the right path. Everyone out there has there own questions they’d like to have answered, but these are some of the bare minimums needed for a good decision. Some of these questions are as basic as the elk business itself, yet many are very rarely asked. Failure to have such information can lead to real financial grief.
While eyeballing the prospective new elk, a separate attached note sheet on actual animal observations can be used to further enhance your buying knowledge. Watch for animal temperament, an individual’s attitude in mixing with a group of animals, how they stand and move when you approach, how is their mothering ability, etc., or perhaps look for subtle signs of animal injury or stress. Figure 1 portrays a magnificent elk bull in the last stages before antler removal. He is a nice looking animal, but something is wrong. A subtle display which may be indicative of an undisclosed problem. Can you find it? Note a double brow tine on his right side. Hmmm, a possible indicator of stress from some unknown cause (and, in fact, he was stressed by movement from Canada to Colorado prior to his velvet growth). Subtle problems such as these demand answers. Such answers must be weighed before purchase, not after. After the purchase is too late.
To hone your skills, here is another test. In the Fall, 1996 issue of North American Elk (the ‘96 International Velvet Competition issue) the Colorado Elk and Game Breeders Association has a large spread from page 41 to page 60. On page 59 (non-paginated), Mountain Velvet has an ad. You’ll recognize Clearbeau as the bull with the double tine, .... but something else important is amiss in this ad. Can you find it? .
Making a mistake can be very costly. For instance, suppose you have an Accredited TB herd. You buy some great animals for a good price, they arrive at your farm and they are integrated into your herd. The papers go to the State Vet and gee, they only had one whole herd TB test. Whoops, you just may have lost your Accredited Herd Status .... back to square one, do not pass go, do not collect $200.00. You must now risk having to start over again with your TB tests. Just a few days time and hundreds, perhaps thousands of dollars wasted. All because of not asking! What happens if an animal dies while in the retesting. Ouch ... so much for all my profits this year. Why take the risk? ASK FIRST.
Now, obviously, the answers given to your quizzing are only as good as the person answering. Here you must use some personal judgment. Some unscrupulous people just plain lie. Ask yourself, is the person knowledgeable? Are they trustworthy? Can you discretely find some personal references for them. What is their industry reputation? Such background information is important. Don’t neglect it. If you can’t trust the person behind the answer, then don’t explicitly trust in the answer. Don’t be afraid to ask for proof, i.e. vet records, registration certificates, prior owners or whatever. The minor embarrassment of asking is always less costly then the agonizing humility of financial loss. A few extra days waiting for documents or a few phone calls is a lot cheaper than getting a bad elk. You’ll rest a whole lot easier later when you fork over the big bucks for your new animals knowing that you made a good buy.
The elk industry is essentially a commodity based business. Elk are a product. A product that goes up in value and will go down in value depending upon supply and demand. We are currently blessed with a period of rising demand with animal values escalating monthly. The supply is getting tight. This is a period when a scandalous elk peddler might be able to sell that “pig (elk) in a poke” for a pretty penny. They‘re out their right now, looking for you. But now hopefully you’re partially armed against a financial disaster, armed with information. You will be wiser and safer,.... but for those not paying attention ... Caveat Emptor senor.
About the Author: Mr. Rich Forrest is in his 5th year of the elk business. An entrepreneur by nature, he has been and remains a part-time due-diligence investigator for the mining and finance industry where his expertise has been evaluating and developing gold mines. The gold mining business has long been known for its reckless promotion where caveat emptor is the law of the land. Mr. Forrest now offers these well-honed, due-diligence skills to the elk industry through Mountain Velvet, Ltd. (“MVL”).