Following up on the previos post discussing inventory value and debt, here is another write-in from a friend and skilled marketer:

Ann,

You discussed (or ranted) about debt reduction and using too much borrowed money in our cattle operations. This was a huge hurdle for me to get over when I first started using sell-buy marketing. The light finally came on when I realized that statistically, on average, mainstream cattle operations are profitable 50% of the time.  Even if you are above the curve, you probably are only profitable 60% of the time. I knew that I had to inventory a certain number of cattle in order to make enough money to feed myself.  The flaw was that I was only working at 50-60% efficiency. By implementing sell-buy marketing my profitability has increased to 95%  (I still make a few mistakes). This means I can inventory 35% less cattle and make the same amount of money thus allowing me to increase my equity stake and reduce the amount of borrowed capital required. The best part is that by being consistently profitable and not so highly leveraged, the guy at the bank only calls to talk about the weather not the status of my loan.

Well put!  I love how our friend describes the mainstream cattle industry as "operating at only 50% efficiency".  We have all been sold a bill of goods by the university economists, namely the concept of "economies of scale".  This concept tells us that we should be running at maximum capacity, if not maximum-plus capacity in order to recognize optimum efficiency.  This will drive down our cost structure and thus improve our profitability.  Horse poop.  TRUE efficiency should be measured relative to PROFITABILITY, not throughput!!!  If a man has a 30,000 head feedyard that is only carrying 3000 head, but every one of those 3000 head is profitable, he is infinitely more efficient than the guy with a 30,000 head feedlot filled with 33.000 head of $100 per head losers.  It is true that the guy with the 3000 head in the 30,000 head yard will have a higher marginal cost structure, but if he is COVERING that higher cost . . . what exactly is the problem?

Here's my personal challenge to every economics professor on the face of the earth:  Show me the mathmatical proof that a loss (a negative number) is higher, and thus more desireable than a profit (a positive number).  Show me the mathematical proof that it is better to lose money on LOTS of cattle than it is to make money on fewer cattle.  You guys are all Ph.D.'s right?  I'm just a mouthy chick with a bachelors.  You SHOULD be able to run circles around me in your sleep.  Particularly on such a remedial subject as this.  

Good luck, boys.  And don't worry.  Your tenure isn't riding on this.  The university teat will always be there for you to suckle.