The 49,000 head feedlot at Ainsworth, NE sold at auction earlier this week packaged with several thousand acres of farmground.  The way the deal was described to me, the buyer bought the farmground, and got the feedyard thrown in for free.  The auctioneer began the bidding at $6.5 million, and then had to back the bids down under $4 million before he could even get a starting bid.  The final price was $6 million.  This was a multi-generational family business.  I have quite a few clients up in that area, but had never had any dealings with this yard, so I googled it.  They had a very nice website.  I surfed around and read about the yard and came to this page:

http://www.ainsworthfeedyards.com/index.cfm?show=10&mid=29

I'm still trying to get my jaw off of the floor.  Scroll down to the bottom paragraph under "Risk Management".  Remember, this is dated March 30, 2009.  This is the key sentence:

"Currently we are looking at breakevens in the lower part of the current price range (80-100), using a 60 cent estimate cost of gain for a steer and 67 cents for a heifer."

Ladies and gentlemen, there were probably many, many contributing factors to the failure of this family business and I could speculate as to many of them, but will refrain because I don't have the data, but if you had to boil it all down to one core problem, the quote above would be it.  And I do have the data on that, because it was posted, in writing, on their website.  There is no possible way that ANYONE, ANYWHERE had a $0.60 cost of gain in March of 2009.  I don't care how "super-efficient" the cattle are, or how "cheaply produced" the corn was.  There is absolutely no possible way that their gain costs were anywhere even remotely close to $0.60.  The notion is absurd. 

My contacts and clients up in that area report that this feedlot's buyer would routinely pay $15-$20 per hundred too much for feeder cattle at the area salebarns.  People would look on in amazement and shake their heads.  Now we know why.  By using the ridiculously understated cost of gain, they probably told themselves that the cattle would "pencil".  It's just sick to think about how much money they were losing - entirely at their own hand. 

This feedyard, given its prime location, could be a money printing press.  It could be a goldmine.  But only if run competently.  If the new owner would like to fully realize the potential of his spectacular new asset, my contact info is below.  I know quite a bit about the true art of "cattle hedging".  I also know a thing or two about gain costs.  What I know NOTHING about is forecasting.  But then, neither does anyone else, apparently.  I'm just honest about it.

Forecasters are killing the North American Cattle Industry.
"Global warming" is a complete fraud designed to advance the cause of socialism and enslave humanity.
Abortion is the murder of an innocent human being and is never justified under any circumstance whatsoever.
Every human being is a question, to which the ONLY answer is Jesus Christ.