Nebraska Fires, Cattle Market Chaos & What Farmers NEED to Know Right Now (Ep. 349)

Hello, hello, hello, and welcome back to the podcast. Thank you very much for being here. All right, John and I are gonna talk about some current stuff that's happening in agriculture — ag, ag, ag — and the biggest thing is the Nebraska fires.

Yeah. They're, like, sickening to see, all the video and stuff coming from there.

Yeah, it's bad. We have a lot of clients in Nebraska. We've checked in, everybody's safe. I did get an email this morning that I have clients looking for some pastures, so they're having to send their cattle to South Dakota.

I did talk to somebody in the eastern side of Nebraska last week and he was gonna buy some cattle, and I said, do you need to buy cattle, or can you just use your grass for the people on the western side of your state, and sort of a win-win? I don't know how win-win it is for the people on the western side of the state, but if you've got grass on the eastern side of the state, or you've got a feedlot or whatever, there's opportunity. These people are gonna need someplace to put these cattle. But yeah, absolutely devastating.

South Dakota, we had also had some fires. We had a small fire compared to this Nebraska.

Yeah, I think Nebraska's at close to a million acres.

Oh yeah, I bet. I'm sure they either added —

I looked, it was like 800.

But even the day we're recording this, there was a new fire yesterday that's like almost a hundred thousand acres between the couple.

Yeah. And we checked in on our clients yesterday that are very, very close. We were kind of talking last night, like, what's gonna happen in that area? And I've talked to my clients in Nebraska and I haven't had definite answers of, if they get rain, will that grass grow back right away, because of the fact that it's desert, essentially. I think people are not understanding the impact it's gonna have, that it's blowing — now you have sand blowing, 'cause it's Sandhills.

Not only have we had no moisture, basically, in a majority of the Midwest this whole winter, the wind has been just insane. And tomorrow is supposed to be 40 mile an hour plus gusts across multiple states. High fire danger again. So, pray for rain.

Yeah. It's Colorado, Nebraska, Wyoming —

Southern South Dakota.

Southern South Dakota is dry.

Kansas is.

We're sitting really good in North Dakota, which is abnormal.

There's not a speck of drought in North Dakota on the map.

And that is not normal.

No. You guys have — you're either way too wet or way too dry. There's no — this is like the only happy medium you've had in the last decade.

Yeah, we got rain and rain and rain this winter. So it'll be interesting to see how this affects the cattle market. Now, I'm no expert on the cattle market, but are we gonna have a bunch of cull cows selling? Is that gonna affect what's happening two years down the road? Because we are gonna cull 'em and they're going to slaughter. We're not having 'em out. If we do cull 'em, what's gonna happen with the ranchers? 'Cause a buyback right now is not feasible.

Not super cheap.

Are we gonna have enough hay? What's it gonna do to hay prices for everybody else across the country? 'Cause a lot of hay has been going to Nebraska.

Hay is tight supply anyways, I'm sure, just from how dry it is.

But even just — are we gonna have a lot of land for sale in Nebraska?

Yeah. Just to see the amount of hay that is being shipped out there is eye-opening, to how many acres they've lost. But I don't know. I mean, this doesn't happen very often, so I don't know anybody knows for sure how this will shake out. But that's been one of the saddest parts for me to see — this isn't like a forest burning that's a national park or something. This is privately owned ranch land, for the most part.

I have a lot of questions for the Nebraska governor. Why did it take so long to get the National Guard there with planes? I mean, I don't know the whole story, so — I should just zip it, like I tell you guys, zip it if you don't know. So I should just zip it.

And I'm not asking my clients — like, my clients that are in the heat of that, obviously we're texting and making sure that they're okay, but they are so busy. The one that I did get a message from, she just emailed me real quick. She was out helping her husband, 'cause he had been fighting fires and was very tired and needed to go to sleep, but they still had cows to feed.

I mean, it looks like it's all hands on deck. If you're an able-bodied person —

Well, there's people — I saw tents, like a bunch of tents set up, and people coming from all over the country to help fight. So that's good.

I even asked — I've got a buddy that's trying to join the local fire department here in my little town, and I was like, you guys sending the unit out there? I mean, we got a grass fire unit in our little town. He's like, we're not certified. I was like, oh, come on, let's cut the red tape and get you out there to help. But he's like, no, insurance reasons, we can't do it.

Oh, that's really unfortunate.

Yeah. They don't have the right certificates yet.

Rules are made to be broken, my friends.

Yeah, but I —

People's lives are at stake here.

Well, I'm hoping nothing happens over the weekend. But they can't get rid of these fires, it seems like.

Well, it's so dry and so hot.

Yes.

It was 90 degrees last week. The wind's been —

Yeah.

But you did have a potential client that told you where to donate.

Oh, yes.

So for those of you — while John's looking that up — for those of you that are listening, and I mean, if you're in agriculture, I don't know, you were maybe living under a rock if you don't know there's fires in Nebraska. But it really has not been public. And if this was Texas burning, oh shit, it would be on every news outlet possible. But because it is Nebraska, you just aren't hearing it anywhere, and it's insane. So if you can donate —

For money, fencing supplies, hay, if you have it and you're relatively close by — they need everything that you can think of, for sure.

Food for firefighters.

Yeah. The website would be Kearney — oh gosh.

Kearney. It's like Kearney Foundation.

Clicked the wrong button. Fat fingered it here.

We'll put a link to it in the show notes.

Kearney Foundation dot FC Suite dot com.

FC. Kearney Foundation, FC Suite dot com. I did go to the Kearney Foundation page, hit donate, donate, donate, and then finally it listed a bunch of options. But we'll put a link in the show notes. I have reached out, have not heard of other trusted foundations to donate to that we know are not taking all of the money.

Yeah, this was just right from a source in the area.

Yeah. So somebody that actually lost land in the fire, or lost some grass in the fire.

They must have two different chunks of pasture. She said their south ranch, they did have that burn, but they were able to get all their cattle moved to their north ranch — and now that's where that fire started the other day. They're right across the road from it. So I hope it spares their other grazing.

It might seem crazy, but I don't text our clients for their birthdays. But I do make sure that I follow up when there's bad weather somewhere. I'm gonna check in, make sure everybody's okay. Like when North Carolina had the big hurricane, we were making sure everybody was okay.

Well, just to check on people. I mean, these are life-changing events. They're not just a — you know, even a tornado, that's serious for sure, but they're so small. This is a million acres.

Even the tornadoes that went through North Dakota, I was checking to make sure. If there's big tornadoes, too, I'm checking.

Well, that one came with so much wind anymore with them.

We pay attention to the weather over here. If you have a birthday, good for you. But if there's bad weather —

Well, everybody's got a birthday.

And it's unfortunate we can't do anything really from where we're at, but we just wanna make sure that our clients are okay. During the North Carolina stuff, everybody was okay. But you have a client that is a coroner.

Yep.

And he owns a funeral home, right?

Yeah. And then I think he also worked at his —

And so he replied and said, very busy. And we did not reach back out to him. We could now and just see how he's doing. But we're just gonna leave you alone then, you know?

Yeah. Just making sure they're okay.

But if there is some place to donate — John has already donated. I didn't, I just found out about this, so I'll donate something as well. Just help out the agriculture community.

Yeah, for sure. If you can donate, or like I said, if you're close enough to send hay or fencing material, I'm sure they need it bad.

What else is going on? What else you see on the X?

It's not X.

You gotta change your —

I'm sticking with Twitter. I don't like X.

Oh, John.

That's just a terrible name for an app, in my opinion.

Well, but —

I know it's not the right word.

Don't act like you're 90.

Yeah, I know, I need to adapt. But right now the main thing in the news is this Iran war, and how it's impacting farmers is, fertilizer prices are crazy. Which — I don't know about you, but I did notice, just from our meetings even, that there were less people that bought prepaid fertilizer, especially last fall. I don't know if they maybe got some bought this spring, but I definitely talked to a few people last fall that weren't pre-buying as much as they had in the past.

I guess I didn't ask so much in my meetings if they had been pre-buying. I just assume everybody does. I did talk to somebody that said that 20 to 30% of farmers did not pre-buy. And they're really gonna get hammered now. Which is just gonna do what to the banks? Make the banks pull back even further.

Yeah.

Which — I mean, another plug for infinite banking is, if that's the case, then you just don't pay back your loan like you normally would. There's some flexibility there.

Yeah. Obviously, I mean, nobody knows how long this war is gonna last. It could last five years, it could last five more days. Nobody knows. But supply chain issues don't go away overnight, whether it's fertilizer or gas or fuel. Diesel costs are through the roof right now as well. But it's just — we live in a volatile world anymore, so there's always something.

Yep. And it seems like just agriculture in general is getting hit from every corner, for whatever reason. I don't know if it just feels that way 'cause we're in it, or if it is really — like, first it was tariffs, now it's the war, then it's fires.

Well, and the tariffs stuff isn't really over yet either. Just the other day, beans were limit down because Trump canceled an appointment, basically, with the Chinese.

Yeah. So then we got boxed beef stuff, and then we got screwworm stuff, and we got, is Mexico gonna open the border or not open the border? There's so many variables right now that it feels like it's more than normal.

I feel like since COVID, nothing ever feels normal, you know? We're always going through something.

That's true.

The one constant the last few years has been, the cattle market is pretty steady. And I don't know if there's anything in the future that'll change it.

But we should be planning now. In the cattle market, we have a good time. We should be planning for the bad times.

Oh, definitely.

No different than farming. When you have a good time, you should be planning for the bad times. And the banks are pulling back on farmers, like we've talked about before. So the banks are pulling back on farmers, and that's just a — like, cattle guys, don't get too comfortable. 'Cause they're gonna pull back.

Oh, they all know.

Not all, but most of 'em.

They are like — as soon as it drops a little bit, we get upset, as if we think it's gonna stay high forever. And I'm not saying don't get upset, I'm just saying our expectations of it staying high forever is a little bit unrealistic.

That would be like me saying, I expect and only expect to do more business every year than I've done the year before, and then be mad because I didn't. I have to prepare for the downturns if there's gonna be a downturn, and pay attention to what's happening, to adjust and pivot and do whatever I need to do. And I mean, it's every industry, you kind of have to do that. But if we're not preparing, that's when we get caught with our pants down.

Yeah. I don't want that to happen.

And now all of a sudden we're like, oh, we've got all these payments to make, but cattle prices dropped.

It has been interesting to see what — especially I think cow-calf people are the ones that are really doing well right now, which is pretty rare. Usually they're not getting to enjoy that. But it's been interesting to see what they are doing with their excess cash, because they do have it. Whether you think they do or not, they have it. And a lot of them are being pretty smart with it, the ones we talked to. I mean, they're looking for smart things to do with it.

But we are hitting the minority.

Yes. I'm sure there's guys buying a new pickup and doing crazy stuff they don't need to with it.

Yeah. What I am seeing is the people we talk to are being smart, 'cause they've gone through Ranching for Profit. They know their financials, they've read the book. So they're like, geez, I better be preparing. But that's not the majority. The majority are going to try to avoid taxes.

Correct.

And they're going to be buying things that are maybe not necessary. And then in three or four years from now, they're gonna say, I don't have any operating money. And we're gonna be back to square one.

Well, some of these people that are meeting with us, they have enough cash now that, if they go about it the right way, they wouldn't have to have a bank.

Yes. They would not need to operate without —

Whatever price.

And this is the same thing I saw when I wrote the book. People were saying, oh, it's so good right now with corn prices that I don't need to go to the bank. And three years after, corn prices dropped, now all of a sudden they're back in the bank. And so we might see the same thing in the cattle industry. Three years after prices fall, we're back to the banking system, 'cause we didn't prepare in the right situation.

But if you do prepare — if you spend three years preparing, by the third year you don't really need the bank anymore. In the right scenario, you're good to go. You can handle the market swinging better than your neighbor.

Yep. But you have to prepare.

Yeah.

And I did talk to a veterinarian last week, and she said the screwworm is still there. It's not gone. And so she figures that the Mexico border will stay shut for the foreseeable future.

I'm pretty sure. Yes, it's closed.

So that should continue to help. But that, along with what's happening in Nebraska — that's a big dynamic. There's a lot of cattle in Nebraska.

Even take the fires out of it. Just the area that's in drought right now, it's a massive chunk of the grazed land in our whole country. So I don't know what'll — I am hoping we'd get a big rain.

Good point. Because I've asked my Colorado clients, are you gonna have to sell? I've had some clients from Colorado that I said, based on what I'm looking at here, I don't feel comfortable doing a policy, because we don't know — if you don't get rain, you are not gonna have the cash flow coming in and you've got all these other loans to take care of. I'm looking at their worst case scenario too, and saying, you're gonna have to cull some cows.

Oh yeah.

And we now don't have calves next year.

I don't know that this is true, but I would assume most people have already culled their bad ones at this point, just since they're so high price. So now when you're culling, not your —

Yeah. But every year you kind of have something to cull. With the prices today, you might keep her just one more year.

Yeah.

And so, yeah, it is definitely that side. And it's so funny, 'cause Washington is flooding. I've got potential clients in Washington that are flooding. And then you've got just down the road, they have nothing.

Yeah. It's very, very little rain. And snow.

Yeah. And they're used to snow. Wyoming and Nebraska are used to no rains.

Yeah, but they get a little bit of snow. Usually it's to tide them over for a little while.

It's not like they have massive precipitation. This is so bad.

Yeah. When I met with some people from Wyoming a month ago, they're like, we've literally had the ground turn white once all winter.

Wow.

And they're like, yeah, I don't know what —

And I don't travel in that area, purposely. I don't go to Nebraska or Wyoming — if I'm asked to speak, I'm not heading there in the winter. 'Cause it is usually so bad, and they have so many snow storms that I'm not risking it. You travel for an hour without seeing another human being.

It is pretty desolate.

Yeah. I'm not that comfortable when I'm not from that area. I think I'll just stay put.

It'll be interesting to see what happens, and even what happens on — there's a big meeting going on in DC right now that we know people that are there.

Oh yeah. They're having a big — I don't know if you call it a picnic, but a luncheon or whatever the heck they title it.

With the president.

I don't know that he's there, but it's at the White House. But they're supposed to be announcing some sort of good news for farmers today, but they haven't released it quite yet. John's watching as it's recording.

John's the news guy.

I'll know it in an hour or two.

Yeah. So they want possibly some ethanol changes.

Yeah, that's what the rumor is, but I don't know for sure. Nobody knows yet.

The X rumor.

Correct. Yes. I get all that off of X, or Twitter. Yep.

We'll convert him. We will convert him. Hey, I mean, I don't know that there's a whole lot else going on right now.

Those are the main points I wanted to hit on, I guess.

Yeah. But I think the takeaway here is that we're paying attention to it. So as we're meeting with you guys, we know kind of what's happening. And because we also, when we're helping you plan and strategize, we're also paying attention to what's happening in the market.

I don't wanna sell you a policy and then six months later you're like, well, I sold all my cows due to drought and now I can't pay it. That doesn't do anybody any good.

I inherited some policies years ago — the last time the cattle market was high was what, 2013?

Yeah, 13, 14.

Probably 13, 14. So they had gone to a different agent, and that agent had sold them good policies. The premiums were astronomical. And I said, oh my God, how are you gonna pay those? And they're like, oh, we don't know. It's just too high. And they were young, super young, so they thought, oh God, the cattle prices are gonna stay this way forever. Because it's kind of like young farmers coming in — when prices are great, they think farming's easy, and they haven't experienced the downturn yet.

Yeah.

So they came into the cattle market and everything was great and it was all hunky dory, and it dropped off. And they're like, we don't know how to pay these premiums. I'm like, I'd have never sold you premiums that high.

Yeah, that's way too high.

Like, I would've never done that, because we have to think about what's gonna happen when prices go back to where they were. And so, again, not using the right agent that understands — and we seem to talk about this a lot. It's because we see it, right? We see the mistakes that people are making when they don't go to the right agent that understands the industry, that understands the structure of the policy, that understands how to use the policy.

Yeah. That's why, like, when we do a meeting, the flexibility of the premium is a fair amount of what we talk about in the meeting, because that's a big part of it.

Yeah. And we probably should stop calling them meetings and start calling them strategy sessions. 'Cause in all reality —

Yeah, that's what it is.

That is what we're doing. I mean, we're going over everything that you guys do, so that we can provide you with a strategy of how to use it, and then show you how it's structured best for what you guys are using it for. So it definitely is more of a strategy meeting than just a meeting of us selling you something. Because we're talking about you for an hour and a half plus. We're not teaching you infinite banking in that meeting, in the essence of what's been in the book. You did that homework already.

We're showing how it can help you.

Yeah. So it's so important that we know what's going on in the world and how everything is affecting it, so that we can be helping even our existing clients when they call. We need to be able to answer those questions, knowing what's happening in the industry — and what industry they're in, in particular. Like, I have a client that's a manufacturer of bale feeders. Well, right now this is a great time for him, right? Because farmers, ranchers have a lot of money. They need to spend money, they're gonna buy some new feeders. That's great. That all ties together. We need to know all that stuff.

Yep, it does.

Yeah. All right. Well, that's all we got this episode. If you guys have comments, questions, concerns — you know the routine. maryjo@withoutthebank.com, john@withoutthebank.com. Grab your books, set up your strategy session with us, and then we'll go over everything for you. So you have a fantastic rest of your day.

Thanks for listening to the Farming Without the Bank podcast. We hope today's episode has inspired you to take control of your finances in new ways. Don't forget to check out our website, farmingwithoutthebank.com, and engage with us on our Facebook page, Farming Without the Bank. Join us next week as we smash more financial myths and empower you to accomplish your financial goals.