Farm Progress

The ‘Cattle 529 Plan’The ‘Cattle 529 Plan’

Generating a high income from sell/buy cattle marketing depends on where you start.

Doug Ferguson

January 17, 2025

6 Min Read
The ‘Cattle 529 Plan’
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Last week my daughter passed a milestone in life when she bought her first car.  Long time readers will recall I started her herd when she was born and wrote a blog about it explaining what I was planning to accomplish, and I titled it “Cattle 529 Plan”. 

The purpose of this is to make money for her future, whatever that may be, and to teach her valuable life lessons. Part of the life lessons last week involved pulling her out of school and walking her through the entire sales process. Let’s be honest here, a government institution has no interest in preparing her for these moments. Our kids will learn more in a couple hours at the sale barn or buying a car than they will all week in school. Never let schooling get in the way of education.

Looking back

As we were going through the sales process with her, I heard many voices from when I was about her age. The voices of my past educators who told me there wasn’t any money to be made raising cattle. The mental programming they tried to impregnate my mind with that I needed to go to college so I could land the J O B with benefits. The cattle would be something I do on evenings and weekends. The lines I needed to be a diversified operation of crops and cattle because the years the crops didn’t make any money the cattle probably would and vice versa.

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This was the point I got labeled as a teenager with a bad attitude because I knew it all-already. This happened because I just wouldn’t listen to them. I knew one thing and one thing only, and that was the cattle business was this huge multibillion dollar a year industry and they are telling me no one can make money. The implied hint there was everyone raising cattle was in it for giggles. Come on, we know that isn’t true, so I rejected the idea.

I did go to college for a short time because I wasn’t aware of any other options. While I was there it was clear that we were being trained to be employees. That was not the long-range goal for me, and I just couldn’t accept it. It became clear it was time to drop out and move towards my goal, even though I had no clue what that meant.

The turning point

It wasn’t until I attended Ann Barnhardt’s sell/buy marketing school that I finally discovered the answer of how to earn money in the cattle business. I held on to the idea that there had to be a way to earn money for over a decade before I finally stumbled onto it.

While I couldn’t explain as a young person why my instructors were full of garbage back then, I can today. Ann taught me what they could not and would not teach in college and that is now what I do in my schools.

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These academics program us with a limited mindset. They program us to go after only what is “reasonable” and necessary. This mindset is a trap that will fail us. It will not provide us with what we truly want. To some of us, average is highly unattractive.

The guideline was established

Shortly after my wife and I got married we had a conversation with an older rancher, and he asked this question “What are you going to teach your kids?”  That has stuck with me and became a guideline for raising our daughter. She was going to be taught the right things, and I was going to give her the proper mental programming to succeed in life.

The battle for her mind started long before I expected it to. In kindergarten she came home one day and informed me her teacher makes more money than I do. That teacher wasn’t even close to earning my income and when I asked my daughter why she said that she told me her teacher went to college, so she must make more than I do. I had a talk with my daughter about this and now today when a teacher says something silly like that, she just ignores them. I didn’t accept anyone else’s self-imposed limitations as my own and I will not allow my daughter to do it either

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When I started teaching the mindset material in my schools other educators belittled, attacked, and mocked me. In 2024 everyone in the education space became a mindset expert and coach. What they fail to see in their material is the difference between the growth mindset and limited mindset. They are still programmed with the limited mindset, and I know this because of their actions and what is lacking in their material. They may preach about paradigm challenging material, and they are okay with it until their paradigms are challenged. I know this because their actions and material still defend and promote the status quo. Status quo is Latin meaning “the mess we are in.”

Paradigm shift

Last week, going through the sales process with my daughter, I had a paradigm shift. I realized it is not good enough to challenge myself to have the growth mindset and be open to good ideas. I need to have a limitless mindset.

We talk to ourselves every day. Since that paradigm shift, I have been asking myself different questions. As a result of this, things that I thought were next to impossible 10 days ago are now looking much easier to achieve.

Where are you starting from?

I had a conversation last week with a person who attended my marketing school two years ago. He informed me that since he attended my school his income has gone up 175 percent!

My daughter’s herd was started from scratch when I loaned her $3,400 to buy 5 heifers. I turned those heifers and kept the profits until I recovered my $3,400. After that I reinvested the profits into virgin buying cattle for her and expanding her numbers. It took 13 years of this before she had her own load lot.  The guy that increased his income 175 percent already had things in place, all my school did for him was show him how to generate positive cash flow each and every single time he marketed cattle. People ask me how fast they can do this.  There’s your answer, where are you starting from?

Cash flow

His success and that of myself and my daughter is all built on cash flow. Success is formulaic. While the limited mindset instructors are stuck in the status quo of protecting outdated mental models and cutting costs to survive I am more focused on increasing income. Those of us who do this for a living experience our costs going up all the time, why not increase income more than the rise in expenses? Like I said, it’s formulaic so put that material the 4th grade math teacher taught to work and move forward with a limitless mindset.

Weight gain business

This week the markets continued to signal this is a weight gain business. However, operators must implement the cattle square correctly to examine relationships. Example, fats continue to climb higher in price, this does not mean they are profitable. If we compare fats to heavy feeders that is a good replacement buy that generates positive cash flow and profit. If we compare fats to lighter weight feeders the math shows it would be buying a loss. If we compare other feeder to feeder relationships the lightweight feeders are a profitable buy back. An animal can be both under and over-valued at the same time, it just depends on what we compare it to.

This week feeder bulls were up to 60 back, unweaned calves were up to 20 back, and fleshy cattle were 11 back.

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