Commodities and diversity provide security for Nebraska family farm
Eyes glued to the computer screen, with a 15-year file of February market moves and a phone that rings every five minutes, Harry Knobbe of West Point, Neb., is like a kid in a candy shop. "It’s exciting," he says. "You have to be prepared to make quick decisions, but control your emotions."
Knobbe, who started farming in 1960 with a vision of 160 acres and a few head of cattle, says the same ability to make fast decisions while keeping a level head and emotions in check can be applied to farming, and he looks for it in his employees, regardless of their role.
"I’ve always got my eye out for opportunities. Not everyone can win. You have to try to outmaneuver others."
Today, Knobbe farms and owns Harry Knobbe Feedyards, Livestock Sales & Commodities, Inc., in Cuming County, which is 24 miles by 24 miles with a population of 9,500 people and 330,000 cattle on feed any given day. With customers in 25 states from Virginia to Montana to Utah, Knobbe has earned the respect of farmers and ranchers across the country, marketing 720,000 cattle a year.
Though agriculture has become increasingly volatile during the last decade and risk management has never been more critical to farm and ranch sustainability, Knobbe says farmers are lucky. "What other industry has the ability to lock in prices?" he asks. "The automotive business is completely dependent on consumer spending, which fluctuates. The construction industry is dependent on the economy, with little to no ability to control its future from year to year."
Knobbe is diversified within and outside of the cattle industry and says he is in a comfort zone. "I’ve got commodity markets to deal with my risk and can hedge, set a floor and forward-sell." Admitting that it took him about 20 years to figure the markets out, Knobbe relies heavily on history and charts, as well as his employees. Two walls of a makeshift classroom in the basement of his office are covered with cattle market charts dating back to 1967 and have been marked every week since.
Student Turned Teacher. Knobbe, a student of the commodity markets, takes advantage of professional development opportunities and networking, and gets involved in organizations and boards at the local, state and national levels.
"I’ve always got my eyes open, looking for opportunities," says Knobbe, who partnered with four others in West Point, Neb., to open a hotel and provide visitors with an alternative to Super 8. "Not everyone can win. You have to try to outmaneuver others."
He explains that the market has made a lot of $18 moves during the past 30 years. In 2011, fat cattle went from $126 to $108. In 2012, they went from $129 to $111. This is good, Knobbe says. "You can’t make money on a sideways market," he notes, acknowledging that some disagree with his philosophy.
Knobbe continues to learn, but now his focus is on helping others excel. He opens the doors of his business to local high schools, allowing them to come in and learn about commodities and marketing, while exposing them to different agricultural professions.
Knobbe advised a class of students to be curious and ask questions. "Get involved in extracurricular activities, work in the field and do some research on the job or career you’re interested in," he said. "I will hire someone who has had internships and experience compared to someone who hasn’t, even if they both have the same degree and interview well. It tells me you take initiative."
Marketing more than 720,000 cattle a year, Harry Knobbe helps other farmers make profitable moves.
Knobbe also uses his charts and classroom to teach customers market fundamentals. "It’s a perfect tool to show that the old highs are today’s lows and how outside events affect the markets," he says. "The market is always questioning what price is too high and what price is too low." His rule of thumb: when the market gains a pencil length above or below the red line, get ready for earns and churns.
"I have farmers who call me and ask if we are close to being a pencil length," Knobbe says.
Lessons aren’t just related to the markets or the cattle industry. Knobbe has given presentations about employee management and properly on-boarding new hires.
Knobbe knows that his business is only as strong as his employees and puts a great deal of thought and energy into helping them excel. "Let people make decisions and give them responsibility; they’ll be better employees," he says, noting that it seems simple. "Too many people don’t do this and they just give jobs or micromanage, which does not engage or give a sense of ownership to the employee. For example, I have a phone issue. If I hadn’t given an employee the responsibility to order and set up the phones years ago, this would be my problem. As it is, I don’t have to worry about it; I know it will be handled."
Knobbe says to think of it like a draft horse. "A draft horse likes to work; it wants to be useful," he notes. "A person on the street might see that horse sweating and be sympathetic, but that horse wants to work. It also expects a bucket of oats at the end of the day."
Don’t forget to pay people and reward them for the value they bring to your business, he emphasizes. It’s important to get to know your employees and what motivates them. Knobbe pays his employees an extra $100 a month just for being on time every day. "Guess what?" he asks. "No one is late to work, which means we get more done."
Knobbe believes that he gets more today out of giving. "We make a living by what we make, but we make a life by what we give."
To many in the cattle industry, Harry Knobbe, farmer and owner of the Nebraska-based Harry Knobbe Feedyards, Livestock Sales & Commodities, Inc., is a walking book with a wealth of knowledge about the cattle industry, markets and business practices. Here are a few snippets:
- Get involved. You only get out what you put in. "You have to show up at church on Sunday for your business."
- Put your time and effort where there’s money to be made. "If it’s not going to make you money, don’t do it. I don’t read my e-mail—only what needs attention." Prioritize.
- Grow slowly and live modestly. "If you can anticipate the next move and make a little money each time, you’ll be ahead at the end."
- Write down and know the names of your contacts’ spouses and family members—whether it’s a customer, landlord or potential client. "Get to know those who influence and can make a difference in the future."
- Take time to get to know your employees and what motivates them. "You can get really creative with what you offer—it doesn’t have to be monetary."
- Before making a big purchase or big sell, write down the advantages and disadvantages of making that move. "It’s much easier to make a decision if you have the pros and cons side-by-side."