Yellowstone is Global Macro Trading – Drew Knowles
Summary
Regenerative Agriculture: Extensive discussion of pasture-raised, grass-fed and grass-finished operations, soil health, and rotational practices as both philosophy and business model.
Grass-fed Beef: Deep dive on nutritional differences, cooking techniques, supply logistics, and restaurant partnerships for premium beef offerings.
Carbon Markets: Detailed look at soil carbon sequestration monetization, voluntary vs. EU compliance markets, and potential for sequestration-focused standards.
Energy & Refining: Diesel vs gasoline pricing, exploding crack spreads, and constrained U.S. refining capacity highlighted as key drivers of higher fuel costs.
Agricultural Inputs: Hay price spikes from drought-driven supply shifts, trucking costs, diesel and propane dynamics, and their pass-through to end consumers.
Food Inflation: Producer pricing power, elevated input costs becoming a new baseline, and implications for restaurants and consumers.
Restaurants: Operational realities of sourcing specific cuts, menu planning, supply reliability, and the trade-offs vs. broadline distributors.
Companies Mentioned: No specific public tickers were pitched; General Mills was referenced in passing amid broader industry and supply chain commentary.
Transcript
[Music] hello and welcome this is the mutiny investing podcast this podcast features long-form conversations on topics relating to investing markets risk volatility in complex systems so a couple of weeks ago you told me an anecdote and i i love a good anecdote that comes out of left field that i would never have thought about before but you told me that hay prices like hay is about to be a problem like we're talking about the bullwhip the facts of supply chains and everything but then you start telling me as a rancher you're dealing with hey now because the drought in california hay may become a future problem that i should be keeping my eye on so tell me like kind of what's going on with the the hay market nationally that's a that's a great great thing to start off with um all of our animals eat hay and so we uh we buy a lot of it um so our two branches are located in colorado and texas so we have two different you know hay markets between the two locations and as with any future market or any agricultural market you'll have a national kind of aggregated number and then you'll have more localized and regional uh markets and so as it pertains to various droughts going on at different points in time across the country california is kind of a year ahead of where texas is right now in terms of going through a drought and what do i mean by that well the effects of what are happening in texas right now or what was seen say maybe last year in california and so because california is is ahead of the curve compared to you know say where we are um you know east of there it means that uh producers are gonna follow the money and so right now if there's no pay in california and the demand is there uh you know limited supply then prices are gonna go up classic demand curve so producers say in utah that might be able to go either direction all of a sudden they're looking towards california because if they can get say you know 500 a ton or something like that then they're gonna go get that there and all of a sudden you know a couple years ago when i could you know get it for less than 200 ton uh or something like that now i'm looking at over 200 a ton you know prices are going to be you know moving up in some areas they might already even be 300 a ton and so what we are seeing right now through our stock contractor rodeo stock contractor friends is they're getting you know some of the word on the street uh because they travel around to arizona and utah to all of these different rodeos bringing stocking the rodeo it could be a you know bronco or it could be a crazy cow or what have you that is coming in for the weekend of the prc rodeo and they're hearing from their hay broker friends that you know the the utah or you know saving arizona hey is heading west california because prices are so high so hey that maybe we would have gotten here in colorado is going out there so where are we going to get it well texas is in a massive drought down there right now and uh people are de-stocking uh their cattle like crazy even horses because all of a sudden there's no grass for them to eat and that means that there's no hay that's being planted or wheat and so on and so forth and the knock-on effects really you know are prevalent and i think that we are going to see higher commodity prices higher input prices uh as we march through this thing and it's going to take some time for it to all happen of course because the ag industry is a slow moving industry you know but ultimately i think we are uh already feeling the pinch here we just had two truckloads of hay get delivered and uh and it was expensive but ultimately we need really high quality alfalfa for our broodmares that uh might have a uh full on their side and maybe are pregnant again right now and so uh you know for those horses we have to have really good feed and so we have a choice we can either um you know pay up for it uh or we could de-stock a horse but if we have a really uh high caliber performance horse out in the pasture that has a fall on our side that full future value is well worth some additional input costs and ultimately that does meander its way into something like the horse market so this is going to be my favorite kind of podcast because i get to uh ask a series of dumb questions it's only going to be dumb questions from here on out so uh part of it what i was thinking about when you're saying that so would we not really see the full effects like you're saying during the summer time i assume right they're out grazing but like if you don't have if you had drought in texas or colorado there's not going to be high quality grass so you're trying to increase the quality of grass but i would think you're not going to really see the hay prices move through the system more towards until the winter but it so is it more of like the seasonality like we're really you're seeing it now but you're going to say we're going to start seeing maybe news headlines like this winter with hay prices and then part of it i was you what you're just saying with high performance horses does the sillage content matter like you're saying with alfalfa content and everything so it's very specific states or regions that you want to be getting hay from i know that's like a two-parter and totally divergent two parts but i'm just curious your thoughts yeah so we were already buying hay for the winter we already had some previously bought it's in a hayshed we just had the two truckloads that just arrived those are for this winter as well so in colorado uh in southern colorado where we are we we do get over 100 inches of snow every winter and and so you know when there's a foot of snow on the ground there's nothing for them to eat and what would be left at that point would not be very high quality it's more filler it's not really you know the same nutritional value that you would have during say this time of year when we're very green and lush and whatnot and so if we're talking about protein contents uh you know alfalfa might have say up to 20 protein in it uh oh hey might be say eight or nine percent things like that um and so different types of hay have different protein contents and so when you have a high octane performance horse they are burning a lot of calories they are working very hard they need very high quality uh feed um you know cows also need high quality feed but uh they eat all day every day and so you know they're they're you know kind of different seasons to their life as well and if you're talking about you know a grass-fed and grass-finished cow uh that you want to you know have say a good finishing ground like we have here in colorado uh you know that high protein hay is going to go a long way if you have to you know grass finish a cow in the middle of the winter you better have some really good hay in the barn so you can make sure that that protein on somebody's plate is going to be what they expect the other question you asked about the location of hay and where it comes from and things like that i know a ranch down in texas that trucks hay all the way in from wyoming because they think that hay is that good now you would think in a world of six dollar diesel that maybe this year they don't do that i i don't know um i haven't talked to them about that yet but people will truck hay in that they think can make a difference in their animal life animals lives uh kentucky is famous for bringing in hay from uh say even um you know out here in gunnison county uh so it's it's not irregular for people to truck hay all over the place uh especially if they think it'll give their animal an edge but you know at the same time if you run out of feed and your back is against a wall and you got to go to your local feed shop and pay through the nose for a couple of bales until you can get something delivered people will do that and it'll probably be lower quality and cost a lot more uh but their animal will stay fed maybe not as nutritionally uh dense you know as the producer may like but you don't always have a have a choice in branching you brought up uh another topic so there's so many actually brought up i can't wait to ask you about one was you know as you know i live in a a pseudo farming community here with growing grapes but what's great is where i go get my um my coffee every morning is basically attached to a gas station that's primarily a diesel station where all the the the farmers that are are filling up in the morning and i was looking at the dec at the diesel pump yesterday and the price was 856 dollars for the guy that filled up whatever is like 125 gallons or whatever and so like you're talking about whether it's hay input costs or diesel input costs but the other thing um i didn't have time to look up i'm curious if you know the difference i did notice on the pump though the other day it's like you have off-road diesel and on-road diesel do you know like the differences are i don't mean to put you on the spot with that one yeah green diesel would be your on-road diesel and and that is what truckers have to use on the on the highway um there are various laws that exist uh and and so you have to have that high quality diesel on the highway for emissions reasons and whatnot uh red diesel would be your off-road diesel and that would be what the tractor is running on out in the field it costs less it costs less it doesn't burn as clean and things like that and so there are two types of diesel um somebody asked me recently um an astute market participant asked me well why you know why is gasoline uh you know this price and why is diesel that price we started talking about a little bit and i said you know what if i really knew the real answer i'd probably just get upset uh you know as to you know why i'm paying so much more for diesel as i am uh uh you know uh regular gasoline um unleaded but uh there are some things where ignorance is blessed that one might be one of it i'm sure one of your listeners can tell us exactly what's going on there and i would welcome it although uh i i should probably not do it on screen so you don't see my head explode exactly or it's like uh then we have to start getting into crack spreads and the lack of uh capex and refining uh manufacturing facilities within the us and and then we start getting into that like a lot of people don't realize everybody's looking at crude oil prices but the crack spreads have exploded between crude to refined products from anywhere from like fifteen to twenty dollars a barrel up to like 70 to 80. so that's why the the prices at the pump we've seen in the last year are pretty dramatically different from crude oil because you just had this perfect storm i think on the catback side of refining and especially the the lacquer refining capacity we kind of kind of have in this country but part of it what are you seeing then from the diesel perspective are you still concerned or do you think we're kind of past the hump in diesel and i know this is all speculative from your perspective but like or do you expect prices to kind of go back up and do you help mitigate those prices by doing grass-fed grass-finished cattle and trying to avoid using diesel as much as possible yeah in our business we we're in the the grass-fed grass finish business and so i'm not buying grains like corn for example uh to you know finish finish these uh these cows uh you know when we get to that point with some of them i'd say that you know if you think about um say a feed yard that has a reliance on uh silage or corn or what have you uh what a lot of people don't necessarily understand is that the uh the grain producers use a lot of propane to dry their product before it ends up leaving and you know one of the reasons for the propane is because most of these people are out in the middle of nowhere and they don't have the electricity and uh i guess it's probably more efficient to use the propane for the dryers um and um i forget who it was it might have been doomberg yeah it was doomberg put out a note a month or two ago about the national propane shortage and uh and we messaged about it very briefly and basically the takeaway was you know store as much as you can uh and so to your question about you know fuel prices and everything else i mean we've got storage tanks for diesel and whatnot and so every time we need to fill one of those tanks we're making a call on the directionality of one of these inputs and so let's say it's a 2 000 gallon tank or something like that that can be a pretty expensive uh you know uh pretty expensive moment and it makes sense to study these markets to try to make a call on you know what if if i think there's a near-term transition in the price action that's about to happen maybe i want to wait or maybe i want to jump in right now you know as for say the price specifically in diesel right you know i don't know obviously uh the price per barrel of oil has come down uh more significantly than the price at the pump as you articulated a minute ago uh we've just kind of gotten used to operating in a world with higher input costs and we are charging more on the back end one of our restaurant partners that we sell a lot of ground beef to for example they've got six restaurants and i called them up and i said hey i need to raise your price to x and they didn't even blink an eye you know it was not a problem not an issue they knew what was going on they see it across the board they're increasing their prices and lockstep uh with their producers and so the the pass-through of some of these costs are definitely showing up to the consumer i would say um and it'll be interesting this earnings season to see what's going on with a number of the big companies out there you know that are in this space like general mills and whatnot but i would say that uh you know for somebody that's kind of gotten used to elevated prices i almost think about it a little bit differently as opposed to hey it might go up and come back down it's it's almost kind of like we took a stair step up and we're operating on this level now and it's a little bit easier to operate the business and just saying these are my input costs uh if i have a hope and a dream that they're going to go back down so my margins expand you know if that doesn't happen then you know maybe i go out of business so i better get used to operating in a in a higher uh elevated market and i'd say that to have pricing power and we do have some pricing power as a producer if we can use that pricing power while these things are happening to us then we can maintain our profitability and we can continue uh you know doing what we do but if we don't have that pricing power then we can get into trouble pretty quickly yeah i think about um we're talking about grass fed for example like uh i spent maybe maybe a half decade ago i went around to all my farms in northern california where i sourced all of my produce my dairy my meat from and just to make sure they were doing everything they said they were doing right and the people don't realize the amount of time that takes and part of it was because you know grass-fed became you know a moniker right but then what i had to find out is like they were grass fed but they weren't grass finished so now we have to like think about two terms and correct me i'm wrong my understanding was like yeah they're they're raised out in grass-fed environments but then the last 60 to 90 days they're moved and depends closer to like the abattoir to be harvested and then they're fed on corn to fatten them up and increase the weight as they go into finishing so in my curious when you say grass fed and grass finished um are you taking them off the roaming range when you go to grass finish and like what time are you are they then spending is it done on you know hay and sillage or like what's the what's the transition from grass fed to grass finished that's a great question i'd i'd say that for a consumer the way that i i like to think about it you want to focus on pasture raised grass-fed and grass-finished and so pasture-raised means that the animal has been living out on the grass in the pasture its whole life fed means that that's what it's been eating that's what's been going on a grass finish means that uh it's not receiving something other than grass prior to harvest and so if uh you know if an animal gets into you know some type of confined location and gets put on corn for the final 30 days the flavor profile will be very different than it will a grass-fed and grass-finished cow a lot of consumers like the sweetness that say a corn or silvic uh you know finish might bring to the table and some people prefer that to grass-fed crust finished beef and that's just a um at least from a flavor perspective that's just somebody's preference um so you know for for us how we like to uh operate is they're out on pasture their whole lives and then uh typically our the cattle that's in our beef program those would be coal cows from our cow calf program so if a mother cow has a calf and does not breed back then she would be a coal cow so that that mother cow is gonna turn into grass-fed crust finished beef so the the final bit of of her life to make sure that uh you know the flavor profile is strong and that the quality of the meat and everything else is there we want to make sure that they're finished on high quality forage and so we're going to stick them on some of the best finishing ground that we have but we will also give them free choice to have other other types of hay available depending on what time of year what time of year it is but you know for us we will not put them in a con confined location uh to finish them um you know different operators do things differently for different reasons and depending on what the consumer wants an operator may make one choice versus another do you have anything locally or do you supplement with anything random as like a small percentage of their diet like lupins or egg like trying to like just have a different flavor profile at the very end or is there is there anything unique there or am i just hoping that there's some secret sauce no no there we talk about this stuff all the time so all of these uh craft brewers in colorado have all of the uh spent uh barley and everything else and and so one of our restaurant partners up north uh who is a land to market uh restaurant land market is the savory institute's uh program for producers and buyers that are looking for regenerative uh regenerative uh goods and uh whether it's um you know ugg boots or timberland looking for regenerative leather or it's uh say a restaurant um you know like uh karita that that wants regenerative beef uh and everything in between um you know the that restaurant group they're very interested because they know a lot of the craft brewery guys and they're like hey you know this is just they have to pay for somebody to take this away they would give it to you for free if you would come pick it up let's try to figure out how to do this and with diesel being expensive and uh you know with how quickly uh those those spent grains will spoil and things like that trying to work through some of those roadblocks about how to make it work but i think it's pretty intriguing to use other uh products to alter the flavor profile instead of the final 30 or 60 days we do uh also have oat hay for a diverse diet we have a very you know biologically diverse uh piece of ground here as well as in texas and so uh when it snows in texas for example the sagebrush is also there as an option to forage and somebody say i can't believe they would eat sagebrush uh you know but when there's nothing else around and that's in the ground that's going to happen you know the smell of sage sagebrush is a little bit different but you know that's inherently going to have an impact on that animal i don't know how long that will you know stick around in terms of a flavor profile and how much it takes exactly and so those are some of the things that we're trying to work through right now with with some of our restaurant partners because we we think that we do have the ability to stay within our ethos of land as land managers and to create something that might be a better stake on the plate for the consumer yeah i'm sure you've probably seen this too is like in spain you have a guy that grows um some of the most ethically raised uh foie gras in the world right where he's he's actually not even gorging i love my lovelies yeah he's creating like the uh the disneyland of foraging for his geese and one of those was the yellow lupine plants that created that the yellowish hue or tint to the livers that people came to expect from foie gras and he just figured it out from having them you know forage lupines in when they're out in um in the pastures so to another two-part question for you what do you say like because you brought it up with the the grass finished taste difference between corn finished and your wife's a as a chef so like what do you usually tell people that usually have you know hesitation about the different flavor profiles of actually grass finish i'm just curious what you guys tell them and part of that is that can you tell the difference between uh male and female cattle when when you're actually tasting your your your end stake or rib eye et cetera so i think the in terms of the description of grass fat versus conventional beef one of the things that i really focus on uh is maybe less so on on flavor profile and comes down to cooking technique and so um abby will be one of the first people to tell you you have to babysit grass-finished beef when you're cooking it you can't put it on the grill and walk away and forget about it conventional beef is very forgiving in fact the executive chef uh at the the restaurant down in restaurant group down in new mexico he and i were talking about this the other day because they always have you know turnover and line cooks and things like that and hey here's how you cook this burger to the best of your ability make sure you have your timer on and you know follow these techniques and so i i generally think that you can have a phenomenal grass-fed grass finish flavor profile that people won't know that's what they're eating if it's cooked right if it's overcooked and it's dry and whatever else uh you know say there's a difference in the fat content or you know the the marbling or what have you then cooking technique is is really where you need to go so i generally talk more in cooking technique than i do flavor profiles i've had people in the past say things like well it you know kind of tastes gameier and i said well you know what do you mean by that well it's um you know maybe a little bit tougher or something like that and again i think that you know oftentimes comes down to cooking technique than it does actually what's what's there and so you can you know overcook a conventional beef uh you know conventional steak just as uh just as well as doing it on a grass finish one so you know what kind of marinade do you have what uh you know are you doing a reverse sear you know what are you doing to actually make that be what it should and generally speaking we kind of default to what is the simplest thing and so if i've got two kids and they're really hungry i need things to happen fast and so just like anybody else you know i'll get something off of the grill and onto their plate really fast and whatever else and i'm going to err on the side of undercooking especially with grass-fed and grass-finished beef as opposed to anything else i think the the other thing too that uh just in talking about changes in the ways that animals are being raised over the years like go back to world war ii um you know lamb uh you know mutton things like that was something that a lot of people had didn't really have a good taste to it and whatever wasn't kind of like a generation almost turned off to lamb fast forward to today there are a number of incredibly good land producers like capra and you know aaron cook uh you know people that are phenomenal things shout out to aaron cook uh so you know what capra is doing they're doing regenerative ag as well and so they have phenomenal tasting land uh you know and so kind of a whole bunch of people who are you know say boomers children uh you know whether they're you know millennials or you know whatever they are they're all of a sudden waking up to this this whole you know uh you know new flavor profile out there something that they they actually really enjoy and so i think um you know to have a difference in the point of view about you know raising the the animals uh you know i think it's creating opportunity for people to find new flavors that they really like yeah me i'm i'm not as maybe open when people say gaminess i'm like you mean it tastes like a real animal and maybe that's not what you're accustomed to but like it's and stripping out the nuance from the cooking side um obviously every piece of meat is different in nuance but in general i always think about with grass finished you either want to go real low and slow or you want to cook a lot faster than you would like corn finished beef like those are those are kind of quick rules of thumb wouldn't you would you agree to that i i totally agree with that yeah and if you don't have a sous-vide and if you want to have a really good uh steak uh you know get us get a sous-vide and learn how to use that and then learn how to you know finish it on on the grill to get that sear and it will be amazing no that's a that's an excellent piece of advice if anybody wants to step their game up like sous vide is actually and what's great about sous vide everybody starts getting intimidated just because of maybe the french phrasing but like it actually is like almost idiot proof it's like the best way of cooking things and you don't actually need a lot of technique because you just put the sous vide on set it forget it and then just finish it when you're done and so it's great but one thing you pointed out that i was remiss that i missed earlier is it's really fascinating to me when i looked at the studies of grass finish versus grain finished it's like you're saying not only you're changing the fat content but you're changing the the fat profile it's really affecting your omega-3 to omega-6 ratios and what's amazing to me is like looking at those studies is like how just a certain amount of days can dramatically affect an omega-6 to omega-3 ratio so once again it's about what are you putting into your body and you know what are the cooking techniques and flavor profiles that provides but more importantly what's the omega-3 to omega-6 ratio that you're putting in your body in just a few days on corn can dramatically affect that more than you ever realize it sure can yeah no and that's a great point as well and and i think that you know a lot of people um make the choice uh based on taste some are making it based on uh their health and what their dietary needs are there are a lot of different ways that people find their way to different types of uh different types of beef and i think that however somebody gets theirs it's okay right you know just in my opinion just the place where you want to be these animals are genetically uh engineered to live off of grass and yes you can alter flavor profiles and finish faster and all these other things doing it other way but i believe that these animals were designed to live on grass and the ruminants with four chambers stomach and it's just what it is uh so you know philosophically that's that's where we lie and what we really uh believe in and you know if i go to a restaurant uh and i order a burger um you know i can generally tell pretty quickly that it's a conventional beef versus a grass-fed one just because i i eat it all the time um and i think you asked another question a little while ago about can you tell the difference between a uh male and a female so steer and heifer uh gosh maybe abby could she has she's cultivated such a more discerning palette than myself so maybe she could do that but i will say that um we've tried to discern whether or not there's a difference in taste of a uh a beef that went through an avatar versus a beef that was a field harvest on the ranch and it's almost unfair because i know what's what uh you know but i'd say if i if i had my druthers you know the field harvest would be the way to go um you know per usda while we can't uh you know sell a field harvested beef uh to a restaurant partner or whatever else but um you know that's a whole another podcast um yeah and we're gonna get deep on that one yeah because it's like i try to look at studies too we're worried about like adrenaline and cortisol and other things you know whether it's going through an abattoir or it's field harvested and you know from my study i'm curious you have a pushback on this is like it seems to like dissipate so quickly that it doesn't matter and like the the finished product on on the on the meat side but then what you're talking about that people don't realize is like if you're going to sell meat publicly you have to go through a usda approved abattoir or harvesting facility and there's only like five of them like regionally in the country and actually a lot of them shut down during covet which is even a bigger problem but like you actually cannot necessarily like harvest uh the cattle in a more humane way than you want to because of the regulations on the usda side that that's correct and and that's definitely something that i'd say um politicians are waking up to and something that is getting more attention you know for excuse me for the big packing houses it's a factory right and they have what they do and and there's a bunch of people and they know one cut and then they move on and and that's you know kind of what it is uh whereas a small processor that might only do 10 a day or something like that there's just a couple of people that are out there cutting breaking down the entire animal and so uh you know to have that person i think that person has a lot of knowledge when it comes to butchery and it's it's kind of a lost art form uh you know with uh the production line mentality that that we have here and speed and efficiency so you know but at the same time uh you know can be hard to work with the the smaller uh processors because um you know you might have a restaurant partner that needs a very specific cut down a very certain way and they may not have that knowledge and so actually one of our restaurant partners is uh educating themselves from the butchery side of things so that they know the language to be able to bridge that gap in between restaurant language and avatar language so that they can actually get what they want uh where you know a certain cut is not over trimmed or whatever the case may be and so i think there is an opportunity to work locally with uh with the smaller processors but ultimately you know for the the scale that a restaurant needs and the on-demand needs of a restaurant it can be pretty hard for them to work with a producer like us if they can call their food purveyor up at midnight and the next day they got 25 tomahawk ribeyes that show up that's as convenient as it gets for them whereas i'm saying to them hey a year from now or six months from now or whatever it is you know here's uh let's do some menu planning and let's figure this out so that you can you know have exactly what you want it can be the best plate of food that your customer has that differentiates you from your competitor because if there's i don't know you know a couple dozen steakhouses all in the same city say denver for example or amarillo or something well what what makes you different compared to everybody else and so that's where a lot of people are trying to get an edge by working directly with with somebody like us but then all of a sudden we're playing a bunch of different roles uh which would which have all been displaced by food purveyors and other things so logistically it could be pretty complex yeah i think part of it's like you're trying to educate the restaurant on tour but also at the same time you almost have to educate the end customer because thankfully like the nose to tail movement has caught on so people are starting to understand that better because like you're saying it's like if you sell tomahawks and those are the sexy steaks well that's only a small part of a cow luckily i mean we know how to harvest all the other pieces and parts and every every little you know piece of the animal but like it's it's getting people to think outside of maybe just a a tomahawk or a t-bone or rib eye and try to really you know create better flavor profiles and education from other parts of the animal that can be just as good depending on on what dish you're trying to create um but just put a finer point on i'm curious if you think we're you know we're talking about field harvesting versus an avatar processor do you think we're anthropomorphizing like just having the lineup of animals in a shoot and we're worried about what that does to their their chemical balance before they get harvested or do you think you know is there any data behind that or do you think that's just our our general feeling i've read various opinions over the years about the spikes in cortisol that um an adrenaline that a cow may receive in a stressful situation and does that actually affect flavor profile or not i don't know if there's enough data on that i don't know if there's a preeminent authority on flavor profile that that is published on that front i'd be really interested to read it or to even contribute to the study in in some way um but you know ultimately i think the idea of a happy cow that's out in the field where the lights just turn out is very different than uh loading the animal onto the trailer driving it 100 miles or something like that some people have to drive them 100 miles um and and then it going into a strange place and and then you know what happens happens two very different experiences and like you said uh maybe we're anthropomorphizing things but ultimately i think as consumers um you know ultimately there's a lot that we can do as as consumers you know if i'm the consumer there's a lot i can do to ensure that that cow lived a happy life and i can feel good about that one of the things that i generally say about this business uh to people that aren't involved in this business is our cows only have one bad day you know they've got one bad day and that's it every other day they're taken care of they're fat they have water they have sunshine they can go eat whatever they want you know if if um you know it's it's early season and cheatgrass is coming up you know they can eat on that and if it's late season and the sedge isn't bitter anymore um you know the ph has changed in that grass they can go eat that uh and all of a sudden the um the leaves on on the gimbal oak are no longer toxic and so they can eat that safely at this time of year and you know those types of things but at the same time you know if if it snows real heavy in the spring the only thing that's green uh are those oaks they're gonna go towards them and they can get poisoned to die so you know there's there's tough stuff all around with the free forage movement in raising animals but at the end of the day i think um you know we all would like to have a uh it's kind of like that portlandia episode if you remember where they're ordering chicken at the restaurant like can we meet the chicken i want i want to meet the chicken you know it's kind of like that but it's somewhat tongue-in-cheek but i think that the point is salient that you know we all especially you know these days it seems like people want to have a connection to the food that's on their plate and they want to understand where it came from how it was raised and those sorts of things yeah like just like gen z and millennials want a story from even like a clothing brand they buy like everybody thankfully is like trying to learn more about the supply chain of everything they consume you know you brought it up so i i don't mind kind of alienating everybody in a way but like you said you know like ruminant animals with four chamber stomachs and their ability to to process grass is like in in essence at a thirty thousand foot level we're all living off of like solar energy right and to me a room in an animal floor chamber some stomach can actually is a great vegetarian because they can process that vegetarian into protein that then i can eat so it's just a step removed in between that they're much better at like processing that solar energy through vegetarianism and then by us eating like we're getting that vegetarianism and that solar energy and similarly with fish too with the smaller fish eating plankton and algae larger fish and then we consume the larger fish it's kind of that cascade through the system but maybe people don't want to necessarily deal with that one of the other oh one of the other questions i had for uh heifers versus steers do you see any marbling difference with heifers so steers grow bigger faster and you know so let's just say that uh i've got a group like i do right now that are designated as uh beef cows and so i've got a group that are steers in a group that are heifers the the first set that's going to go to harvest are going to be the steers uh and then the slower growing smaller heifers are going to bring up the rear take some a little bit longer to get to the same place you know a lot of people about how many months ago so a conventional beef is probably going to be somewhere in the 18 month range um and so we're going to be more in the 24 to 30 month category uh is where we're going to be and so the stairs are probably going to be a little bit earlier and the heifers are going to be a little bit later and you know sometimes a cow has a small steer sometimes they have a big heifer things can change a little bit but you know we we would like to try to have a uniform group as best we can and so good genetics plays a big part of that and i think that in terms of marbling and things like that a lot of people are going to argue pretty strongly that they would prefer steer over a heifer any day of the week um you know i think that uh the best beef that we ever had uh was a was was from a coal cow that was in a pasture for one reason or another with a nursing cow and that that coal cow was robbing milk from the mother cow and so all of those extra vitamins and minerals and and everything else we're going into number 675 i still remember her number your text 675. and uh and so that we kept her for ourselves that was the rancher's reserve and uh and so you know uh a mutual friend of yours in mind was by the ranch a little while ago and and he had some of the filets from from that uh uh from that one and i was like i can show you a picture you know here's a picture of that one i loved her so much man now i'm gonna be searching flights right now i gotta i gotta taste 675. but you know part of what is the um and then obviously part of that too is what what breeds of cattle do you raise uh we focus primarily on angus for the mother cows and we do have some sim angus cemental angus cross uh cows as well and then the bulls that we had turned out this season were full-blooded registered wagyu and so a 50-50 mix between the wagyu bull and the angus cow would be an american wagyu calf and so american wagyu is uh is a popular type of beef because it's incredibly rare it's incredibly fatty but at the same time it's not so rich that you can't eat a whole lot of it so if you ever go to a nice steakhouse and you order the a5 wagyu from japan you probably get something like two ounces for 150 bucks that is so rich you i mean some people can eat a lot of it i i can't you know two to four ounces i'm i'm tapped out you know i don't want my skin to crawl uh but it's incredibly rich and flavorful and amazing but uh like that um you know uh wacky american wagyu ribeye the it might be kind of like a 50 50 meat to fat ratio you might cut off a fair you know fair bit here and there but it's so rich it's so juicy it's really good and so the the steakhouse might sell that for 150 bucks too um and so the american wagyu uh product i i like quite a bit i think it's pretty interesting um and so we we do have that as a part of our business we uh you know so so those calves specifically are for the american y view program if that mother cow is a coal cow because she doesn't breed back then that's going to be a grass fed angus the franklin's barbecue down in in austin uh one of the things i i heard on their master class was that black angus uh grass that grass finished black angus is the closest thing possible to a conventional beef that's out there like where maybe you can't even tell the difference or what have you and and so um you know whether whether that's just one person's opinion or that's actually a gospel you know that's for each person to decide but our restaurant partners that are um uh you know going for the angus product that's you know where that is yeah i think i think i told you about somebody here locally that started with scottish highland cattle and then decided to crossbreed with angus but you and i both know that's the same bloodline so it's a little bit odd to me to like be you know reintroducing like a lower bloodline yeah just a furry one versus a you know with the horns versus uh you know a slicker backed one um that's kind of funny yeah uh harry kus are so adorable they make mini ones too uh i think i might have to get my wife one as a birthday present next year oh man i wish you wouldn't have told me that because i i i there's a mini horse farm near here and i it makes me laugh every time i drive by so um yeah a mini hurricane would just make me just overjoyed but i'll talk a little bit about because you brought up pricing power earlier so i want to talk a lot a little bit of the business side and then you know i think about often if we have a tradition uh transition back to regenerative farming or if we don't or if population keeps growing and we never have population nutrition you know part of it it might be that protein becomes an extremely luxury good and so you know maybe i'm saving money here or there but then maybe i have to spend you know a hundred dollars on a filet or a steak and that's just part of like you know making money in this world is like you're actually going to be spending a good portion of it on getting the highest quality protein you can because it may becomes a scarce commodity but i think part of that is you know your efforts to really tell the story to do everything right is you have to tell that story and you have to go direct to consumer and like you said luckily people want to know where that animal is coming from what their life cycles been like um you know and originally people started maybe doing cow shares to get people to buy other parts of it um or just be maybe actually be able to take the cow in aggregate so tell me about like how you think about that pricing power because you have specialty breeds because you're telling that story and you know you guys have been doing a phenomenal job on instagram um highly recommend people follow xit ranch on instagram but like what do you like did you try cow shares at first and then you decided people want specific cuts or how did that evolve on that the sales side of the process uh starting off we we did more of a direct to consumer model than what we have now and in that model we were generally doing subscriptions and it was by weight and then each month there would be a different set of cuts but probably you know say it was a five pound or ten pound box they're gonna get a couple pounds of ground beef every month and things like that because you need your you know me for meatballs or burgers or whatever but then we would put in other cuts now part of the value proposition that we brought to the table is that abby's a chef and we could also put in recipe cards uh so that people could try new recipes along with the cut you know if they um you know weren't familiar with what to do with liver abby can tell them uh you know and things like that or you know a lot of people are like oh what am i gonna do with stew meat or whatever you know it's like well you know here's a way that you can use uh you know bones to do marrow and and things like that and abby's really into using the whole animal and so she's got um tacos de lengua as one of the recipes that you can get off of uh off of our website and instagram and and so that was part of of how we got started with it and as we grew you know there's a lot of work that goes into the direct to consumer subscription box business and when we wanted to scale up we wanted to do it a little bit differently so we focused more on um you know can we sell buy the trailer load or the pot load or um you know can we can we sell you know x to a restaurant group and so working with one restaurant is very different than working with a restaurant group and so they're the restaurant group up in the front range that we work with we sell them say all the prime cuts out of a bunch of grass-fed and grass-finished angus cows um they then feather that out to their restaurants based on menu planning and things like that and so i'll get a nice message from somebody saying oh i loved this cut that i had at this restaurant i didn't even know that was that was going to be there you know i sold it to the restaurant group and then they sent it to this one or they sent it to that one and and things like that it's nice to get those uh those and so sometimes i go onto their websites to see what they're actually doing with uh with the beef and and so these days you know we're focusing more on larger relationships that allow us to really focus on the best possible um you know culinary experience for the end consumer and there are other companies out there that are doing a really good job of filling that gap in between say the producer and the direct to consumer uh person buying over the internet and so we i actually had a conversation this morning with some of the land of market guys about one of those companies that wants more regenerative beef they have demand for it but they need more producers and so they basically handle that entire you know middle section uh you know so we can send it on a pallet somewhere and then they've got people that then divvy it up into the boxes and send it out because trying to get dry ice when you live in the middle of nowhere is a little bit difficult and so there's some headwinds to that i mean i looked at like what do i have to do to have my own dry ice factory and uh and things like that but in terms of the the pricing power what i don't want to do is price out people who need high quality protein and so we still do have some friends that we sell cows to a friend picked up a whole cow last weekend that we had butchered and um and so we do still do a little bit of that but one of the ways that we make sure that high quality protein is working its way into the system uh irrespective of price is that we donate a lot of beef to local food banks and so there are a handful of organizations that we regularly donate our high quality high protein beef to and and so that is that's one way that we try to stay involved at a more localized level and in a way where if they can't afford this we don't want that to stop them from having good health and having good food yeah it's as you said i love the i always love like the csa box model though like buying by certain weight and then you get kind of whatever you get and it's kind of like a um it's a it's like an episode of chopped right like and then with abby's you know recipes you can kind of figure out new new things to make but i always felt like that was just a tiny fraction of the populace like most people just want their prime cuts shipped to them the way they want and all that stuff but then yeah then for you it's like finding you're basically starting a logistics business like you're saying trying to find dry ice and everything but part of it too i don't think people realize it's like if you can play in the head and you can buy like a quarter or an eighth share of a cattle you can actually get grass-fed grass finish prices way down like you can get down to like six to twelve dollars a pound depending on like whether you're using burger or prime cuts and so people are like well people can't afford it it's like if you could just pre-plan and buy in larger bulk size like it's you can get prices really down especially if you're able to shop across the country and maybe more than locally yeah for sure that's a great point and it's a great point and there are a lot of wonderful producers doing uh raising animals the same way that we do that have scaled their business and are doing a million dollars a year in that type of business and they've got uh large families and they can do it that way and it works for them and my hat's off to them i only have two kids and they're not that old and uh you know so it's harder for me to compete with them where they've got a lot of kids and they're older right um but uh you know all kidding aside i think that the one of the big misnomers is is how much space how much freezer space people thinks people think it takes to have a quarter of a cow or something like that and so if you have a you know a chest freezer freezer in your garage it's probably one of the best investments you could ever make for yourself you know it might cost you 30 40 50 bucks a year in energy to to have that freezer but all of a sudden you're buying grass-fed beef at a 30 discount to what it would cost buying it one cut at a time at the store uh so it it's uh it's something that makes a lot of sense to me and even before you know we were a producer we had two chest freezers in our garage and um you know there are a lot of people that were getting metered at the grocery store during covet because of the co-packer problems or not the car backer the packing house problems that you alluded to when they shut down during cobit well people who had been buying a quarter half full of beef and had that in the freezer they were fine for the couple months of quarantine you know they had all the high protein uh beef that they could have ever wanted you know it's just sitting right there so then all of a sudden people start a lot of people started cooking the cuts that uh they wouldn't usually do you know everyone goes for like the the you know the nice cuts first because it's their favorites and then at the end of the quarter share or whatever it is it's like what do i do with this cut what do i do with that cut you know that was the time when people learned just like sourdough starters you probably a sourdough starter that you started during quarantine too right no i'm thankfully not that bad for like chest freezers and then i i love getting like the vegetable csa boxes is like what the hell am i going to do with this and then you got to play thankfully for youtube and google makes it so much easier now but speaking of offcuts i'm i'm a one-man band i'm trying to promote uh swadero tacos those are my favorite locally and i'll send you and abby some some recipes for suadero and it's uh that's my favorite form of beef taco um but you know thinking about this i was i heard the anecdote the other day tell me if this is true i heard you're never supposed to ask a rancher how many had a cattle they have because that's like looking into their wallet that's correct yes 100 and and uh don't ask them how many acres as well uh those are some big no-nos yeah some people get pretty pretty upset about that because the idea because i can figure out what like the dress weight price is for cattle and then multiply it by how many cattle you have so i know exactly what your net worth is is that is that the general yeah i mean your bank account's sitting out in the field over there right it's a it's a very personal thing and and so uh you know whether it's the price per acre it's uh the price per pound or whatever you know it's it's there's a lot of transparency there and um so yeah asking somebody those questions is like you know how many dollars do you have in equities or you know things like that it's a it's a pretty personal question exactly so i was thinking about it as like you know everybody says farm to table now but i was trying to think like you went from finance to farmer or more specifically finance to rancher so like let's get into like why did you make that decision you know you come from a financial family and everything and you run your own finance businesses why did you want to get back into into ranching or i said back into because i know kind of the story but like tell me what what what made you step out of the corporate world and get back get into ranching and then from there maybe we could tell that the xit story through the years as well ranching is the ultimate macro trait is that volatility for the end of the world's like the hugh henry you know uh st bart's house kind of thing exactly exactly uh gosh there are a lot of different answers to that question i think um when when i worked in finance i always sought hobbies that were tangible where there would be a completed uh project tangible project at the end like making a table for example i made a dining room table once uh and i really enjoyed that process because i had something you know at the end of it that i could look to and point to whereas markets go up a little bit one day they go down the next and whatever else and depending on how you're judged maybe you don't know how you did for 10 years or something like that and um so ranching is very tangible it's very hands-on uh you you know see these animals get born you raise them and then you uh you know sell them later or what have you and so there's there's a journey that you go and uh you know like with the ranch down in texas we've we've had to mend a lot of fence down there miles and miles of fence and you can look down that fence when you're done you know after hours of work and you can see the completion of it and then it holds your animals where they're supposed to be because cows are always getting out it's what they do uh if there's a fence they can try to squirm through they're gonna do it um so you know i'd say that uh for me a lot of it came down to the tangible nature of fulfillment and uh i love markets and you know the horse market is another market you know cattle is another market you know they're all these different things they're just other markets and navigating them and figuring out how to put the puzzle pieces together so like i said it's one big macro trade you've got a commodity linked business you've got you know real estate you've got financing you've got uh you know just all these different things going at one time i mean shoot right now there's now a carbon market so if i measure how much carbon i'm capturing into the soil i can sell that into a market because we now have a price on carbon so there are all these things that exist in this that really scratch a lot of itches that i have in terms of professional fulfillment but in a tangible way yeah i want to even get into carbon sequestration later but like no i this is why i wanted to have you on because to me it's all trading and investing in finance like there's no difference it's just like different kind of formats but like um what do you think though is more stressful the vicissitudes of financial markets or the physicist institutes of weather and nature and all that but at least you get the satisfaction at the end of the day feeling like you did something there's some days when i wonder why i'm doing this and not sitting in front of a bloomberg terminal and then there are other days where i'm really thankful that i'm i'm not sitting in front of a screen all day um somebody asked me recently kind of how much time is split between the two and it changes based on what workflow needs are and things like that and getting ready to ship cattle down to texas from colorado it was like a 4 a.m to 10 p.m week long stretch to get ready to do that you know and uh horseback the majority of the time and some of the hardest work you could imagine but some of the most enjoyable fun times at the same moment and um and so you know there are trades that i'm involved in in the financial markets uh that uh that i enjoy a lot and um you know maybe it's you know um euro dollar futures or options on your adult you know like there's all sorts of things that i can do that that that i really uh can you know dial in on and have a lot of fun with but at the end of the day you know to have the satisfaction of raising the animal uh and and selling it for a good price and making you know good margin on everything i was like that that's there's a lot of fulfillment there that's that's very different than financial markets um and uh and and so i think that's something i'd say also the ability to model hard work for my children and for them to be able to learn off of the land is something that's very important because when my kids were little they're 12 and 7 now but when they were very little i didn't really know how to teach them what i did and so i came up with a game i said okay we're gonna have a scavenger hunt and the scavenger hunt led my older of the two who's old enough for the time to do this to find some nike sneakers that were in her closet and you know different public company goods right and then we were able to uh you know put them down and have a conversation about fractional ownership of the company you know being a shareholder and all this stuff and the earnings and dividends and she just looked at me she was like i don't understand what you're talking about i thought i'd come up with such a great idea as to you know how to explain this you know that when you buy these sneakers if i'm a shareholder you know i'm entitled to a little fraction of those cash flows and whatnot and she just didn't get it whereas now you know the baby calf comes out the baby calf gets big the baby calf goes away you know rinse and repeat like makes a lot more sense uh so i think there's a big bit of that for me in it um i do at times miss managing money you know professionally because i did really enjoy that and i took took a lot of pride in it but at this stage i am really enjoying building uh our ranching business and the employees that we're hiring and the decisions that that we're making are very complex and and so i have a lot of enjoyment for this uh but as you know as we talk about sometimes on on the side uh the grass is always greener and i'm just like gosh i should you know i should you know do a fun because this idea you know carbon related is so cool and investors should be all over this and whatever else uh but you know then i come back to my senses when people tell me no no stay outside on that horse all day it's a it's a way better thing um so it it's kind of funny you know to still sort of span the two worlds um you know but not professionally managing money for other people um you know it's a gift not to be doing that and to be outside ranching all day is is a lot of fun but at the same time i have to run the business which means when we switch payroll like we did a couple weeks ago and two people didn't get paid i'm then running around on a friday afternoon you know to make sure people have money in their and their accounts you know um but that's just part of life for any business owner yeah i would say just theoretically now you're just a uh discretionary global macro trader and i would think at least you through your physical exhaustion you at least sleep better at night than i do just staring at screens and living in this digitized financialized world but i think this is a good spot i know you've told it a million times but can you tell us about like the the history of xit ranch and how it started and how it got to where you are today so my my family um well this branch of the family was in chicago and uh the the uh the farwell brothers um originally held from steubenville new york and they moved west to the chicago area pre-civil war and um john v farwell my third great grandfather had a dry goods merchant business in chicago that uh you know did did quite well and and had a lot of uh pricing power come back to price of power and uh and you know post civil war boom that business did pretty well and he had partners such as marshall fields uh who then took the driver's merchant wholesaling business to the next level and and had the um you know had the department store uh and so when uh john v's brother charles heard from another politician so john b farley served in both the housing and senate uh charles b farwell did he heard from one of his friends from texas that they needed a new state capitol building and they were going to finance it by a land swap their ears perked up and so keep in mind these guys are a little bit older at the time they've just rebuilt chicago post the the huge fire and you know a lot of guys might not want to take on such a big endeavor but they they did so um there were three uh proposals three architects threw their hat in the ring for the state capitol building in austin what would be the new state capitol building in austin the firewalls really wanted that deal so they backed two out of three of them and one of those two got picked and so uh in return for building the state capital in austin my family received uh three million acres in the panhandle of texas and today if you watch austin city limits you see the state capitol building in in the background and there it is it's still there today the financing of it is is a pretty interesting story so at the time uh unless something was quoted on an exchange no bank would would lend on it and uh and so this is you know 1870s or so uh mid the late 1870s early 1880s and so unless it was quoted on exchange they wouldn't lend on it so they couldn't find anyone to land on the dirt and what was that dirt it was nothing it was raw land nobody lived there it was empty and uh and so john v had offices over in um over in europe and a lot of contacts in london so he went to london and he raised three and a half million sterling in debt in the capital freehold land and investment company used that sterling you know converted the sterling back into dollars so we've got a foreign exchange trade here so you can see where i get this stuff right it's one big macro trade and they uh converted dollars they built the state capitol building uh they then sold off uh later uh in the late 1890s they sold off some of the land to repay the note holders in uh the uk and so you know the the difference between that you know was was how much the family was left with at that point in time and um charles died i'm going to say 1903. john v died in 1909 and uh the uh the business was still going in in chicago and so you know there's a i guess at the time was when maybe family offices were becoming in vogue uh you know they had that business and they had other things going on and so the the branch was another portfolio position in today's words and so they continued to ranch it until 1912 and then in 1912 the cattle were sold and the family decided to go into the land leasing business in the land sales business and so their original vision was always to colonize that area and to um and for americans to be able to move west have a plot of land that they could farm and ranch on and provide for themselves and be able to make a living for themselves as the population grew and the west was explored and everything else and so the you know they really had this idea of you know self-actualization and people being able to provide for themselves and make a life for themselves um and so from 1912 to 1963 uh land was leased out and sold and in 1963 the last of it was sold so for the last 59 years my family had been ranching until we purchased the um the ranch outside of channing texas just in the months and so we have uh xit branded cattle running on original xit ranch lands right now and it's a pretty exciting thing for us after 110 years we've got xit cattle running around again and uh and so to me it's it's very fulfilling i view my role in all this is that of a steward and uh it's my job to take care of the land and uh well it's my turn and what you know what happens after i'm gone i don't know but hopefully i raise my my children with the right mindset to be stewards as well and uh next not this weekend next weekend is the xit rodeo and reunion in 1936 a bunch of the uh we'll call them alumni the former employees uh started a rodeo and reunion and it's still going today and i talked to the president of the board yesterday and we're going to be down there and everybody's all excited it's a big prca rodeo and uh you know we're gonna go and thank them for keeping the history alive all of these years and um you know they're just so excited that a descendant of the family is back running you know xit again i mean it's it's pretty neat because what a lot of people don't realize jason is that prior to what we did in the panhandle nothing existed there so there were zero railroad lines going through that area zero period by the time john v died there were four rail lines going through the property and i know he was really proud of that and that meant a lot to him and the family has taken a lot of pride as to what it meant for westward expansion and the colonization of our country and a lot of people don't understand that on that ranch about i don't know six seven miles away probably i can there's one of those rail lines and i can hear the rumble of those trains going the way it kind of goes and comes down this valley i can hear it when i first got there i'm thinking is this you know uh wind turbines that i can see on the horizon figured out it was the railroad so it's pretty cool to be able to hear that from that property and uh and so that's in our rita blanca division um and it was the mayor pasture uh back then and and so it's pretty exciting for us given uh our horse program and what we're doing with our cattle to be back down there and so today we want to do the best job we can do to take care of that land and to carry the the um you know the torch uh for the xit and to honor the past and the legacy is really important to us and it's such an amazing story i was hoping to tell even that the financing tangent too because like you and i have done many speculative investments that we've had bankers try to finance and it's so hard on modern times to get bankers to financing anything i can't imagine taking a steam ship to europe to try to convince europeans and then it comes full circle because it shows like how you you love trading euro dollar markets right so it's just like it's like the original almost euro dollar market even though it's more of an fx exchange from sterling back to dollars but it's an interesting part of the story and i i can't imagine i know how proud you were to re rebrand xit even with the with the colorado ranch but now and to watch like how excited you've been in the last few months to to bring back to raising cattle on the original xit land uh i mean it's just kind of amazing to watch it coming full circle and like you said you'd be in the stewardship of that but part of that is i'm gonna like kind of finish talking about is the modern version of ranching so to speak so it comes full circle with our conversation is you know we're originally talking about what's the difference between grass fed grass finish et cetera like you really got to learn these names and unfortunately there's no good names for anything right like we've talked about organic regenerative you know all these different forms of naming conventions that people are trying to figure out and so part of it is you and i privately talked about this a lot is the idea with ruminant animals and hooves systems and everything is it's part of an ecological system that you know they create indentations in the grass or in the land with their hooves that then larvae can you know kind of facilitate and water can um combine within those hooves systems and then you have you know the chickens can come in and feed off those larvae and how it creates kind of a full cycle system but more importantly is also then the even the way that the um the teeth structure of cattle are used to even rip grass is a form of regenerative farming and it creates like where we're alluding to earlier it creates a permaculture where you're maintaining or building the integrity of the soil and the microbiome that lives in the soil which provides us better nutrients as humans when we when we harvest these animals but one of the biggest part of it that you mentioned is if done properly properly with regenerative farming and building that permaculture you have a form of carbon sequestration and now that we have these modern carbon markets um you could be using those ranch lands to get credit for the carbon sequestration so it kind of like i know you and i have texted back and forth about you having even people come out to assess ranch lands that you're looking to buy and see what the the carbon sequestration impacted would be and if you could sell those credits into different marketplaces yeah you know the the well first off i should say if we are going to hire a new marketing director you know you should uh throw your hat in the ring first uh because you're definitely pretty savvy um you know as it pertains to the the carbon markets i think there are a couple of different important things in play the first is the eu has a compliance market and so they they're the you know the kind of leaders in that space and we have a voluntary market here in the us and a couple different regional ones at that the the markets over in the eu those that's an allowance market meaning you are allowed to uh to burn so many fossil fuels to emit so many pollutants right so it's not you know that the price of carbon is the it's the dirty price it's not actually the clean price of carbon and so i think the shift that we ought to see and maybe it's the u.s that's the leader in this space um you know would be that in instead of you know an allowance market it turns into a sequestration market and what i mean by that is that if a producer such as myself sequesters carbon into the soil and there's a verified process for that and you know you can say with a high degree of certainty that i'm not going to till it next year and release all the carbon and all this other stuff right um you know if you can do it that way then we're actually starting to turn back the clock a little bit whereas if you're going to whittle down you know the like in in the eu compliance regime for example they reduce the supply of these allowances every year which should artificially increase the the price of carbon in the eu for example and and so uh they're creating a demand curve that makes a lot of sense to me but it's still an allowance so if we want to move to a place where we're actually trying to turn back the clock in terms of um you know what's going on then i think a sequestration market is is where we need to end up going with this and i i think frankly we have the capabilities to do that but we need a uh national standard right now there's i don't know four or five different registries that have their own standard shoot you can even buy a bitcoin with a carbon credit wrapped around it right now there's all sorts of crazy stuff that's out there you know so just a fig leaf of carbon it's wrapped around a bitcoin so you've got a net zero token when it when it comes to the energy usage to uh create a single bitcoin i find that to be fascinating but i digress i think that the fact that farmers and ranchers can have another outlet to monetize their land is what's really important here because you know with government subsidies and all these other things we have a lot of pricing that is not as free as one might expect in various commodity markets and so uh if we can you know create an opportunity for somebody to have one more source of revenue off of an existing piece of land then maybe they can they can make ends meet and they don't have to sell land to live which you do see a lot of that these days where old branching families are having a hard time making ends meet and they might have to sell land in order to do so which is pretty sad it used to be that you could um you know run a cow-calf operation and be profitable and that was it now you need three four five different sources of revenue in order to be successful as a rancher and so i'm not just a rancher you know we've got horses we've got cattle we've got uh we're going into merchandise um you know hopefully we'll be doing the carbon stuff um you know uh on and on uh outfitter you know we're gonna be selling hunts and things like that so all of a sudden you have to be in all these different businesses at one time which that takes a lot of work and it takes a lot of people to pull off so you know i think carbon is is one of those things that could be one more lever to pull and to be pretty profitable i know some some guys uh that have organic farmland in the mississippi delta that are really excited about it and they've got a bunch of acreage that you know they just have to now quantify what's happening underneath it and they can monetize that and that's you know that's good for them it's good for their investors and whatnot some i'm very much for it i'm not for regulation per se so i wouldn't mind it staying a voluntary market but going to a sequestration market and having to be that something having to be something that people want organically as opposed to it being you know regulated yeah i think about um one of the things i think you'll love is like the perversions like the perverse incentives that can even come off the way the european market structure that i've been looking into is like is essentially it's a it's a weird like uh coal play in a way right like if if in the uk if not gas prices spike they're going to fire up the coal plants which means they're going to increase their buying of carbon credits in europe to offset that so it's like it's like a perverse way of playing coal which makes no sense when you're buying like carbon credits but that's that's a whole different story so one of the things that we're gonna have to say for a future episode that i was gonna get into is like like you just said it's like looking at these ranches and figuring out the six to eight different income sources like uh it's been serendipity that we've had the rise of the television show yellowstone so i always joke with you that like your text messages are like a living breathing episode of yellowstone whenever you're sending text messages when you're looking at ranches to buy and you're flying around in helicopters scoping out the land but then you'll send me the prospectus and we'll go through and like you said it's like it's not only like the it's the it's the cattle it's the horses it's the water sources it's you know how do we create merch out of this you know is it like king ranch working with like ford or whatever it is like all these different merch opportunities so like you're saying to like then carbon credits and sequestration is another form so it's yeah it's figuring out all the layer cake to make this a going concern and like we've always talked about lodges and in tourism and all those sorts of things so it's like it's a it's always a i i enjoy it i immensely but i always joke with you that getting your texts are just unbelievably uh uh enlightening as far as what it's like to live that that yellowstone kind of life and i and i'm always the one that's discouraging you from going back into running financial firms uh so that's that's my that's my fault but one of the things you did bring up that i want to mention is i was thinking about that like we were talking about what's more stressful running a financial firm or running a ranch and you brought up the idea of stewardship and especially with the history of xit is that you think about i'm just a steward of this land and i always wondered if that like long now type of thinking actually reduces anxiety and stress where i'm getting a uh you know a pnl on an intraday basis and that's heightening my stress so i just wonder if just that what your thoughts are on that longer term form of thinking does that it's in thinking in stewardship terms does that call a lot of the anxiety for you yeah that's a great behavioral finance question and uh so one of the things that became popular during my career uh was high frequency trading and uh the the way that i dealt with high frequency trading was to be a low-frequency trader and uh i can't i can't beat those guys they're uh they're too good at coding and they've got their uh you know hard line in right behind the server at nicey and and all that stuff right um and another fun manager i was talking to about that at one point he said you know i think it probably cost us 100 basis points a year i thought to myself man that's that's a lot um so kind of the old how do you be bobby fischer thing claiming anything but chess um so that was always part of how i like to think about things uh you know to to take the other end of the trade i'll take the long trade and uh and i'll just let things work out over time so i think in some ways when you take on this stewardship mindset it puts you in a position to start thinking about things in terms of generations or decades as opposed to the here and the now now the fact of the matter is i got payroll to make so i have needs for the here and the now today but if my primary asset say the land is going to be chugging along in the background at i don't know seven percent a year or something like that that's okay that's all right uh so then what can i do with all of these other uh lines of revenue and assets that i have and so i think that definitely helps us to sleep a little bit better at night because i'm not so worried about you know what's the price of cattle gonna do tomorrow or whatever else i mean ultimately it impacts us but if i do a good job taking care of the land and taking care of the animals they can take care of me and i always viewed previously that if i did a good job taking care of my clients they would take care of me as well and uh and so i think to be able to sleep well at night sometimes i refer back to reminiscences of a stock operator and uh selling to the sleeping point so if i have a position on that is keeping me up at night then i need to get it to the right size and uh what's jared dillian say there's two sizes too big and too small yeah exactly never always in hindsight you're either too big or too small yeah you know that that's what it is yeah so speaking of like sleeping at night or keeping you up at night i'm sure there's a final question but i'm sure it's it sure it's a million things at both of the ranches and like you even invite me to ones i didn't even thought about before of like when are the leaves are poisonous and are my animals gonna eat them at that time of year but like right at this particular time of year at all the ranches like what what is keeping you up at night what's on your mind right now right now what's on my mind is uh is there anything i can do to push this storm system south a little bit so it tags more of the ranch down in the panhandle we've been getting a lot of really good rain in colorado and we're only about a three and a half hour drive to the ranch in channing and they're catching kind of the the tail end of of it down there so we're getting a little bit of rain but right now you know um rain is uh rain is one of the things that i'm thinking about because ultimately that really impacts what we can do with the land and so if it if it doesn't rain then the land can't rest we have to have rain in order for the land to rest and if you know the you know if if a ranch is capable of you know let's say running 500 cows in a drought year maybe it's 250 or something like that then if you're overstocked and you take too many bites uh out of that apple then there's nothing left to eat and so fortunately right now we are under stocked down in texas where uh we don't have as much rain right now and because prices are going down because a lot of people are de-stocking right now and there's pictures on instagram of mile long traffic jams on highways of producers with trailers taking their animals to the sail barn right now because they don't have any grass rain's not coming people were trying to you know see if they could last and people are just capitulating and uh and so you know there are pockets of prices where they're they're getting to be pretty inexpensive um you know but uh as somebody who's under stock that's a good thing for me because now i can i can stock up and prices are lower so that that helps my p l you're talking about your p l i still have a p l and i need to buy right and i need to sell right um you know it's uh you know if i buy high and sell low it's a pretty quick recipe to to you know not do very well but if i can i loan and sell high then i'll be better off in the long run and at uh you know at our place here in colorado or in our place down in texas you know we will err on the side of what's best for the land before we will let it drive a financial decision that might mean that there are financial repercussions for that but if we don't put the land first then we're we're not we're not in it for the right reasons we're not going to you know be able to to have this land take care of us over multiple generations like every great trader you're structuring structuring a counter-cyclical p l and that way you can you know be there for the long term so i want to thank you for coming on we didn't we talked about cattle this whole time we didn't even need to get into horses and and breeding stallions for income so maybe i can convince you one day to come back on and and we'll go over the horse trading and stallion trading and and try to uh to enlighten the the viewers and listeners to what it's like to also be running a horse business as well so i drew i just wanted that'll be part two going on yeah exactly part two later yeah thank you all right jason thank you sir good to see you thanks for listening if you enjoyed today's show we'd appreciate if you would share this show with friends and leave us a review on itunes as it helps more listeners find the show and join our amazing community to those of you who already shared or left to review thank you very sincerely it does mean a lot to us if you'd like more information about mutiny fund you can go to mutinyfun.com for any thoughts on how we can improve the show or questions about anything we've talked about here on the podcast today drop us a message via email i'm taylor mutinyfun.com and jason is jason munifun.com or you can reach us on twitter i'm at taylorpearsonme and jason is at jason mutiny to hear about new episodes or get our monthly newsletter with reading recommendations sign up at mutinyfun.com newsletter this podcast is 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Yellowstone is Global Macro Trading – Drew Knowles
Summary
Transcript
[Music] hello and welcome this is the mutiny investing podcast this podcast features long-form conversations on topics relating to investing markets risk volatility in complex systems so a couple of weeks ago you told me an anecdote and i i love a good anecdote that comes out of left field that i would never have thought about before but you told me that hay prices like hay is about to be a problem like we're talking about the bullwhip the facts of supply chains and everything but then you start telling me as a rancher you're dealing with hey now because the drought in california hay may become a future problem that i should be keeping my eye on so tell me like kind of what's going on with the the hay market nationally that's a that's a great great thing to start off with um all of our animals eat hay and so we uh we buy a lot of it um so our two branches are located in colorado and texas so we have two different you know hay markets between the two locations and as with any future market or any agricultural market you'll have a national kind of aggregated number and then you'll have more localized and regional uh markets and so as it pertains to various droughts going on at different points in time across the country california is kind of a year ahead of where texas is right now in terms of going through a drought and what do i mean by that well the effects of what are happening in texas right now or what was seen say maybe last year in california and so because california is is ahead of the curve compared to you know say where we are um you know east of there it means that uh producers are gonna follow the money and so right now if there's no pay in california and the demand is there uh you know limited supply then prices are gonna go up classic demand curve so producers say in utah that might be able to go either direction all of a sudden they're looking towards california because if they can get say you know 500 a ton or something like that then they're gonna go get that there and all of a sudden you know a couple years ago when i could you know get it for less than 200 ton uh or something like that now i'm looking at over 200 a ton you know prices are going to be you know moving up in some areas they might already even be 300 a ton and so what we are seeing right now through our stock contractor rodeo stock contractor friends is they're getting you know some of the word on the street uh because they travel around to arizona and utah to all of these different rodeos bringing stocking the rodeo it could be a you know bronco or it could be a crazy cow or what have you that is coming in for the weekend of the prc rodeo and they're hearing from their hay broker friends that you know the the utah or you know saving arizona hey is heading west california because prices are so high so hey that maybe we would have gotten here in colorado is going out there so where are we going to get it well texas is in a massive drought down there right now and uh people are de-stocking uh their cattle like crazy even horses because all of a sudden there's no grass for them to eat and that means that there's no hay that's being planted or wheat and so on and so forth and the knock-on effects really you know are prevalent and i think that we are going to see higher commodity prices higher input prices uh as we march through this thing and it's going to take some time for it to all happen of course because the ag industry is a slow moving industry you know but ultimately i think we are uh already feeling the pinch here we just had two truckloads of hay get delivered and uh and it was expensive but ultimately we need really high quality alfalfa for our broodmares that uh might have a uh full on their side and maybe are pregnant again right now and so uh you know for those horses we have to have really good feed and so we have a choice we can either um you know pay up for it uh or we could de-stock a horse but if we have a really uh high caliber performance horse out in the pasture that has a fall on our side that full future value is well worth some additional input costs and ultimately that does meander its way into something like the horse market so this is going to be my favorite kind of podcast because i get to uh ask a series of dumb questions it's only going to be dumb questions from here on out so uh part of it what i was thinking about when you're saying that so would we not really see the full effects like you're saying during the summer time i assume right they're out grazing but like if you don't have if you had drought in texas or colorado there's not going to be high quality grass so you're trying to increase the quality of grass but i would think you're not going to really see the hay prices move through the system more towards until the winter but it so is it more of like the seasonality like we're really you're seeing it now but you're going to say we're going to start seeing maybe news headlines like this winter with hay prices and then part of it i was you what you're just saying with high performance horses does the sillage content matter like you're saying with alfalfa content and everything so it's very specific states or regions that you want to be getting hay from i know that's like a two-parter and totally divergent two parts but i'm just curious your thoughts yeah so we were already buying hay for the winter we already had some previously bought it's in a hayshed we just had the two truckloads that just arrived those are for this winter as well so in colorado uh in southern colorado where we are we we do get over 100 inches of snow every winter and and so you know when there's a foot of snow on the ground there's nothing for them to eat and what would be left at that point would not be very high quality it's more filler it's not really you know the same nutritional value that you would have during say this time of year when we're very green and lush and whatnot and so if we're talking about protein contents uh you know alfalfa might have say up to 20 protein in it uh oh hey might be say eight or nine percent things like that um and so different types of hay have different protein contents and so when you have a high octane performance horse they are burning a lot of calories they are working very hard they need very high quality uh feed um you know cows also need high quality feed but uh they eat all day every day and so you know they're they're you know kind of different seasons to their life as well and if you're talking about you know a grass-fed and grass-finished cow uh that you want to you know have say a good finishing ground like we have here in colorado uh you know that high protein hay is going to go a long way if you have to you know grass finish a cow in the middle of the winter you better have some really good hay in the barn so you can make sure that that protein on somebody's plate is going to be what they expect the other question you asked about the location of hay and where it comes from and things like that i know a ranch down in texas that trucks hay all the way in from wyoming because they think that hay is that good now you would think in a world of six dollar diesel that maybe this year they don't do that i i don't know um i haven't talked to them about that yet but people will truck hay in that they think can make a difference in their animal life animals lives uh kentucky is famous for bringing in hay from uh say even um you know out here in gunnison county uh so it's it's not irregular for people to truck hay all over the place uh especially if they think it'll give their animal an edge but you know at the same time if you run out of feed and your back is against a wall and you got to go to your local feed shop and pay through the nose for a couple of bales until you can get something delivered people will do that and it'll probably be lower quality and cost a lot more uh but their animal will stay fed maybe not as nutritionally uh dense you know as the producer may like but you don't always have a have a choice in branching you brought up uh another topic so there's so many actually brought up i can't wait to ask you about one was you know as you know i live in a a pseudo farming community here with growing grapes but what's great is where i go get my um my coffee every morning is basically attached to a gas station that's primarily a diesel station where all the the the farmers that are are filling up in the morning and i was looking at the dec at the diesel pump yesterday and the price was 856 dollars for the guy that filled up whatever is like 125 gallons or whatever and so like you're talking about whether it's hay input costs or diesel input costs but the other thing um i didn't have time to look up i'm curious if you know the difference i did notice on the pump though the other day it's like you have off-road diesel and on-road diesel do you know like the differences are i don't mean to put you on the spot with that one yeah green diesel would be your on-road diesel and and that is what truckers have to use on the on the highway um there are various laws that exist uh and and so you have to have that high quality diesel on the highway for emissions reasons and whatnot uh red diesel would be your off-road diesel and that would be what the tractor is running on out in the field it costs less it costs less it doesn't burn as clean and things like that and so there are two types of diesel um somebody asked me recently um an astute market participant asked me well why you know why is gasoline uh you know this price and why is diesel that price we started talking about a little bit and i said you know what if i really knew the real answer i'd probably just get upset uh you know as to you know why i'm paying so much more for diesel as i am uh uh you know uh regular gasoline um unleaded but uh there are some things where ignorance is blessed that one might be one of it i'm sure one of your listeners can tell us exactly what's going on there and i would welcome it although uh i i should probably not do it on screen so you don't see my head explode exactly or it's like uh then we have to start getting into crack spreads and the lack of uh capex and refining uh manufacturing facilities within the us and and then we start getting into that like a lot of people don't realize everybody's looking at crude oil prices but the crack spreads have exploded between crude to refined products from anywhere from like fifteen to twenty dollars a barrel up to like 70 to 80. so that's why the the prices at the pump we've seen in the last year are pretty dramatically different from crude oil because you just had this perfect storm i think on the catback side of refining and especially the the lacquer refining capacity we kind of kind of have in this country but part of it what are you seeing then from the diesel perspective are you still concerned or do you think we're kind of past the hump in diesel and i know this is all speculative from your perspective but like or do you expect prices to kind of go back up and do you help mitigate those prices by doing grass-fed grass-finished cattle and trying to avoid using diesel as much as possible yeah in our business we we're in the the grass-fed grass finish business and so i'm not buying grains like corn for example uh to you know finish finish these uh these cows uh you know when we get to that point with some of them i'd say that you know if you think about um say a feed yard that has a reliance on uh silage or corn or what have you uh what a lot of people don't necessarily understand is that the uh the grain producers use a lot of propane to dry their product before it ends up leaving and you know one of the reasons for the propane is because most of these people are out in the middle of nowhere and they don't have the electricity and uh i guess it's probably more efficient to use the propane for the dryers um and um i forget who it was it might have been doomberg yeah it was doomberg put out a note a month or two ago about the national propane shortage and uh and we messaged about it very briefly and basically the takeaway was you know store as much as you can uh and so to your question about you know fuel prices and everything else i mean we've got storage tanks for diesel and whatnot and so every time we need to fill one of those tanks we're making a call on the directionality of one of these inputs and so let's say it's a 2 000 gallon tank or something like that that can be a pretty expensive uh you know uh pretty expensive moment and it makes sense to study these markets to try to make a call on you know what if if i think there's a near-term transition in the price action that's about to happen maybe i want to wait or maybe i want to jump in right now you know as for say the price specifically in diesel right you know i don't know obviously uh the price per barrel of oil has come down uh more significantly than the price at the pump as you articulated a minute ago uh we've just kind of gotten used to operating in a world with higher input costs and we are charging more on the back end one of our restaurant partners that we sell a lot of ground beef to for example they've got six restaurants and i called them up and i said hey i need to raise your price to x and they didn't even blink an eye you know it was not a problem not an issue they knew what was going on they see it across the board they're increasing their prices and lockstep uh with their producers and so the the pass-through of some of these costs are definitely showing up to the consumer i would say um and it'll be interesting this earnings season to see what's going on with a number of the big companies out there you know that are in this space like general mills and whatnot but i would say that uh you know for somebody that's kind of gotten used to elevated prices i almost think about it a little bit differently as opposed to hey it might go up and come back down it's it's almost kind of like we took a stair step up and we're operating on this level now and it's a little bit easier to operate the business and just saying these are my input costs uh if i have a hope and a dream that they're going to go back down so my margins expand you know if that doesn't happen then you know maybe i go out of business so i better get used to operating in a in a higher uh elevated market and i'd say that to have pricing power and we do have some pricing power as a producer if we can use that pricing power while these things are happening to us then we can maintain our profitability and we can continue uh you know doing what we do but if we don't have that pricing power then we can get into trouble pretty quickly yeah i think about um we're talking about grass fed for example like uh i spent maybe maybe a half decade ago i went around to all my farms in northern california where i sourced all of my produce my dairy my meat from and just to make sure they were doing everything they said they were doing right and the people don't realize the amount of time that takes and part of it was because you know grass-fed became you know a moniker right but then what i had to find out is like they were grass fed but they weren't grass finished so now we have to like think about two terms and correct me i'm wrong my understanding was like yeah they're they're raised out in grass-fed environments but then the last 60 to 90 days they're moved and depends closer to like the abattoir to be harvested and then they're fed on corn to fatten them up and increase the weight as they go into finishing so in my curious when you say grass fed and grass finished um are you taking them off the roaming range when you go to grass finish and like what time are you are they then spending is it done on you know hay and sillage or like what's the what's the transition from grass fed to grass finished that's a great question i'd i'd say that for a consumer the way that i i like to think about it you want to focus on pasture raised grass-fed and grass-finished and so pasture-raised means that the animal has been living out on the grass in the pasture its whole life fed means that that's what it's been eating that's what's been going on a grass finish means that uh it's not receiving something other than grass prior to harvest and so if uh you know if an animal gets into you know some type of confined location and gets put on corn for the final 30 days the flavor profile will be very different than it will a grass-fed and grass-finished cow a lot of consumers like the sweetness that say a corn or silvic uh you know finish might bring to the table and some people prefer that to grass-fed crust finished beef and that's just a um at least from a flavor perspective that's just somebody's preference um so you know for for us how we like to uh operate is they're out on pasture their whole lives and then uh typically our the cattle that's in our beef program those would be coal cows from our cow calf program so if a mother cow has a calf and does not breed back then she would be a coal cow so that that mother cow is gonna turn into grass-fed crust finished beef so the the final bit of of her life to make sure that uh you know the flavor profile is strong and that the quality of the meat and everything else is there we want to make sure that they're finished on high quality forage and so we're going to stick them on some of the best finishing ground that we have but we will also give them free choice to have other other types of hay available depending on what time of year what time of year it is but you know for us we will not put them in a con confined location uh to finish them um you know different operators do things differently for different reasons and depending on what the consumer wants an operator may make one choice versus another do you have anything locally or do you supplement with anything random as like a small percentage of their diet like lupins or egg like trying to like just have a different flavor profile at the very end or is there is there anything unique there or am i just hoping that there's some secret sauce no no there we talk about this stuff all the time so all of these uh craft brewers in colorado have all of the uh spent uh barley and everything else and and so one of our restaurant partners up north uh who is a land to market uh restaurant land market is the savory institute's uh program for producers and buyers that are looking for regenerative uh regenerative uh goods and uh whether it's um you know ugg boots or timberland looking for regenerative leather or it's uh say a restaurant um you know like uh karita that that wants regenerative beef uh and everything in between um you know the that restaurant group they're very interested because they know a lot of the craft brewery guys and they're like hey you know this is just they have to pay for somebody to take this away they would give it to you for free if you would come pick it up let's try to figure out how to do this and with diesel being expensive and uh you know with how quickly uh those those spent grains will spoil and things like that trying to work through some of those roadblocks about how to make it work but i think it's pretty intriguing to use other uh products to alter the flavor profile instead of the final 30 or 60 days we do uh also have oat hay for a diverse diet we have a very you know biologically diverse uh piece of ground here as well as in texas and so uh when it snows in texas for example the sagebrush is also there as an option to forage and somebody say i can't believe they would eat sagebrush uh you know but when there's nothing else around and that's in the ground that's going to happen you know the smell of sage sagebrush is a little bit different but you know that's inherently going to have an impact on that animal i don't know how long that will you know stick around in terms of a flavor profile and how much it takes exactly and so those are some of the things that we're trying to work through right now with with some of our restaurant partners because we we think that we do have the ability to stay within our ethos of land as land managers and to create something that might be a better stake on the plate for the consumer yeah i'm sure you've probably seen this too is like in spain you have a guy that grows um some of the most ethically raised uh foie gras in the world right where he's he's actually not even gorging i love my lovelies yeah he's creating like the uh the disneyland of foraging for his geese and one of those was the yellow lupine plants that created that the yellowish hue or tint to the livers that people came to expect from foie gras and he just figured it out from having them you know forage lupines in when they're out in um in the pastures so to another two-part question for you what do you say like because you brought it up with the the grass finished taste difference between corn finished and your wife's a as a chef so like what do you usually tell people that usually have you know hesitation about the different flavor profiles of actually grass finish i'm just curious what you guys tell them and part of that is that can you tell the difference between uh male and female cattle when when you're actually tasting your your your end stake or rib eye et cetera so i think the in terms of the description of grass fat versus conventional beef one of the things that i really focus on uh is maybe less so on on flavor profile and comes down to cooking technique and so um abby will be one of the first people to tell you you have to babysit grass-finished beef when you're cooking it you can't put it on the grill and walk away and forget about it conventional beef is very forgiving in fact the executive chef uh at the the restaurant down in restaurant group down in new mexico he and i were talking about this the other day because they always have you know turnover and line cooks and things like that and hey here's how you cook this burger to the best of your ability make sure you have your timer on and you know follow these techniques and so i i generally think that you can have a phenomenal grass-fed grass finish flavor profile that people won't know that's what they're eating if it's cooked right if it's overcooked and it's dry and whatever else uh you know say there's a difference in the fat content or you know the the marbling or what have you then cooking technique is is really where you need to go so i generally talk more in cooking technique than i do flavor profiles i've had people in the past say things like well it you know kind of tastes gameier and i said well you know what do you mean by that well it's um you know maybe a little bit tougher or something like that and again i think that you know oftentimes comes down to cooking technique than it does actually what's what's there and so you can you know overcook a conventional beef uh you know conventional steak just as uh just as well as doing it on a grass finish one so you know what kind of marinade do you have what uh you know are you doing a reverse sear you know what are you doing to actually make that be what it should and generally speaking we kind of default to what is the simplest thing and so if i've got two kids and they're really hungry i need things to happen fast and so just like anybody else you know i'll get something off of the grill and onto their plate really fast and whatever else and i'm going to err on the side of undercooking especially with grass-fed and grass-finished beef as opposed to anything else i think the the other thing too that uh just in talking about changes in the ways that animals are being raised over the years like go back to world war ii um you know lamb uh you know mutton things like that was something that a lot of people had didn't really have a good taste to it and whatever wasn't kind of like a generation almost turned off to lamb fast forward to today there are a number of incredibly good land producers like capra and you know aaron cook uh you know people that are phenomenal things shout out to aaron cook uh so you know what capra is doing they're doing regenerative ag as well and so they have phenomenal tasting land uh you know and so kind of a whole bunch of people who are you know say boomers children uh you know whether they're you know millennials or you know whatever they are they're all of a sudden waking up to this this whole you know uh you know new flavor profile out there something that they they actually really enjoy and so i think um you know to have a difference in the point of view about you know raising the the animals uh you know i think it's creating opportunity for people to find new flavors that they really like yeah me i'm i'm not as maybe open when people say gaminess i'm like you mean it tastes like a real animal and maybe that's not what you're accustomed to but like it's and stripping out the nuance from the cooking side um obviously every piece of meat is different in nuance but in general i always think about with grass finished you either want to go real low and slow or you want to cook a lot faster than you would like corn finished beef like those are those are kind of quick rules of thumb wouldn't you would you agree to that i i totally agree with that yeah and if you don't have a sous-vide and if you want to have a really good uh steak uh you know get us get a sous-vide and learn how to use that and then learn how to you know finish it on on the grill to get that sear and it will be amazing no that's a that's an excellent piece of advice if anybody wants to step their game up like sous vide is actually and what's great about sous vide everybody starts getting intimidated just because of maybe the french phrasing but like it actually is like almost idiot proof it's like the best way of cooking things and you don't actually need a lot of technique because you just put the sous vide on set it forget it and then just finish it when you're done and so it's great but one thing you pointed out that i was remiss that i missed earlier is it's really fascinating to me when i looked at the studies of grass finish versus grain finished it's like you're saying not only you're changing the fat content but you're changing the the fat profile it's really affecting your omega-3 to omega-6 ratios and what's amazing to me is like looking at those studies is like how just a certain amount of days can dramatically affect an omega-6 to omega-3 ratio so once again it's about what are you putting into your body and you know what are the cooking techniques and flavor profiles that provides but more importantly what's the omega-3 to omega-6 ratio that you're putting in your body in just a few days on corn can dramatically affect that more than you ever realize it sure can yeah no and that's a great point as well and and i think that you know a lot of people um make the choice uh based on taste some are making it based on uh their health and what their dietary needs are there are a lot of different ways that people find their way to different types of uh different types of beef and i think that however somebody gets theirs it's okay right you know just in my opinion just the place where you want to be these animals are genetically uh engineered to live off of grass and yes you can alter flavor profiles and finish faster and all these other things doing it other way but i believe that these animals were designed to live on grass and the ruminants with four chambers stomach and it's just what it is uh so you know philosophically that's that's where we lie and what we really uh believe in and you know if i go to a restaurant uh and i order a burger um you know i can generally tell pretty quickly that it's a conventional beef versus a grass-fed one just because i i eat it all the time um and i think you asked another question a little while ago about can you tell the difference between a uh male and a female so steer and heifer uh gosh maybe abby could she has she's cultivated such a more discerning palette than myself so maybe she could do that but i will say that um we've tried to discern whether or not there's a difference in taste of a uh a beef that went through an avatar versus a beef that was a field harvest on the ranch and it's almost unfair because i know what's what uh you know but i'd say if i if i had my druthers you know the field harvest would be the way to go um you know per usda while we can't uh you know sell a field harvested beef uh to a restaurant partner or whatever else but um you know that's a whole another podcast um yeah and we're gonna get deep on that one yeah because it's like i try to look at studies too we're worried about like adrenaline and cortisol and other things you know whether it's going through an abattoir or it's field harvested and you know from my study i'm curious you have a pushback on this is like it seems to like dissipate so quickly that it doesn't matter and like the the finished product on on the on the meat side but then what you're talking about that people don't realize is like if you're going to sell meat publicly you have to go through a usda approved abattoir or harvesting facility and there's only like five of them like regionally in the country and actually a lot of them shut down during covet which is even a bigger problem but like you actually cannot necessarily like harvest uh the cattle in a more humane way than you want to because of the regulations on the usda side that that's correct and and that's definitely something that i'd say um politicians are waking up to and something that is getting more attention you know for excuse me for the big packing houses it's a factory right and they have what they do and and there's a bunch of people and they know one cut and then they move on and and that's you know kind of what it is uh whereas a small processor that might only do 10 a day or something like that there's just a couple of people that are out there cutting breaking down the entire animal and so uh you know to have that person i think that person has a lot of knowledge when it comes to butchery and it's it's kind of a lost art form uh you know with uh the production line mentality that that we have here and speed and efficiency so you know but at the same time uh you know can be hard to work with the the smaller uh processors because um you know you might have a restaurant partner that needs a very specific cut down a very certain way and they may not have that knowledge and so actually one of our restaurant partners is uh educating themselves from the butchery side of things so that they know the language to be able to bridge that gap in between restaurant language and avatar language so that they can actually get what they want uh where you know a certain cut is not over trimmed or whatever the case may be and so i think there is an opportunity to work locally with uh with the smaller processors but ultimately you know for the the scale that a restaurant needs and the on-demand needs of a restaurant it can be pretty hard for them to work with a producer like us if they can call their food purveyor up at midnight and the next day they got 25 tomahawk ribeyes that show up that's as convenient as it gets for them whereas i'm saying to them hey a year from now or six months from now or whatever it is you know here's uh let's do some menu planning and let's figure this out so that you can you know have exactly what you want it can be the best plate of food that your customer has that differentiates you from your competitor because if there's i don't know you know a couple dozen steakhouses all in the same city say denver for example or amarillo or something well what what makes you different compared to everybody else and so that's where a lot of people are trying to get an edge by working directly with with somebody like us but then all of a sudden we're playing a bunch of different roles uh which would which have all been displaced by food purveyors and other things so logistically it could be pretty complex yeah i think part of it's like you're trying to educate the restaurant on tour but also at the same time you almost have to educate the end customer because thankfully like the nose to tail movement has caught on so people are starting to understand that better because like you're saying it's like if you sell tomahawks and those are the sexy steaks well that's only a small part of a cow luckily i mean we know how to harvest all the other pieces and parts and every every little you know piece of the animal but like it's it's getting people to think outside of maybe just a a tomahawk or a t-bone or rib eye and try to really you know create better flavor profiles and education from other parts of the animal that can be just as good depending on on what dish you're trying to create um but just put a finer point on i'm curious if you think we're you know we're talking about field harvesting versus an avatar processor do you think we're anthropomorphizing like just having the lineup of animals in a shoot and we're worried about what that does to their their chemical balance before they get harvested or do you think you know is there any data behind that or do you think that's just our our general feeling i've read various opinions over the years about the spikes in cortisol that um an adrenaline that a cow may receive in a stressful situation and does that actually affect flavor profile or not i don't know if there's enough data on that i don't know if there's a preeminent authority on flavor profile that that is published on that front i'd be really interested to read it or to even contribute to the study in in some way um but you know ultimately i think the idea of a happy cow that's out in the field where the lights just turn out is very different than uh loading the animal onto the trailer driving it 100 miles or something like that some people have to drive them 100 miles um and and then it going into a strange place and and then you know what happens happens two very different experiences and like you said uh maybe we're anthropomorphizing things but ultimately i think as consumers um you know ultimately there's a lot that we can do as as consumers you know if i'm the consumer there's a lot i can do to ensure that that cow lived a happy life and i can feel good about that one of the things that i generally say about this business uh to people that aren't involved in this business is our cows only have one bad day you know they've got one bad day and that's it every other day they're taken care of they're fat they have water they have sunshine they can go eat whatever they want you know if if um you know it's it's early season and cheatgrass is coming up you know they can eat on that and if it's late season and the sedge isn't bitter anymore um you know the ph has changed in that grass they can go eat that uh and all of a sudden the um the leaves on on the gimbal oak are no longer toxic and so they can eat that safely at this time of year and you know those types of things but at the same time you know if if it snows real heavy in the spring the only thing that's green uh are those oaks they're gonna go towards them and they can get poisoned to die so you know there's there's tough stuff all around with the free forage movement in raising animals but at the end of the day i think um you know we all would like to have a uh it's kind of like that portlandia episode if you remember where they're ordering chicken at the restaurant like can we meet the chicken i want i want to meet the chicken you know it's kind of like that but it's somewhat tongue-in-cheek but i think that the point is salient that you know we all especially you know these days it seems like people want to have a connection to the food that's on their plate and they want to understand where it came from how it was raised and those sorts of things yeah like just like gen z and millennials want a story from even like a clothing brand they buy like everybody thankfully is like trying to learn more about the supply chain of everything they consume you know you brought it up so i i don't mind kind of alienating everybody in a way but like you said you know like ruminant animals with four chamber stomachs and their ability to to process grass is like in in essence at a thirty thousand foot level we're all living off of like solar energy right and to me a room in an animal floor chamber some stomach can actually is a great vegetarian because they can process that vegetarian into protein that then i can eat so it's just a step removed in between that they're much better at like processing that solar energy through vegetarianism and then by us eating like we're getting that vegetarianism and that solar energy and similarly with fish too with the smaller fish eating plankton and algae larger fish and then we consume the larger fish it's kind of that cascade through the system but maybe people don't want to necessarily deal with that one of the other oh one of the other questions i had for uh heifers versus steers do you see any marbling difference with heifers so steers grow bigger faster and you know so let's just say that uh i've got a group like i do right now that are designated as uh beef cows and so i've got a group that are steers in a group that are heifers the the first set that's going to go to harvest are going to be the steers uh and then the slower growing smaller heifers are going to bring up the rear take some a little bit longer to get to the same place you know a lot of people about how many months ago so a conventional beef is probably going to be somewhere in the 18 month range um and so we're going to be more in the 24 to 30 month category uh is where we're going to be and so the stairs are probably going to be a little bit earlier and the heifers are going to be a little bit later and you know sometimes a cow has a small steer sometimes they have a big heifer things can change a little bit but you know we we would like to try to have a uniform group as best we can and so good genetics plays a big part of that and i think that in terms of marbling and things like that a lot of people are going to argue pretty strongly that they would prefer steer over a heifer any day of the week um you know i think that uh the best beef that we ever had uh was a was was from a coal cow that was in a pasture for one reason or another with a nursing cow and that that coal cow was robbing milk from the mother cow and so all of those extra vitamins and minerals and and everything else we're going into number 675 i still remember her number your text 675. and uh and so that we kept her for ourselves that was the rancher's reserve and uh and so you know uh a mutual friend of yours in mind was by the ranch a little while ago and and he had some of the filets from from that uh uh from that one and i was like i can show you a picture you know here's a picture of that one i loved her so much man now i'm gonna be searching flights right now i gotta i gotta taste 675. but you know part of what is the um and then obviously part of that too is what what breeds of cattle do you raise uh we focus primarily on angus for the mother cows and we do have some sim angus cemental angus cross uh cows as well and then the bulls that we had turned out this season were full-blooded registered wagyu and so a 50-50 mix between the wagyu bull and the angus cow would be an american wagyu calf and so american wagyu is uh is a popular type of beef because it's incredibly rare it's incredibly fatty but at the same time it's not so rich that you can't eat a whole lot of it so if you ever go to a nice steakhouse and you order the a5 wagyu from japan you probably get something like two ounces for 150 bucks that is so rich you i mean some people can eat a lot of it i i can't you know two to four ounces i'm i'm tapped out you know i don't want my skin to crawl uh but it's incredibly rich and flavorful and amazing but uh like that um you know uh wacky american wagyu ribeye the it might be kind of like a 50 50 meat to fat ratio you might cut off a fair you know fair bit here and there but it's so rich it's so juicy it's really good and so the the steakhouse might sell that for 150 bucks too um and so the american wagyu uh product i i like quite a bit i think it's pretty interesting um and so we we do have that as a part of our business we uh you know so so those calves specifically are for the american y view program if that mother cow is a coal cow because she doesn't breed back then that's going to be a grass fed angus the franklin's barbecue down in in austin uh one of the things i i heard on their master class was that black angus uh grass that grass finished black angus is the closest thing possible to a conventional beef that's out there like where maybe you can't even tell the difference or what have you and and so um you know whether whether that's just one person's opinion or that's actually a gospel you know that's for each person to decide but our restaurant partners that are um uh you know going for the angus product that's you know where that is yeah i think i think i told you about somebody here locally that started with scottish highland cattle and then decided to crossbreed with angus but you and i both know that's the same bloodline so it's a little bit odd to me to like be you know reintroducing like a lower bloodline yeah just a furry one versus a you know with the horns versus uh you know a slicker backed one um that's kind of funny yeah uh harry kus are so adorable they make mini ones too uh i think i might have to get my wife one as a birthday present next year oh man i wish you wouldn't have told me that because i i i there's a mini horse farm near here and i it makes me laugh every time i drive by so um yeah a mini hurricane would just make me just overjoyed but i'll talk a little bit about because you brought up pricing power earlier so i want to talk a lot a little bit of the business side and then you know i think about often if we have a tradition uh transition back to regenerative farming or if we don't or if population keeps growing and we never have population nutrition you know part of it it might be that protein becomes an extremely luxury good and so you know maybe i'm saving money here or there but then maybe i have to spend you know a hundred dollars on a filet or a steak and that's just part of like you know making money in this world is like you're actually going to be spending a good portion of it on getting the highest quality protein you can because it may becomes a scarce commodity but i think part of that is you know your efforts to really tell the story to do everything right is you have to tell that story and you have to go direct to consumer and like you said luckily people want to know where that animal is coming from what their life cycles been like um you know and originally people started maybe doing cow shares to get people to buy other parts of it um or just be maybe actually be able to take the cow in aggregate so tell me about like how you think about that pricing power because you have specialty breeds because you're telling that story and you know you guys have been doing a phenomenal job on instagram um highly recommend people follow xit ranch on instagram but like what do you like did you try cow shares at first and then you decided people want specific cuts or how did that evolve on that the sales side of the process uh starting off we we did more of a direct to consumer model than what we have now and in that model we were generally doing subscriptions and it was by weight and then each month there would be a different set of cuts but probably you know say it was a five pound or ten pound box they're gonna get a couple pounds of ground beef every month and things like that because you need your you know me for meatballs or burgers or whatever but then we would put in other cuts now part of the value proposition that we brought to the table is that abby's a chef and we could also put in recipe cards uh so that people could try new recipes along with the cut you know if they um you know weren't familiar with what to do with liver abby can tell them uh you know and things like that or you know a lot of people are like oh what am i gonna do with stew meat or whatever you know it's like well you know here's a way that you can use uh you know bones to do marrow and and things like that and abby's really into using the whole animal and so she's got um tacos de lengua as one of the recipes that you can get off of uh off of our website and instagram and and so that was part of of how we got started with it and as we grew you know there's a lot of work that goes into the direct to consumer subscription box business and when we wanted to scale up we wanted to do it a little bit differently so we focused more on um you know can we sell buy the trailer load or the pot load or um you know can we can we sell you know x to a restaurant group and so working with one restaurant is very different than working with a restaurant group and so they're the restaurant group up in the front range that we work with we sell them say all the prime cuts out of a bunch of grass-fed and grass-finished angus cows um they then feather that out to their restaurants based on menu planning and things like that and so i'll get a nice message from somebody saying oh i loved this cut that i had at this restaurant i didn't even know that was that was going to be there you know i sold it to the restaurant group and then they sent it to this one or they sent it to that one and and things like that it's nice to get those uh those and so sometimes i go onto their websites to see what they're actually doing with uh with the beef and and so these days you know we're focusing more on larger relationships that allow us to really focus on the best possible um you know culinary experience for the end consumer and there are other companies out there that are doing a really good job of filling that gap in between say the producer and the direct to consumer uh person buying over the internet and so we i actually had a conversation this morning with some of the land of market guys about one of those companies that wants more regenerative beef they have demand for it but they need more producers and so they basically handle that entire you know middle section uh you know so we can send it on a pallet somewhere and then they've got people that then divvy it up into the boxes and send it out because trying to get dry ice when you live in the middle of nowhere is a little bit difficult and so there's some headwinds to that i mean i looked at like what do i have to do to have my own dry ice factory and uh and things like that but in terms of the the pricing power what i don't want to do is price out people who need high quality protein and so we still do have some friends that we sell cows to a friend picked up a whole cow last weekend that we had butchered and um and so we do still do a little bit of that but one of the ways that we make sure that high quality protein is working its way into the system uh irrespective of price is that we donate a lot of beef to local food banks and so there are a handful of organizations that we regularly donate our high quality high protein beef to and and so that is that's one way that we try to stay involved at a more localized level and in a way where if they can't afford this we don't want that to stop them from having good health and having good food yeah it's as you said i love the i always love like the csa box model though like buying by certain weight and then you get kind of whatever you get and it's kind of like a um it's a it's like an episode of chopped right like and then with abby's you know recipes you can kind of figure out new new things to make but i always felt like that was just a tiny fraction of the populace like most people just want their prime cuts shipped to them the way they want and all that stuff but then yeah then for you it's like finding you're basically starting a logistics business like you're saying trying to find dry ice and everything but part of it too i don't think people realize it's like if you can play in the head and you can buy like a quarter or an eighth share of a cattle you can actually get grass-fed grass finish prices way down like you can get down to like six to twelve dollars a pound depending on like whether you're using burger or prime cuts and so people are like well people can't afford it it's like if you could just pre-plan and buy in larger bulk size like it's you can get prices really down especially if you're able to shop across the country and maybe more than locally yeah for sure that's a great point and it's a great point and there are a lot of wonderful producers doing uh raising animals the same way that we do that have scaled their business and are doing a million dollars a year in that type of business and they've got uh large families and they can do it that way and it works for them and my hat's off to them i only have two kids and they're not that old and uh you know so it's harder for me to compete with them where they've got a lot of kids and they're older right um but uh you know all kidding aside i think that the one of the big misnomers is is how much space how much freezer space people thinks people think it takes to have a quarter of a cow or something like that and so if you have a you know a chest freezer freezer in your garage it's probably one of the best investments you could ever make for yourself you know it might cost you 30 40 50 bucks a year in energy to to have that freezer but all of a sudden you're buying grass-fed beef at a 30 discount to what it would cost buying it one cut at a time at the store uh so it it's uh it's something that makes a lot of sense to me and even before you know we were a producer we had two chest freezers in our garage and um you know there are a lot of people that were getting metered at the grocery store during covet because of the co-packer problems or not the car backer the packing house problems that you alluded to when they shut down during cobit well people who had been buying a quarter half full of beef and had that in the freezer they were fine for the couple months of quarantine you know they had all the high protein uh beef that they could have ever wanted you know it's just sitting right there so then all of a sudden people start a lot of people started cooking the cuts that uh they wouldn't usually do you know everyone goes for like the the you know the nice cuts first because it's their favorites and then at the end of the quarter share or whatever it is it's like what do i do with this cut what do i do with that cut you know that was the time when people learned just like sourdough starters you probably a sourdough starter that you started during quarantine too right no i'm thankfully not that bad for like chest freezers and then i i love getting like the vegetable csa boxes is like what the hell am i going to do with this and then you got to play thankfully for youtube and google makes it so much easier now but speaking of offcuts i'm i'm a one-man band i'm trying to promote uh swadero tacos those are my favorite locally and i'll send you and abby some some recipes for suadero and it's uh that's my favorite form of beef taco um but you know thinking about this i was i heard the anecdote the other day tell me if this is true i heard you're never supposed to ask a rancher how many had a cattle they have because that's like looking into their wallet that's correct yes 100 and and uh don't ask them how many acres as well uh those are some big no-nos yeah some people get pretty pretty upset about that because the idea because i can figure out what like the dress weight price is for cattle and then multiply it by how many cattle you have so i know exactly what your net worth is is that is that the general yeah i mean your bank account's sitting out in the field over there right it's a it's a very personal thing and and so uh you know whether it's the price per acre it's uh the price per pound or whatever you know it's it's there's a lot of transparency there and um so yeah asking somebody those questions is like you know how many dollars do you have in equities or you know things like that it's a it's a pretty personal question exactly so i was thinking about it as like you know everybody says farm to table now but i was trying to think like you went from finance to farmer or more specifically finance to rancher so like let's get into like why did you make that decision you know you come from a financial family and everything and you run your own finance businesses why did you want to get back into into ranching or i said back into because i know kind of the story but like tell me what what what made you step out of the corporate world and get back get into ranching and then from there maybe we could tell that the xit story through the years as well ranching is the ultimate macro trait is that volatility for the end of the world's like the hugh henry you know uh st bart's house kind of thing exactly exactly uh gosh there are a lot of different answers to that question i think um when when i worked in finance i always sought hobbies that were tangible where there would be a completed uh project tangible project at the end like making a table for example i made a dining room table once uh and i really enjoyed that process because i had something you know at the end of it that i could look to and point to whereas markets go up a little bit one day they go down the next and whatever else and depending on how you're judged maybe you don't know how you did for 10 years or something like that and um so ranching is very tangible it's very hands-on uh you you know see these animals get born you raise them and then you uh you know sell them later or what have you and so there's there's a journey that you go and uh you know like with the ranch down in texas we've we've had to mend a lot of fence down there miles and miles of fence and you can look down that fence when you're done you know after hours of work and you can see the completion of it and then it holds your animals where they're supposed to be because cows are always getting out it's what they do uh if there's a fence they can try to squirm through they're gonna do it um so you know i'd say that uh for me a lot of it came down to the tangible nature of fulfillment and uh i love markets and you know the horse market is another market you know cattle is another market you know they're all these different things they're just other markets and navigating them and figuring out how to put the puzzle pieces together so like i said it's one big macro trade you've got a commodity linked business you've got you know real estate you've got financing you've got uh you know just all these different things going at one time i mean shoot right now there's now a carbon market so if i measure how much carbon i'm capturing into the soil i can sell that into a market because we now have a price on carbon so there are all these things that exist in this that really scratch a lot of itches that i have in terms of professional fulfillment but in a tangible way yeah i want to even get into carbon sequestration later but like no i this is why i wanted to have you on because to me it's all trading and investing in finance like there's no difference it's just like different kind of formats but like um what do you think though is more stressful the vicissitudes of financial markets or the physicist institutes of weather and nature and all that but at least you get the satisfaction at the end of the day feeling like you did something there's some days when i wonder why i'm doing this and not sitting in front of a bloomberg terminal and then there are other days where i'm really thankful that i'm i'm not sitting in front of a screen all day um somebody asked me recently kind of how much time is split between the two and it changes based on what workflow needs are and things like that and getting ready to ship cattle down to texas from colorado it was like a 4 a.m to 10 p.m week long stretch to get ready to do that you know and uh horseback the majority of the time and some of the hardest work you could imagine but some of the most enjoyable fun times at the same moment and um and so you know there are trades that i'm involved in in the financial markets uh that uh that i enjoy a lot and um you know maybe it's you know um euro dollar futures or options on your adult you know like there's all sorts of things that i can do that that that i really uh can you know dial in on and have a lot of fun with but at the end of the day you know to have the satisfaction of raising the animal uh and and selling it for a good price and making you know good margin on everything i was like that that's there's a lot of fulfillment there that's that's very different than financial markets um and uh and and so i think that's something i'd say also the ability to model hard work for my children and for them to be able to learn off of the land is something that's very important because when my kids were little they're 12 and 7 now but when they were very little i didn't really know how to teach them what i did and so i came up with a game i said okay we're gonna have a scavenger hunt and the scavenger hunt led my older of the two who's old enough for the time to do this to find some nike sneakers that were in her closet and you know different public company goods right and then we were able to uh you know put them down and have a conversation about fractional ownership of the company you know being a shareholder and all this stuff and the earnings and dividends and she just looked at me she was like i don't understand what you're talking about i thought i'd come up with such a great idea as to you know how to explain this you know that when you buy these sneakers if i'm a shareholder you know i'm entitled to a little fraction of those cash flows and whatnot and she just didn't get it whereas now you know the baby calf comes out the baby calf gets big the baby calf goes away you know rinse and repeat like makes a lot more sense uh so i think there's a big bit of that for me in it um i do at times miss managing money you know professionally because i did really enjoy that and i took took a lot of pride in it but at this stage i am really enjoying building uh our ranching business and the employees that we're hiring and the decisions that that we're making are very complex and and so i have a lot of enjoyment for this uh but as you know as we talk about sometimes on on the side uh the grass is always greener and i'm just like gosh i should you know i should you know do a fun because this idea you know carbon related is so cool and investors should be all over this and whatever else uh but you know then i come back to my senses when people tell me no no stay outside on that horse all day it's a it's a way better thing um so it it's kind of funny you know to still sort of span the two worlds um you know but not professionally managing money for other people um you know it's a gift not to be doing that and to be outside ranching all day is is a lot of fun but at the same time i have to run the business which means when we switch payroll like we did a couple weeks ago and two people didn't get paid i'm then running around on a friday afternoon you know to make sure people have money in their and their accounts you know um but that's just part of life for any business owner yeah i would say just theoretically now you're just a uh discretionary global macro trader and i would think at least you through your physical exhaustion you at least sleep better at night than i do just staring at screens and living in this digitized financialized world but i think this is a good spot i know you've told it a million times but can you tell us about like the the history of xit ranch and how it started and how it got to where you are today so my my family um well this branch of the family was in chicago and uh the the uh the farwell brothers um originally held from steubenville new york and they moved west to the chicago area pre-civil war and um john v farwell my third great grandfather had a dry goods merchant business in chicago that uh you know did did quite well and and had a lot of uh pricing power come back to price of power and uh and you know post civil war boom that business did pretty well and he had partners such as marshall fields uh who then took the driver's merchant wholesaling business to the next level and and had the um you know had the department store uh and so when uh john v's brother charles heard from another politician so john b farley served in both the housing and senate uh charles b farwell did he heard from one of his friends from texas that they needed a new state capitol building and they were going to finance it by a land swap their ears perked up and so keep in mind these guys are a little bit older at the time they've just rebuilt chicago post the the huge fire and you know a lot of guys might not want to take on such a big endeavor but they they did so um there were three uh proposals three architects threw their hat in the ring for the state capitol building in austin what would be the new state capitol building in austin the firewalls really wanted that deal so they backed two out of three of them and one of those two got picked and so uh in return for building the state capital in austin my family received uh three million acres in the panhandle of texas and today if you watch austin city limits you see the state capitol building in in the background and there it is it's still there today the financing of it is is a pretty interesting story so at the time uh unless something was quoted on an exchange no bank would would lend on it and uh and so this is you know 1870s or so uh mid the late 1870s early 1880s and so unless it was quoted on exchange they wouldn't lend on it so they couldn't find anyone to land on the dirt and what was that dirt it was nothing it was raw land nobody lived there it was empty and uh and so john v had offices over in um over in europe and a lot of contacts in london so he went to london and he raised three and a half million sterling in debt in the capital freehold land and investment company used that sterling you know converted the sterling back into dollars so we've got a foreign exchange trade here so you can see where i get this stuff right it's one big macro trade and they uh converted dollars they built the state capitol building uh they then sold off uh later uh in the late 1890s they sold off some of the land to repay the note holders in uh the uk and so you know the the difference between that you know was was how much the family was left with at that point in time and um charles died i'm going to say 1903. john v died in 1909 and uh the uh the business was still going in in chicago and so you know there's a i guess at the time was when maybe family offices were becoming in vogue uh you know they had that business and they had other things going on and so the the branch was another portfolio position in today's words and so they continued to ranch it until 1912 and then in 1912 the cattle were sold and the family decided to go into the land leasing business in the land sales business and so their original vision was always to colonize that area and to um and for americans to be able to move west have a plot of land that they could farm and ranch on and provide for themselves and be able to make a living for themselves as the population grew and the west was explored and everything else and so the you know they really had this idea of you know self-actualization and people being able to provide for themselves and make a life for themselves um and so from 1912 to 1963 uh land was leased out and sold and in 1963 the last of it was sold so for the last 59 years my family had been ranching until we purchased the um the ranch outside of channing texas just in the months and so we have uh xit branded cattle running on original xit ranch lands right now and it's a pretty exciting thing for us after 110 years we've got xit cattle running around again and uh and so to me it's it's very fulfilling i view my role in all this is that of a steward and uh it's my job to take care of the land and uh well it's my turn and what you know what happens after i'm gone i don't know but hopefully i raise my my children with the right mindset to be stewards as well and uh next not this weekend next weekend is the xit rodeo and reunion in 1936 a bunch of the uh we'll call them alumni the former employees uh started a rodeo and reunion and it's still going today and i talked to the president of the board yesterday and we're going to be down there and everybody's all excited it's a big prca rodeo and uh you know we're gonna go and thank them for keeping the history alive all of these years and um you know they're just so excited that a descendant of the family is back running you know xit again i mean it's it's pretty neat because what a lot of people don't realize jason is that prior to what we did in the panhandle nothing existed there so there were zero railroad lines going through that area zero period by the time john v died there were four rail lines going through the property and i know he was really proud of that and that meant a lot to him and the family has taken a lot of pride as to what it meant for westward expansion and the colonization of our country and a lot of people don't understand that on that ranch about i don't know six seven miles away probably i can there's one of those rail lines and i can hear the rumble of those trains going the way it kind of goes and comes down this valley i can hear it when i first got there i'm thinking is this you know uh wind turbines that i can see on the horizon figured out it was the railroad so it's pretty cool to be able to hear that from that property and uh and so that's in our rita blanca division um and it was the mayor pasture uh back then and and so it's pretty exciting for us given uh our horse program and what we're doing with our cattle to be back down there and so today we want to do the best job we can do to take care of that land and to carry the the um you know the torch uh for the xit and to honor the past and the legacy is really important to us and it's such an amazing story i was hoping to tell even that the financing tangent too because like you and i have done many speculative investments that we've had bankers try to finance and it's so hard on modern times to get bankers to financing anything i can't imagine taking a steam ship to europe to try to convince europeans and then it comes full circle because it shows like how you you love trading euro dollar markets right so it's just like it's like the original almost euro dollar market even though it's more of an fx exchange from sterling back to dollars but it's an interesting part of the story and i i can't imagine i know how proud you were to re rebrand xit even with the with the colorado ranch but now and to watch like how excited you've been in the last few months to to bring back to raising cattle on the original xit land uh i mean it's just kind of amazing to watch it coming full circle and like you said you'd be in the stewardship of that but part of that is i'm gonna like kind of finish talking about is the modern version of ranching so to speak so it comes full circle with our conversation is you know we're originally talking about what's the difference between grass fed grass finish et cetera like you really got to learn these names and unfortunately there's no good names for anything right like we've talked about organic regenerative you know all these different forms of naming conventions that people are trying to figure out and so part of it is you and i privately talked about this a lot is the idea with ruminant animals and hooves systems and everything is it's part of an ecological system that you know they create indentations in the grass or in the land with their hooves that then larvae can you know kind of facilitate and water can um combine within those hooves systems and then you have you know the chickens can come in and feed off those larvae and how it creates kind of a full cycle system but more importantly is also then the even the way that the um the teeth structure of cattle are used to even rip grass is a form of regenerative farming and it creates like where we're alluding to earlier it creates a permaculture where you're maintaining or building the integrity of the soil and the microbiome that lives in the soil which provides us better nutrients as humans when we when we harvest these animals but one of the biggest part of it that you mentioned is if done properly properly with regenerative farming and building that permaculture you have a form of carbon sequestration and now that we have these modern carbon markets um you could be using those ranch lands to get credit for the carbon sequestration so it kind of like i know you and i have texted back and forth about you having even people come out to assess ranch lands that you're looking to buy and see what the the carbon sequestration impacted would be and if you could sell those credits into different marketplaces yeah you know the the well first off i should say if we are going to hire a new marketing director you know you should uh throw your hat in the ring first uh because you're definitely pretty savvy um you know as it pertains to the the carbon markets i think there are a couple of different important things in play the first is the eu has a compliance market and so they they're the you know the kind of leaders in that space and we have a voluntary market here in the us and a couple different regional ones at that the the markets over in the eu those that's an allowance market meaning you are allowed to uh to burn so many fossil fuels to emit so many pollutants right so it's not you know that the price of carbon is the it's the dirty price it's not actually the clean price of carbon and so i think the shift that we ought to see and maybe it's the u.s that's the leader in this space um you know would be that in instead of you know an allowance market it turns into a sequestration market and what i mean by that is that if a producer such as myself sequesters carbon into the soil and there's a verified process for that and you know you can say with a high degree of certainty that i'm not going to till it next year and release all the carbon and all this other stuff right um you know if you can do it that way then we're actually starting to turn back the clock a little bit whereas if you're going to whittle down you know the like in in the eu compliance regime for example they reduce the supply of these allowances every year which should artificially increase the the price of carbon in the eu for example and and so uh they're creating a demand curve that makes a lot of sense to me but it's still an allowance so if we want to move to a place where we're actually trying to turn back the clock in terms of um you know what's going on then i think a sequestration market is is where we need to end up going with this and i i think frankly we have the capabilities to do that but we need a uh national standard right now there's i don't know four or five different registries that have their own standard shoot you can even buy a bitcoin with a carbon credit wrapped around it right now there's all sorts of crazy stuff that's out there you know so just a fig leaf of carbon it's wrapped around a bitcoin so you've got a net zero token when it when it comes to the energy usage to uh create a single bitcoin i find that to be fascinating but i digress i think that the fact that farmers and ranchers can have another outlet to monetize their land is what's really important here because you know with government subsidies and all these other things we have a lot of pricing that is not as free as one might expect in various commodity markets and so uh if we can you know create an opportunity for somebody to have one more source of revenue off of an existing piece of land then maybe they can they can make ends meet and they don't have to sell land to live which you do see a lot of that these days where old branching families are having a hard time making ends meet and they might have to sell land in order to do so which is pretty sad it used to be that you could um you know run a cow-calf operation and be profitable and that was it now you need three four five different sources of revenue in order to be successful as a rancher and so i'm not just a rancher you know we've got horses we've got cattle we've got uh we're going into merchandise um you know hopefully we'll be doing the carbon stuff um you know uh on and on uh outfitter you know we're gonna be selling hunts and things like that so all of a sudden you have to be in all these different businesses at one time which that takes a lot of work and it takes a lot of people to pull off so you know i think carbon is is one of those things that could be one more lever to pull and to be pretty profitable i know some some guys uh that have organic farmland in the mississippi delta that are really excited about it and they've got a bunch of acreage that you know they just have to now quantify what's happening underneath it and they can monetize that and that's you know that's good for them it's good for their investors and whatnot some i'm very much for it i'm not for regulation per se so i wouldn't mind it staying a voluntary market but going to a sequestration market and having to be that something having to be something that people want organically as opposed to it being you know regulated yeah i think about um one of the things i think you'll love is like the perversions like the perverse incentives that can even come off the way the european market structure that i've been looking into is like is essentially it's a it's a weird like uh coal play in a way right like if if in the uk if not gas prices spike they're going to fire up the coal plants which means they're going to increase their buying of carbon credits in europe to offset that so it's like it's like a perverse way of playing coal which makes no sense when you're buying like carbon credits but that's that's a whole different story so one of the things that we're gonna have to say for a future episode that i was gonna get into is like like you just said it's like looking at these ranches and figuring out the six to eight different income sources like uh it's been serendipity that we've had the rise of the television show yellowstone so i always joke with you that like your text messages are like a living breathing episode of yellowstone whenever you're sending text messages when you're looking at ranches to buy and you're flying around in helicopters scoping out the land but then you'll send me the prospectus and we'll go through and like you said it's like it's not only like the it's the it's the cattle it's the horses it's the water sources it's you know how do we create merch out of this you know is it like king ranch working with like ford or whatever it is like all these different merch opportunities so like you're saying to like then carbon credits and sequestration is another form so it's yeah it's figuring out all the layer cake to make this a going concern and like we've always talked about lodges and in tourism and all those sorts of things so it's like it's a it's always a i i enjoy it i immensely but i always joke with you that getting your texts are just unbelievably uh uh enlightening as far as what it's like to live that that yellowstone kind of life and i and i'm always the one that's discouraging you from going back into running financial firms uh so that's that's my that's my fault but one of the things you did bring up that i want to mention is i was thinking about that like we were talking about what's more stressful running a financial firm or running a ranch and you brought up the idea of stewardship and especially with the history of xit is that you think about i'm just a steward of this land and i always wondered if that like long now type of thinking actually reduces anxiety and stress where i'm getting a uh you know a pnl on an intraday basis and that's heightening my stress so i just wonder if just that what your thoughts are on that longer term form of thinking does that it's in thinking in stewardship terms does that call a lot of the anxiety for you yeah that's a great behavioral finance question and uh so one of the things that became popular during my career uh was high frequency trading and uh the the way that i dealt with high frequency trading was to be a low-frequency trader and uh i can't i can't beat those guys they're uh they're too good at coding and they've got their uh you know hard line in right behind the server at nicey and and all that stuff right um and another fun manager i was talking to about that at one point he said you know i think it probably cost us 100 basis points a year i thought to myself man that's that's a lot um so kind of the old how do you be bobby fischer thing claiming anything but chess um so that was always part of how i like to think about things uh you know to to take the other end of the trade i'll take the long trade and uh and i'll just let things work out over time so i think in some ways when you take on this stewardship mindset it puts you in a position to start thinking about things in terms of generations or decades as opposed to the here and the now now the fact of the matter is i got payroll to make so i have needs for the here and the now today but if my primary asset say the land is going to be chugging along in the background at i don't know seven percent a year or something like that that's okay that's all right uh so then what can i do with all of these other uh lines of revenue and assets that i have and so i think that definitely helps us to sleep a little bit better at night because i'm not so worried about you know what's the price of cattle gonna do tomorrow or whatever else i mean ultimately it impacts us but if i do a good job taking care of the land and taking care of the animals they can take care of me and i always viewed previously that if i did a good job taking care of my clients they would take care of me as well and uh and so i think to be able to sleep well at night sometimes i refer back to reminiscences of a stock operator and uh selling to the sleeping point so if i have a position on that is keeping me up at night then i need to get it to the right size and uh what's jared dillian say there's two sizes too big and too small yeah exactly never always in hindsight you're either too big or too small yeah you know that that's what it is yeah so speaking of like sleeping at night or keeping you up at night i'm sure there's a final question but i'm sure it's it sure it's a million things at both of the ranches and like you even invite me to ones i didn't even thought about before of like when are the leaves are poisonous and are my animals gonna eat them at that time of year but like right at this particular time of year at all the ranches like what what is keeping you up at night what's on your mind right now right now what's on my mind is uh is there anything i can do to push this storm system south a little bit so it tags more of the ranch down in the panhandle we've been getting a lot of really good rain in colorado and we're only about a three and a half hour drive to the ranch in channing and they're catching kind of the the tail end of of it down there so we're getting a little bit of rain but right now you know um rain is uh rain is one of the things that i'm thinking about because ultimately that really impacts what we can do with the land and so if it if it doesn't rain then the land can't rest we have to have rain in order for the land to rest and if you know the you know if if a ranch is capable of you know let's say running 500 cows in a drought year maybe it's 250 or something like that then if you're overstocked and you take too many bites uh out of that apple then there's nothing left to eat and so fortunately right now we are under stocked down in texas where uh we don't have as much rain right now and because prices are going down because a lot of people are de-stocking right now and there's pictures on instagram of mile long traffic jams on highways of producers with trailers taking their animals to the sail barn right now because they don't have any grass rain's not coming people were trying to you know see if they could last and people are just capitulating and uh and so you know there are pockets of prices where they're they're getting to be pretty inexpensive um you know but uh as somebody who's under stock that's a good thing for me because now i can i can stock up and prices are lower so that that helps my p l you're talking about your p l i still have a p l and i need to buy right and i need to sell right um you know it's uh you know if i buy high and sell low it's a pretty quick recipe to to you know not do very well but if i can i loan and sell high then i'll be better off in the long run and at uh you know at our place here in colorado or in our place down in texas you know we will err on the side of what's best for the land before we will let it drive a financial decision that might mean that there are financial repercussions for that but if we don't put the land first then we're we're not we're not in it for the right reasons we're not going to you know be able to to have this land take care of us over multiple generations like every great trader you're structuring structuring a counter-cyclical p l and that way you can you know be there for the long term so i want to thank you for coming on we didn't we talked about cattle this whole time we didn't even need to get into horses and and breeding stallions for income so maybe i can convince you one day to come back on and and we'll go over the horse trading and stallion trading and and try to uh to enlighten the the viewers and listeners to what it's like to also be running a horse business as well so i drew i just wanted that'll be part two going on yeah exactly part two later yeah thank you all right jason thank you sir good to see you thanks for listening if you enjoyed today's show we'd appreciate if you would share this show with friends and leave us a review on itunes as it helps more listeners find the show and join our amazing community to those of you who already shared or left to review thank you very sincerely it does mean a lot to us if you'd like more information about mutiny fund you can go to mutinyfun.com for any thoughts on how we can improve the show or questions about anything we've talked about here on the podcast today drop us a message via email i'm taylor mutinyfun.com and jason is jason munifun.com or you can reach us on twitter i'm at taylorpearsonme and jason is at jason mutiny to hear about new episodes or get our monthly newsletter with reading recommendations sign up at mutinyfun.com newsletter this podcast is 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