Schiefelbein Farms- Managing Market

Risk

Don SchiefelbeinKimball, Minnesota

A Family Operation

Schiefelbein Farms

Frank & Frosty (Dad & Mom)9 sons8 daughters in-law31 grandchildren10 great-grandchildren

Raising Registered Angus Seedstock since 1958

Yes, we are Catholic!

650 head of Registered Angus Cows

Cows/Heifers Rough it

Market 300 Angus & Hybrid Bulls Each Year

Rito 1I2 Final Answer

BR MidlandObjectiveSale Date: February 19, 2011

Selling 300 Angus Bulls

Feed 5000 head of fed cattle annually

1500 head of Customer Calves on Feed

CONFIDENTIAL

Schiefelbein Farms

BusinessPlan

Basic Rules

We’d all be very, very rich.

If it were easy...

Risk Management at a Young Age

We’d all be very, very rich.

If it were easy...

Basic Rules

And, I mean nobody. If they did, they would not

tell you.

Nobody knows the market

Risk Management

Practical Risk Strategies

Formal Risk Management

Usually inexpensive, easy to understand

In risky markets, very expensive

We take a “high deductible” approach when we feed the cattle at our place with our feed

We take a “lower deductible”, more conservative approach when we feed cattle outside our place

Formal Risk Management

Be Disciplined Be Disciplined Be Disciplined

Guiding Principles

We ALWAYS employ this rule in our feeding

operation.

Avoid “Game-Over”

Guiding Principles

Establish a formal risk management strategy

that allows you to be in control of your operation

Avoid “Banker Input”

Guiding Principles

In “Bull” markets, we strive for significant profit potential.

In “Bear” markets, we have a breakeven plus mentality

Big Picture Perspective

BUY feed cheapSELL cattle highWe always buy value-added calves

Informal Risk Management

Be Disciplined Be Disciplined Be Disciplined

Guiding Principles

We feed by-products that other proteins can’t

(sweet corn silage, wet beet pulp, wet gluten, wet distillers grain, soybean hulls, corn screenings)

Feed what most can’t

Guiding Principles

The way small producers can effectively compete with larger companies is by growing their

own feed

Grow Your Own Feed

Guiding Principles

100% of the cattle we feed are sold as value-added cattle

(NHTC, Natural, Source & Age, Value-based grid)

Always Sell for More

Rito 1I2 Final Answer

BR MidlandObjectiveSale Date: February 19, 2011

Selling 300 Angus Bulls

Warning!Tractors Don’t Float.

Don SchiefelbeinSchiefelbein Farms

dschiefel@meltel.netwww.schiefelbeinfarms.com

320-398-6511

Thank You!