5 lessons I learnt from not running a dairy farm

I invested in a dairy farm recently. The opportunity looked great on paper. I was supposed to get a decent ROI, and a predictable growth path.

Funnel your profits back into the business, and flourish into perpetuity. The popular narrative about dairy farming in Pakistan is that it is highly profitable. The popular narrative worldwide is that the future is in agro. What better place to invest, I thought. I had the opportunity to do something for the country, be part of an industry that on paper looks solid, and of course, make money – all in one swoop. This is what happened:

Animals. Animals. Animals.

The first rule of dairy farming is that you need to start with the right animals. It is much better to pay a premium to get the right animals, than trying your luck at the life-stock market (mandi). In our case, my working partner took a team comprising a vet, a former dairy farmer, and a milker – and still  20% of the resulting herd was seriously under performing and had to be replaced.

I think people are generally good (I guess I have been living away for too long), hence it is difficult for me to say this. But here goes: The livestock traders in Pakistan are terribly dishonest. The sellers employ all kinds of clever tactics to temporarily elevate the animal’s milk production – and sometimes even the experts cannot tell the difference.

There are some operators, however, who charge a significant premium but provide the right animals. Pay the premium.

Don’t trust the assumptions

My partner met with a number of dairy farmers to identify key parameters: consumption, production and sales price. I applied a 20% uplift on costs, and discount on production volume and sales price to estimate feasibility. The actual numbers were off by an order of magnitude.

Most smallish dairy farmers do not manage quantitatively, and have poor visibility into costs and revenues per animal. The larger players are (understandably) quite cagey about sharing financial data. Even if they share the data, their scale may be very different from yours making the numbers less relevant.

Also, I hate to break this to you, but animals are not machines. The yield per animal in the first 2 months was 1/3rd of the forecasted average. And here’s the rub, the average buffalo’s milking period is 10 months. So you have effectively lost 20% of its productive life-time in what can  euphemistically be called, ramp-up period.

Its all about the mix.

Buffalo milk is easy to sell in Pakistan because it contains a higher percentage of solids (e.g. fat). It also fetches a better price than cow milk. The problem though is that the feed conversion ratio of buffaloes is typically egregious compared to cows. Translation: Cows produce much more milk per unit of feed consumed. This is a real big deal.

In fact one sophisticated farmer I spoke with said that running a sustainably profitable dairy farm  based on buffalo milk production is very difficult. Pay more, and go for high yielding cows.

In our case, the feasibility we had developed was based on cows, but we succumbed to a false sense of  urgency and started a buffalo based farm instead. The problem was that only industrial buyers (and certain sweetshop owners – halwais) purchase cow milk, and these contracts are usually signed once or twice a year. Rather than waiting, or finding direct references to establish these contracts, we went out and started a buffalo farm.

Don’t rush into it.

This brings me to the key point. When starting a business that you know nothing about, start (really) small. Test the assumptions and then put in more money. Starting with 10 animals is much better than starting with 50. Investing that time up front to practically understand how the business works is crucial. If the assumptions do not add up, then you can always make adjustments, or dispose the business without going into a financial tailspin.

Karachi is a f**ked up place.

Pardon my french, but there is no other way to say it. If you are based in Karachi, and want to actively manage the farm, then your only option is to set it up in the outskirts. Unless you have significant political clout, this is a terrible idea. Three months after setting up the farm, just as we were figuring out what to do, just as the operation was becoming marginally profitable, my partner got the parchi. Pay up or die.

Or run.

“Dubai is a plastic town”

Dubai has the reputation of being a plastic town, often compared to Vegas and Macau. There is no soul, people say. The vibrant, messy vibe that makes a city real, is absent.  While I have often succumbed to this narrative, I’m beginning to realize that the truth is more nuanced.

Cultural is an expansive, nebulous term. Men dressed in stark white dishdashes, waving thin wooden sticks to percussive rhythm is culture. Equally, women rolling their heads with hair falling down their shoulders in a celebratory dance, is a cultural norm. But culture is much wider than that.

What gives Dubai soul is not the neatly restored (or built from scratch?) Heritage Village. Its not the desert safaris with faux camps and fat bellied dancers. Its the buzzing streets of Satwa, where Ravi dishes out greasy Pakistani fare like it has for decades. It is Meena Bazar, where cloth merchant hawk synthetic bales as Egyptian cotton. It is old Jumeria, where Bu Qutair, a Keralite eatery, serves fried fish from a Portacabin by the beach.

As you drive South towards new Dubai, soul gives way to glamor and comforting sterility. In this part of Dubai, nobody ever dies, or falls seriously ill. Getting sworn at by a personal trainer is a favorite past time, followed by kick-boxing and Bikram yoga. Poultry is preferred organic. Tomatoes must be from Holland although local cucumbers are tolerated.

This amalgamation of preferences is culture too, in all its Jumeirah-Jane glory.

-Adnan

 

“Screw it, I want to chase my dreams”

Can you?

You have bills to pay. And much as I hate resorting to that trite middle class defense – ‘mouths to feed’. You have to contribute to your retirement fund. Schooling for kids. Healthcare for parents. Can you really afford a clean break from the trajectory of your life?

Probably not.

But that doesn’t mean you can’t chase your dreams. Truth is that getting your dream job, or kick-starting that business is not so much about a radical leap, than it is a series of small steps. As much as diehard entrepreneurs would have you believe, you don’t need to quit your day job to dabble in your dreams. But you need to start now.

I generally hold the self-help industry in a lot of disdain, starting with the well-intentioned Dale Carnegie. I guess it has to do with my early lack of success at winning friends and influencing people. But, Tim Ferris was onto to something in his 4 Hour Work Week. Before delving into semi-effective productivity techniques, he introduces the idea of dreamlining. This is how it works:

List down the things you would like to have and what you would like to be in 6 months and in 12 months (create two separate lists). Feel free to be as silly or ambitious as you want. Focus on what you’d like to be (conversationally proficient in Spanish) and not on the material things you want to possess as the excitement of possessions is typically short-lived. Do you want to be a novelist? A swimmer? A polyglot? An entrepreneur?

Now for each thing you want to be, convert that to an activity, something you can do. For example, If you want to be a novelist, you should publish your first novel in 12 months (that’s your ‘do’). If you want to be fluent in Spanish, your ‘do’ can be to have a conversation with a native speaker in 6 months.

Now – for each ‘dream’ on your list, identify the first step you need to take. Read through the list of tasks. Pick one task, and do it now. Repeat tomorrow.

If you write a paragraph each day – you will have a novel in 6 months.

-Adnan

ps. The quagmire we call the developing world is a good excuse, but a disingenuous one.

“Life’s hard and then you die”

I saw an interesting post on Quora about Tragedies. Have you ever thought about what makes a particular news item or a story tragic? Its the loss of what could have been. Husrev and Shirin could’ve lived long fulfilling lives. They could’ve made lots of babies. But alas – it was tragic that they couldn’t live out that potential. The 19 year old sprinter could’ve become an Olympic champion, but his leg had to be amputated because of the injuries he sustained at the Boston marathon. Tragedy is about the loss of potential. If the same amputation was being done to a 72 year old retiree, it wouldn’t be nearly as tragic.

Now think about how your life and compare that to what could’ve been. Did you have all the potential to be a quantum physicist, but you ended up as a Grade 17 CSS-type in Pakistan Railways? Did you have the making of a great photographer, only to wind up as call center agent? The good news is that your situation is still not tragic. All you have to do is…

PAUSE.

This where the motivational narrative peddled in the West fails when applied to the quagmire we euphemistically call the developing world. When there is no safety net, no medical insurance, no free education. When you have to vigorously defend your middle class precipice against the onslaught of inflation and employment you do not have the luxury of saying, ‘Fuck it, I want to chase my dreams’.

Or do you?

-Adnan

The irresistible sway of irrational behaviour

When the price of eggs goes up, we eat fewer eggs – just as we eat more when the price goes down. Its simple economics – the elasticity of demand. And if we were behaving rationally, then our consumption would go up or down with the same magnitude given a particular change in price. But it doesn’t.

You are the head of safety at KLM. Last week you just completed a pan-European course on airline safety where you were the trainer. And yet, you disregard basic safety convention to avoid a delay that may look bad on your track record. As a result you ram your jet into another during take off and kill each person on board. 522 in all.

You get into a betting game in a class full of smart, business-savvy professionals. The auction starts at 1 dollar. Whoever wins the auction walks away with a twenty dollars, but whoever has the second highest bid has to fork out the amount of his bid. It would be rational for the bids to never go past twenty dollars. Yet, every time this experiment is run with Harvard b-schoolers, the final bid is well above a hundred. On one occasion it was $204.

You are a trained archeologist. Your approach is scientific, your method is rigorous and your documentation is painstakingly detailed. You are convinced that the missing link between the modern man and the homoerektus lies not in mainland Europe, but in the jungles of the Pacific. You pack up your bags, travel half way across the world with your family in tow, and move into a shack in Indonesia. After months of methodical excavation, you make a monumental discovery. No one in the scientific world believes you, even though your research method is bulletproof.

What do these stories have in common? The fact that irrational behavior tugs at us at the most unexpected time and place.

The first three cases are different manifestations of loss aversion. The fact that we perceive loss much more acutely than gain. Insurance companies have been exploiting this for decades by selling Comprehensive Damage Waivers.

The last example is about the diagnosis bias. If we have made up our mind about something, then mounting evidence to the contrary will not sway us. Scientists in Europe in the 17th century expected the missing link to found in Europe, as that would confirm their conviction that Europe was the birthplace of humanity. No amount of scientific proof could convince them otherwise.

Applying these biases is sometimes essential for us to function as they help us make quick (and sometimes faulty) decisions. But often, as we are sliding down a precipitously irrational slope, its good to know what these biases are so we can quash them if we have to. That’s what this eminently readable book is about: Sway: The Irresistible Pull of Irrational Behavior.

What are your dreams worth?

A close friend posted this on Facebook yesterday:

The mundane and the prosaic, how they hamper my dream, where grass may be pink, and fairies dancing on moonbeam. The realities that intrude upon my muse, my travels left in worn out books, left are my brand new shoes. The hard fact of living blows away the castle in the air, career clipping my wings, and money has chained me here.

Its beautiful, painfully eloquent, and true for many of us. Seven years back, a mentor warned me about gold handcuffs – the type that restrain you from chasing your dreams. Now let’s set aside all the motivational, feel-good, Seth-Godin talk and imagine…

You just graduated from university, let’s say, at the top of your class. You’ve always wanted to build widgets. You get headhunted to the leading widget-maker in the world. You’re young and the world is ripe with opportunity. An abstract ambition is propelling you forward; your work isn’t as engaging as you had imagined, but you rationalize that its the means to something bigger. You don’t know quite what that is though.

You spend 5 years working at the widget company and you’re now the lead widget consultant. Your friends envy you, and your family thinks you’ve made it. You have a posh apartment, high above the plebeian streets. But your ambition remains as abstract, and its power to propel you forward diminishes. You realize gradually that you don’t know what you have been running towards.

What do you do?

The Opiate of Connection

Almost 1 year of no writing.

This is the age of consumer-created content where every person can become a publisher and reach a worldwide audience. Publishing is trivial. Set up a blog (if you’re stuck in the 90s) or a twitter account (if you’re more of the age) – and there you go. Consumption is even easier; all you need to do is lounge on your sofa and immerse your mind in an endless info-stream to sterilize your mind.

The very technology that allowed me to blog now seems to be killing my desire (or ability) to write. Consuming is so easy. Its tempting to think that reading the tens of thousands of snippits pushed onto my Android phone, iPad and laptop every day somehow make me smarter. That I will someday find use for Vintage Hemingway Wallpaper, Milstein Hall, Warhol Rules or Anna Dello Russo. There is a case to be made for learning for learning’s sake. But do these bits of fleeting data constitute knowledge? Entertainment – yes. Knowledge? I’m not sure.

The internet is rewiring our mind – some would say that its making us stupid.

Most of our groundbreaking ideas seem to occur out of nowhere. The aha moment in the shower. The unexpected insight in the kitchen. Or the flash of inspiration at a desolate beach. It doesn’t occur when you have 10 different streams clamoring for attention. Tweets, notifications, texts, blackberry pings and farmville alerts – they dull you into a vegetative state with a drip-feed of toxic nutrients.

I guess that explains a year of no writing. I’m too content with consuming to create. Too hooked-on to the opiate of connection.

-Adnan

The Case for Vegas

I really should not be up this early, but the successive jetlags have not been too kind on my bio-clock. First Dubai to east coast, and just when I thought I had the jetlag thing figured out, I sling-shot myself, on a rickety United flight, to the glorious capital of global sin.

And so, in the grand pyramid of Luxor, featuring the brightest man-made light projecting into the atmosphere, I had my first encounter with the slot machine. I lost a whopping 6 dollars – and here i was thinking I had skill.

On the way back, I quipped, to my friend who lives here: I don’t know why logical people gamble? And proceeded to have 30 minute discussion (argument?!) over the case for Vegas. My position, perhaps unfairly parochial, was this:

Why would a rational person put money in the slot machine, or on the table, when he knows that the odds are so heavily stacked against him that on an aggregate basis they will always lose money?

I mean, would you knowingly buy a stock that you know will eat 50% of your equity or even 15%? In my mind, playing a lottery and feeding a slot machine is like putting a wad of cash on fire – money you will never see again. And to be honest, I thought this case was so compelling that a counter argument is a non-starter.

Not if the friend arguing with you is a business-savvy, epicurean deconstructionist. Here is the case he made:

Firstly, the gambling industry is very closely regulated with the probability in favor of the house closely monitored – so in most games the aggregate probably is not “heavily” but reasonably stacked against you. In the slot machines for example, the aggregate probability is only about 5% in favor of the house. So an a sample of sufficient trials, you should only lose 5% of the money.

Secondly, gambling is not an investment, its entertainment. You go to the casino to experience the thrill, the adrenalin rush of winning and losing, of beating the house. And you pay for that – but how is that payment different from watching a movie? A “rational” person can decide what his apetite for risk is, if it is zero, he can always go watch Casino Royale on the silver screen, but he will still walk away 20 dollars and 3 hours poorer.

Thirdly, gambling can be a source of good. Take for example, the employment it has created for thousands. The chefs, the gymnasts, the singers, (the strippers? : P) . It created a city in the middle of the desert (sound familiar, right?)? so people could flock there for an escape, and in doing so, built a massive economy, universities, schools and architectural marvels.

Reflecting on this argument in the wee hours of the morning with the lucidity of a sleep deprived truck driver – I think he has a point. Not that a counter argument cannot still be made, but what it boils down to is:

People have always gambled, and in places of prohibition, it still happens, behind closed doors, unregulated, unchecked. Wouldn’t making it legit allow better monitoring and control, bring it under the tax net, and as an ancillary benefit, allow patronage of the arts, however, extravagant and plastic?

I think my friend and I were both discussing minutiae, because I was never questioning the legality of gambling. I believe adults have the right to do whatever they choose. What we were arguing over was the rationality of the gamblers and that again is a subtle point:

Spock will never gamble, as he will calculate the sterile mathematical probability and it will not equate. Kirk, on the other hand, will gamble at every galactic casino, while having three simultaneous love affairs with 3 different humanoid species. Irrational – yes. But that’s what makes him human – and captain.

Time to sign off…I can hear the slot machines ringing. :p

-Adnan

Welcome to the moral collapse of Pakistan

They came first for the Ahmedis
and I didn’t speak up because I wasn’t a Ahmedi

Then they came for the Hindus, Christians
and I didn’t speak up because I wasn’t either
……
Then they came for the Shias
and I didn’t speak up because I wasn’t a Shia

Then they came for the accused Blasphemer
and I didn’t speak up because I wasn’t an accused Blasphemer

Then they came for me
and by that time no one was left to speak up

Welcome to the Moral Collapse of Pakistan.

-Adnan

Is Urdu Dead?

Poor Urdu.

I didn’t care much for Urdu growing up. It was just something I had to do in school, not “learn”, but cram just enough to clear the exams. Even though I was schooled in the FSc system, and took urdu literature, my reading proficiency was so poor that Amma had to read chapters to me prior to the exam, in the hope that I would remember enough to scribble something half meaningful in my broken handwriting. I eventually triumphed with a glorious D. I would never have to look at Urdu again.

After escaping the torture of Urdu language, when I entered university in suburban Punjab (PIEAS), I was horrified to see “Urdu medium” students – y’know the type who actually read Jang. To rescue them from their lingual misfortunes, I set up, along with three urban kids, an English Literary Society to teach the masses the joys of English conversation. And everybody gladly enrolled; part of the reason of course was that 2 of the 3 girls on campus where in my little English-speaking clique. We had one language to rule them all. But the real reason was that the “Urdu medium crowd”, as we disparagingly called them, despite their high grades, and smart minds, felt less capable. Urdu was the burden they carried, a scar too obvious to hide.

Fast forward 10 years.

I now realize how grave our mistake really was and how dangerous was the precedent that we set. I see parents whom we would deride in the immaturity of youth, as being “urdu medium”, now only speak to their toddlers in English. I see an entire generation, not recognizing the beauty of their language, struggling to speak where I once merely struggled to read and write. I know a case in which the son of an Urdu teacher grew up not knowing the language that was supposed to be his. In cafes and restaurants, radios and TVs, all I hear is either English, spoken in a plastic accent meant to impress, or a vile form of Urdu adulterated and abused.

What have we done!?!

During my travels, I have occasionally been complimented “…your English is really good”. The 18-year-old me would have been joyous, but I now cringe because I have only recently begun to understand the sub-print: “…(as your second language)”. But where is my first language? My stamp of identity?

It is in tatters, dying a painful death from neglect, from discrimination and from the shame of defeat, not at the hands of its erstwhile colonial masters, but us, its supposed saviours.

Is Urdu dead?

-Adnan

ps. Sabeen and Zak, thank you for your efforts to trigger the reawakening of our generation. One Ghalib event is more inspirational than years of bland classroom instruction.