Monday, February 8, 2016

Staying Power

We still have our solid snow covering. It’s packed hard. Venturing off the feedground into fresh territory takes chains and bravado. We’ve gotten stuck a few times which keeps us humble. Truth told, smooth sailing doesn’t show one’s true character does it? Wallowing around in the snow securing tire chains does. I let Mark do the wallowing of course. It’s so unfair.

I read to Mark out of my 2015 diary. It was 63 degrees on this date. What? The forecast for today is a high of 26!   

It’s a new year. Some things are the same. Red meat and raising cows in general is still being vilified. We’re still ignoring nutrition commonsense and refusing to raise the conversation around climate issues. And some things are different. After several years of sky-high beef industry profits, calf prices have plummeted to nearly one-half the high of a few short months ago.

The agricultural world is rife with boom and bust net returns. Of course any economic sector (oil for instance) can fluctuate wildly, and keeping our wits about us when prices are strong is always good advice.

Mark and I have asked ourselves more than once, “Were high cattle prices good for the industry?” On one hand, ranchers finally had enough money to build the shop, buy the new Ford tractor, remodel the house or put a handsome down payment into a coveted piece of real estate. On the other hand, grazing rental rates went through the roof because of competition for grass. And if you were trying to expand, cow prices were (and still are in our opinion) too high to cash flow. Seems the ride up is easy, the ride down stilted and begrudging. Hopefully the new equipment was paid for in cash and any real estate debt comes with a payment that can be covered when profits are squeezed. 

The high prices put a shot of adrenaline into the beef industry. Many ranching families brought on the next generation during this upswing. This was positive in so many ways, but now it's time to dig into the finances and help the youngsters understand the figure at the end of the spreadsheet. Then work together to keep it in the black. Knowledge is power, and respectful debate and collaboration, golden. 

beauty in my world

1 comment:

  1. Thanks for your insights into the cattle business. I hadn't realized there were down sides to high cattle prices.

    And amen to this! - "Knowledge is power, and respectful debate and collaboration, golden."