Depending on whether you count the
grains of sand that have already reached the bottom of the
hourglass or the ones still left on top, these financial times
are getting awfully bleak.
In fact, some pundits are describing the current financial
crisis gripping the globe as the worst since the Great
Depression. The U.S.
government made the controversial decision to try to shore up
bad private business decisions with a $700 billion banking
bailout; the next day the Dow Jones market plunged, as did stock
markets around the world.
Commodity markets—a safe haven not so long ago for investment
dollars battered by financial insecurity and outright
illiquidity—have plummeted. Pick one. In the middle of October,
Darrell Peel, livestock marketing specialist at Oklahoma State
University noted that since mid-August, corn futures were down
24%, wheat futures were down 28%, feeder and live cattle futures
were both down 12%, the Dow Jones industrial average was down
25%, crude oil was down 21% percent, and Choice boxed beef
prices were down 9% percent.
At the time, cash calves and stocker cattle were still looking
for a bottom after losing a smooth $5 to $14/cwt. or so during
the previous two weeks, depending on where those calves called
home. Though the
aforementioned input commodities prices are falling to within at
least a day’s hard ride to reality, they’re still plumb high by
historical standards, especially when cattle net profit
opportunity is losing ground faster.
Add to that increasing equity
requirements for short-term credit, wonderments about the
availability of long-term credit. Sprinkle on top the drought
gripping wide swaths of country during the last several years.
It’s easy to see why few analysts expect the nation’s cowherd to
expand for at least the next 2-3 years.
Plenty of Hope, Too
When you do your counting from the top of the hourglass, the
view is vastly different.
Not only are cow numbers short in this nation—key global beef
producers are losing cows, too. Notwithstanding the current
financial crunch, beef supply is stable at best, while global
per capita income and beef demand increase.
When the incentive finally exists
for expansion to begin again in this country and around the
world, supplies will be even tighter.
Shorter term, though there is
nothing easy about the current mess, producers have more
technology—much of it underutilized—available to them than at
any time in history to reduce costs, increase output or both.
Whether that technology be reproductive, pharmaceutical,
mechanical, electronic or something else there are lots of cats
left to be skinned. As an
industry, agriculture overall is also well positioned to weather
the current storm. Look at any figures you want, debt-to-asset,
debt-to-equity, etc. and the industry is more solvent that it
has been in decades.
Lessons of Our Kin
There’s a picture—one of many preserved by my Mom and the
generations before her that I get a bang out of pondering. It
was taken about 1938, if my facts and memory are straight. In
the dusty foreground is a string of Hereford mamas and their
babies coming into a gathering pen. Behind them in the distance
are three riders, one with his rope lifted high overhead,
another with his hand held high, and the third with his rope
held out at his side, all in various stages of encouragement,
the way you do. The picture
was taken by my Grandma as the “boys” mothered up cows for the
last counting at the Temple Ranch where my Mom was born.
The ranch was being sold to
Davis-Noland-Merrill Grain Co. of Kansas City. Over the 28 years
my Grandpa, Orville “T.O.” Alley managed the old Temple place
would be known variously as the East Davis Ranch or just the
Davis Ranch. To everyone locally, though, it was the Z Bar. That
ranch and others added by the syndicate became known
collectively as the storied Z Bar Ranch in Barber and Comanche
Counties, Kansas. Ultimately, my Grandpa went on to own his own
ranch in the Kansas Flint Hills.
But, on this day in 1938, it was
Davis-Noland-Merrill buying and George Temple selling.
I look at that picture and I get to thinking about how the world
might have seemed on that day.
It was only a couple of years
after one High Plains Dust Bowl, and the severe drought that
went with it as cause and effect; and about 15 years before
another one. It was only about 10 years after some of these boys
had either gone to fight the Great War or had been called up,
and just a few years before the second Great War. It was just a
few years after the Great Depression, which itself was the
second great financial unraveling since the Teens. Never mind
the animal health problems they worried with then, things we
thankfully only learn about in history books now.
Here these folks are mothering up
cows to count because someone is selling a ranch and someone is
buying it. Accuracy matters to the people on either side of the
transaction because they believe there’s a future worth worrying
about.
I look at the picture, and I see
those arms raised, almost as if in greeting across the
generations. They look like they’re held up in victory, never
despair—we made it! Sometimes, I look at it and imagine the arms
are raised in challenge, their generation to ours, and I can
hear them say, “You think you’ve got uncertainty, you think
times are tough? Grab a shorter rein and tighter seat—bear
down—We figured it out even when we weren’t sure what we should
figure. You can, too. You can.”
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