Food is a fundamental consumer need and the economy will recover from the downturn.
Tom Field, executive director of producer education with the National Cattlemen's Beef Association, recognizes it's been a tumultuous ride these past few months. But the beef industry isn't down for the count.
He begins by pointing out free markets aren't immune from “purging” themselves. But what's amiss is media and politicians continuing to compare the current economic environment to the Great Depression. There are concerns certainly, but there are also safeguards in place. Field reminds producers to keep it all in perspective.
“When a market shifts like this, the market tends to look for things with tangible value as preferred assets,” Field says. “We still provide basic goods and services, and those things are going to be valued.”
It also helps that at the beginning of this economic downturn, the international economy was healthier and stronger than ever before. Imagine the boom for beef demand when the economy strengthens globally.
“Even with this economic downturn tapping the brakes on overall demand, the reality is the long-term outlook for beef demand is very, very good,” Field says.
Two pieces of good news every cattle producer can grasp is normalized input costs and credit availability. “When we spoke last, I would not have imagined I could fill up my vehicle for $1.69/gal.,” Field muses. In late '08, corn was trading far below summer levels. Local and regional banks are also faring better than larger lenders.
“I don't see any one decision that will make everything right,” Field says. “Producers will have to take an individual look at their own situation.” For some, that might entail keeping a herd bull for an extra season; to others, it will mean maintaining equipment to avoid repair and replacement.
“However, if we get caught in the game of saying we're going to reduce our preventive health care or not do a good job at weaning, the costs of those decisions will come back to haunt us as individual producers,” Field says.
Don't stray from core principles
Businesses that have survived tough economic times have similar key characteristics, Field says. First, they never stray from the core principle of cost control, which doesn't necessarily mean they're the lowest-cost producer.
Second, long-term sustainable businesses create value for their product. “It's a combination of staying focused on the prize, which is partly managing costs, partly creating value and partly looking for unique marketing opportunities,” Field says.
Producers need to look for every dime that can be extracted on cull cows; every opportunity possible for lightweight calves, heiferettes or buying inputs; and economies of scale by working with others in communities, counties and regions.
The silver lining Field reiterates lies in the product we produce. “Beef has loyalty with consumers, and we've got enough versatility to hold our own with a variety of consumer demographics in these economic times.”
Key in all of this will be working together with colleagues inside and outside of the industry. There are issues that must be fought together. “I have a lot of faith in what we can do as an industry when we link arms, clarify our vision and communicate that vision to the American people,” Field says.
He emphasizes there's never been a more important time in history to be active in local, state and national cattle organizations. It will be imperative to push the new administration for trade access, avoid excessive regulation and effectively communicate the positive message about American beef producers and their families to policy makers and consumers.
This is also the time to honor our elders and seek their counsel, Field suggests. “They can give us the perspective, courage and hope that this too shall pass; if we work hard and keep the faith, we'll come out stronger and better on the other side.”