My View From The Country

Happy Days Are Here Again

South Korea to reopen. Beef demand soaring. Carcass weights down. Supplies to tighten. Fats trade for $100/cwt. or more. Feeders $10/cwt. higher than January. Corn acres higher, corn prices lower. Drought officially ends. Green grass is coming. These are some of the variations on the headlines we'll see this week in industry publications, and the exciting thing is that, for the most part, all seem to be true.

I've been told you can tell the direction of our industry by evaluating the last cattle cycle and determining if it was a net positive or negative. The previous couple of cattle cycles probably deserved to go in the negative column. However, the current cycle is not only the longest in history, but among the most positive.

Whether it be tremendous gains in beef demand, record profits or vastly improving genetics, the story from an internal-industry standpoint is tremendously positive. The one negative was the infighting that prevented the industry from capitalizing on important opportunities. In the big-picture scope of things, however, history will likely record that as a mere blip.

To be sure, there were some major negatives evident but they came mostly from outside forces, and the industry response was exemplary. The beef industry lived through the summer of E. coli, and made dramatic gains in reducing its incidence. Then came 9/11, and the beef industry continued to grow demand despite a weakened economy.

Of course, BSE was a huge hit from a price standpoint, but the growth in demand and strong supply fundamentals enabled the industry to weather its loss of export markets. And an amazing industry response kept beef demand growing, thus avoiding the collapse that virtually every other country experienced.

Of course, the anti-beef groups were in full swing and well prepared. They even attempted to align with cattlemen groups, but the effort failed, as American consumer confidence in the safety of the U.S. beef supply remained unshaken.

Then there was the weather (drought, severe winter storms, hurricanes, fires), followed by the ethanol boom that resulted in a doubling of corn prices. In the past, all these events could have crippled the industry. Instead, they became just short-term obstacles.

All in all, most of the negatives in this last cattle cycle came from outside the industry, and the industry deserves an "A" for its response. The challenges of the next cattle cycle will be significant, but so will the opportunities.

Certainly, there are those who feel threatened by the changes in the market place -- the move from a commodity-based system to one based on value. But the vast majority of the industry has become more customer focused, making the prospects for the future even brighter.
-- Troy Marshall

What's My View From The Country?

As a fulltime rancher, opinion contributor Troy Marshall brings a unique perspective on how consumer and political trends affect livestock production.

Contributors

Troy Marshall

Troy Marshall is a multi-generational rancher who grew up in Wheatland, WY, and obtained an Equine Science/Animal Science degree from Colorado State University where he competed on both the livestock...

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