Call it the Roaring '20s before the Depression of the next cattle cycle if you want to. But the past 12 months, even with the debacle over bovine spongiform encephalopathy (BSE), have been what most in the cattle business wish they always could be — profitable.
Pick a segment and it has had ample opportunity during the last year to make significant profits. That doesn't mean everyone did. Nor does it suggest that even those who raked in some large dollars were able to recoup the equity that had bled for too many months before things turned.
But, historically high cattle prices — five-weight calves were trading for as much as $127/cwt. the first part of May, and fed cattle fetching $90/cwt. — were nearly back to the levels they were before the world closed its doors to U.S. beef exports in late December.
You know the reasons. Cattle supplies are dwindling and lingering drought continues to stall industry-wide herd expansion. Mostly, though, even in light of having to sell more beef here at home than intended, increasing domestic demand for beef (growing since 1999), even as prices continue to increase, has put an exclamation mark behind one of the most remarkable turnarounds imaginable.
What's more, the near and longer term prognosis could make the most flint-hearted skeptic downright giddy.
For one thing, so far, the market is higher and got there quicker post-BSE than many economists predicted early on. Longer term, the Food and Agricultural Policy Research Institute (FAPRI) is projecting — all else remaining equal in terms of government policy and whatnot — that the cow-calf segment will be profitable at least through 2009.
We May Be The Enemy
Certainly, there are plenty of challenges. There's also little reason to expect that the economic ebb and flow between good times and bleak will be much different down the road than it has been since the modern beef industry took root.
Ironically, the stiffest challenges today are arguably those being manifested from within the industry itself.
As an example, let's go by the headlines or by the last coffee shop chat where folks are always eager to agree when they're told what they want to hear. It would be logical to assume from these sources that some of the philosophical issues currently dividing the industry have been cleaved so deeply and inexorably that it will never recover.
Fact is, the future looks a whole lot like the past. Today, the clash is over things like country-of-origin labeling, packer concentration and imports from Canada. Some 20 years ago, the lines were being drawn upon alliances and direct trade vs. the auction markets, how to improve demand and packer concentration.
History says 40 years ago, battle cries were shouted across such issues as how to deal with consumer demands (not demand), exports and packer impact on prices. Every decade of the cattle business has seen some decent to downright good times, some broke times, and disagreement all the time. In every decade, the notion of protectionism in one form or another has been bandied about.
The point is that it is human nature to think yesterday was better, friendlier or gentler somehow. The reality is, however, that today is no worse than yesterday and, in fact, it's usually better.
For instance, no one had to worry about BSE years ago. But then again, no one today is trying to figure their way out of a screwworm epidemic like they did in the 1950s. Globalization today continues to bring new and unknown risks, but no one since the Depression and Dust Bowl era of the '30s has had to seriously consider shooting cattle that were starving because there was no feed and no buyer, period.
So, even with the current challenges, and notwithstanding some cataclysmic event no one can rationally predict, the state of the industry today has to be considered finer than frog's hair. As such, it's one of those rare times when there is the opportunity to run on offense, rather than dig in and defend.
A comment made by Dolph Briscoe, comes to mind. He's a former governor of Texas, a lifelong cattle producer from Uvalde and one of the largest landowners in the state. I had the good fortune to visit with him a couple of years back. As he reflected on what he'd seen and done in close to 80 years, he recollected how there was more opportunity today than he'd ever seen in his lifetime.
As for advice, he suggested, “Take care of business and look ahead. At the same time, don't be afraid to bet on the future of this great country of ours. As you look back, the future of this country has always been greater than its past and, in my opinion, it will continue to be so.”