Baxter Black: Suspicious of the good cow market
May 25, 2012
I was visiting with Bill in Alabama. He’s a cattleman, a bit of a philosopher and a constant worrier. I mentioned that one of my friends had sold a set of 520-pound feeder cattle for $1.99 a pound! That’s more than a thousand dollars a head!
“I know,” said Bill, “I’ve sold some myself but…” then he paused and added, “I’m wondering if the price is getting too high?”
I cast a skeptical eye, but he was serious. “Whattaya mean?” I asked
“Is it possible that the price will drive people away from beef and ruin our business?” he said.
I immediately thought of that Yogi Berra observation, “The place is so crowded, nobody goes there anymore.”
Due to the government’s cheap-food policy re-established with each new Farm Bill, and the tremendous advances in production brought on by modern agriculture technology, food prices have stayed cheap in relation to other essential commodities.
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I compared the number of 500-pound feeder cattle it took to buy a new three-quarter ton pickup in the last four decades. In the 70’s it took 22 head, in the 80’s it took 36 head, in the 90’s it took 72, and in the 00’s it took 79 head. With each passing decade the farmer’s product declined in value relative to his costs. Then suddenly in 2012 the number of feeders it took to buy a pickup dropped to 64 head! That’s back to the mid-80’s average.
We in agriculture have grown used to being treated like Cinderella’s stepchild or the kindly old hick uncle who still has cows, plants a garden and drives a real tractor. The consumer believes we live a simple life, Ma and Pa Kettle, like the sod-busters on the plains that need to be protected by the hero (a congressman or senator) who shoots the bad guy and runs off with the farmer’s daughter!
It would be an eye opener for a good portion of consumers to spend a day with a Washington feedlot operator, Illinois corn grower, Georgia seed stock producer, Utah rancher or an Arkansas cotton farmer. To see computer projections of average daily gain, soil testing, laser leveling, vineyard irrigation systems, dairy genetic selections, swine and poultry’s meticulous ration calculations and the voluminous scientific research being used in all phases of agriculture.
The corn seed or semen sample that is put to work on our farms and ranches every day has as much technology behind it as a satellite on its way to Mars. But the trusting consumer doesn’t see all that. They only see us driving a grain truck out to the mill or taking a trailer load of feeders to the sale. We, in our greasy overalls or well-worn cowboy hat, are the tip of the technological, tried and trusted, diligent, essential iceberg that puts food on their table.
So if the price of beef, grain, milk and strawberries are now a little closer to what they are really worth, I’m gonna be thankful. Of course, if corn hits ten bucks, I just might start to worry.