By Chris McClure, Contributing Editor
My generally optimistic nature has been put to the test over the last few months. I know I am not alone in dealing with the turmoil of the marketplace, politics and a declared pandemic that has swept the globe, roiled the economy and shoved us all down the pathways of determining where we fit in the spectrum of “belief” in regard to the economy, the government, media and in our fellow man. It is mighty easy to fall into a conspiracy theory or two these days.
Most of us, however, are focused on getting through each day, and the business of producing beef really hasn’t changed, but the environment in which it is accomplished is in the midst of an earthquake of epic proportions. The aftershocks continue to reverberate through the markets and do not look to subside until, possibly, the end of the fourth quarter. Is that being optimistic?
How well have we responded as an industry? I suspect, in visiting with various individuals and assessing their attitudes, that as an industry, we exhibit a typical bell-shaped curve in how we have dealt with the situation – a handful of A’s, a good number of B’s and C’s, a few D’s and definitely some F’s. Overall, I give us a C minus. I suppose that is a bit pessimistic.
One thing is certain. The opportunity for constructive discussions related to epidemiology in regard to disease carriers such as a BVD-PI animal, or biosecurity measures to control the spread of disease through a population – or, even to prevent exposure, as well as appropriate responses – has grown tremendously. No, I’m not an epidemiologist or a veterinarian or even someone highly qualified in this area other than from the school of experience, but the discussions have been interesting. What I have observed is that when things are going well, we allow a lot of slack into the operation, and when they go south on us, it takes a period of adjustment to reinstate the basics.
Is that the state we are in as an industry? Are we responding in panic to a tremendously disruptive force only to realize that we should have focused all along on the basics of managing risk? The A’s, mentioned above, seem to be the ones who had the risk quantified and mitigated, whereas the D’s and F’s had forgotten the lessons of the past. It’s not the first time we’ve dealt with a cataclysmic seismic event that shook our very roots.
My optimism has waned to the point I feel I have no qualifications whatsoever to write about the state of the industry. I have a few cattle on feed; I bought the “dip” when the market cratered. I’m concerned they may need to be harvested before the market works its way back to near normal. I’m one-third hedged. I’m looking for the right conditions to lock in the rest of them, but my crystal ball shows only a thick, dusty haze. I’m just one of the little guys who wants to feed cattle and finds that my “place” in the industry is less and less secure with each passing year.
Are we on the cusp of mirroring the poultry and swine industries where a handful of companies control the industry? If we are, shouldn’t we be looking closely at those industries and carefully evaluating whether or not that is a good thing? When the big integrators fail, who steps in to bail them out? Foreign money or the government are usually the only options. Food production is a national security issue and to my mind, it makes sense to have a highly diverse, non-monopolistic structure that is both robust and resilient. When it is concentrated in the hands of a few, such as in the automobile industry, a single failure could jeopardize a significant portion of our food-producing ability.
I am deeply opposed to placing my faith in the wisdom of a handful of people within the government to make good decisions. I believe power should reside in the hands of the people – dispersed across the country. I believe the same is good for industry. There is a strong argument for efficiencies that come with scale, but there is also a tendency toward lethargy, arrogance, loss of flexibility and heavy-handed tactics in the marketplace. When I weigh the positives of efficiency against the negatives that come with it, I think a little inefficiency can be a good thing. Inefficiency can often drive creativity, and that is something we dearly need right now.
I visited with an elder industry statesman a few weeks ago who believes that the roots of much that is wrong within cattle feeding today might have been prevented had different choices been made back in the 1970s. The choices made then set us on the paths that we continue to follow to this day, and his assessment was that those decisions were based in selfish pride. An industry populated by those whose knowledge is superior to anyone else is unable to operate in a coordinated fashion because it might require compromise or the temporary surrender of a perceived advantage. What a sad way to live.