Is There an Upside to a Down Market?

By Jennifer Hill

Like all markets, cattle prices are cyclical. The tampering of mega-packers emboldened by government protections and regulation puts a false color on the market, but it still cycles, nonetheless. While the market is down things can get tough and long-term low cattle prices can bring hard times to all of beef country. However, if you are inclined to see the sunny side you might find that there is an upside to a down market.  

We’ve all seen the backyard breeders, wannabe cowboys and uppity show jocks that get drawn into the industry when prices are high and good times roll. They bring a variety of unsustainable animals and general tomfoolery into the industry. The low budget ranchette owner breeds half yak, half mini yard ornaments so he can tell his friends he is a rancher. Hobby breeds like Highland cattle become increasingly popular because despite their inefficiency at beef production, they look kind of cool. The genetic pool in the cull pens gets stranger and stranger, as do the questions these breeders ask on Facebook cattle groups, where no matter what is asked the answer always seems to be “call the vet”. (Veterinarian’s bottom lines must be loving these guys who can’t figure out how to treat ringworm on their own.) Then there’s the guy who dips his toe into the purebred world, bringing buckets of cash to purchase a small number of high priced animals, buying himself instant notoriety in a breed association. He plays the show game, putting his money into whatever looks flashy. He buys professional fitters and every can of show product available, then proudly displays his purple ribbon. He doesn’t know enough to realize that the cattle he’s purchasing are structurally unsound. They may bring home a few ribbons but they’ll never be masters of beef production, and because he’s not in it for his real income he probably doesn’t care.

So where does the upside come in? A down market forces everyone to take another look at their expenditures and set priorities. We tighten belts and cut out frivolous spending. For the cattle industry this looks like a culling of the chaff. The guys who never should have been in the business are forced out as they realize they can no longer justify their hobby to their spouses. The bottom end of beef genetics are sold off and the business of producing America’s beef is left to those who really know how to do it.

Finding the upside means holding onto whatever strands of optimism and hope that you can find. After years of intense drought across most of the west the U.S. cow herd began the new year with diminished numbers. In a free market system this should mean the market will cycle back up with rising prices. The coming months will show us if this principle stands despite the government intrusions in the market.  

In an industry that is constantly at the whims of things outside of our control; weather, government, urban idiots and sheer dumb luck, it’s important that we look for the bright side wherever we can.