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Certainties for uncertain times

Warren Buffett is staying away from stocks. The latest report from the Federal Reserve shows scant signs of growth. Experts warn the foreclosure crisis is far from over. Unemployment approaches a 20-year high. The value of the dollar continues to move lower. The U.S. no longer has the most competitive economy, at least according to latest survey and economic data; we've been replaced by Switzerland.

These are just a few of the stories garnering headlines in one September week. When you add in the stories about the hard times in the cattle-feeding, dairy, poultry and pork industries, it all can add up to be kind of depressing and just a little bit scary. These are interesting times, no doubt, but then again these are the kinds of times when opportunities are to be grasped.

An example is that JBS announced last month its intention to purchase Pilgrims Pride; such a move would give JBS a position in the poultry business similar to Tyson, and even surpass Tyson in acquiring for itself a major position in all four protein arenas.

In times like these, it's hard to have a good, long-term perspective; looking ahead just three or four months feels like an eternity. And, with the volatility that's been occurring, there is good reason for such thoughts.

Certainly, the big economic drivers are emanating from outside the beef industry right now, which makes predicting the future even trickier than normal. However, there are a lot of positives, as well. For instance, people still love their protein. And, while beef demand has been dropping along with the declining global economy, when compared to the other protein sources, one has to feel pretty good about our position.

Cattle supplies are tight and are expected to remain so for the foreseeable future. But, the global economy will stabilize; in fact, there are some signs we may already be at the bottom of this macro-economic cycle.

Without question, industry numbers are bullish and, compared to our friends in the other segments, we've fared better than most would have expected as cow-calf producers. Retained ownership is returning as a viable option, grain prices are down, and hay and grass conditions are generally better in most areas this year.

While cow and calf prices are lower than they were a couple of years ago, just compare them to what the pork and dairy segments have been enduring. Or, compare it to investments in real estate and/or the stock market — cows have held up better than just about anything, with a few exceptions, such as gold.

Those who are in a position to do so are becoming more aggressive; history tells us that getting in when others are heading for the exits is usually a pretty good strategy.

Ethanol and the global financial crisis took away what would have been some historically good times for the beef business. And, yes, ethanol appears to be a permanent negative and promises to significantly reduce the size of our industry. But, when this economy turns around, we'll see that the good times have been merely delayed.

Troy Marshall is a seedstock producer and contributing editor to BEEF Cow-Calf Weekly, an electronic newsletter distributed every Friday afternoon. Sign up for a free subscription at

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