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Should producers double down or exercise caution right now?

September 29, 2016

4 Min Read
Should producers double down or exercise caution right now?

I recently read an article on theweek.com titled, “America’s birth rate is now a national emergency.” Written by Pascal-Emmanual Gobry, the article reveals that the U.S. birth rate is at an all-time low with only 59.6 births per 1,000 women. This is partly because of a decline in teen pregnancies and partly because people are choosing to marry later in life and have fewer children. However, a more troubling reason why there are fewer babies born could be that folks are exercising caution during times of volatility.

Gobry writes “It used to be taken for granted that the best indicator of a nation's health was its citizens' desire and capacity to reproduce. And it should still seem self-evident that people's willingness to have children is not only a sign of confidence in the future, but a sign of cultural health. It's a signal that people are willing to commit to the most enduring responsibility on Earth, which is raising a child.

“But reproduction is also a sign of national health in a more dollars-and-cents way. The more productive people you have in your society, the healthier your country's economy. It's an idea that was obvious back in the 17th century, when economist Jean Bodin wrote ‘the only wealth is people.’”

READ: America’s birth rate is now a national emergency

Aside from the fact that I just gave birth to my second child in June, I get why people are feeling a little bit hesitant about expanding their brood. In addition to the cost of health insurance, other “input” costs for raising a child continue to go up, but incomes are not necessarily following suit.

Then if you factor in the first U.S. presidential debate earlier this week, which left people frustrated and wondering how these could be the two best people America could come up with to lead the nation, it’s no wonder people are worried about the future and whether new leadership could further hinder their ability to raise a growing family.

Switching gears to the cattle business, the growing frustration with the current state of the markets has many predicting that competent ranchers will find themselves exiting the business.

This isn’t the first economic low cattlemen have weathered, nor will it be the last, but with the escalating costs of family living, along with high pasture rental rates, increasing upfront capital needed to run the operation, and confusing cattle markets, I fear that the pessimistic predictions might come true.

However, despite the negative rhetoric, my husband and I found ourselves having a conversation with our banker this week about expanding our cow herd. I don’t know if we’re dumb, foolish or risk takers, but we want to take a chance that there will be some opportunities to buy high-quality registered seedstock at low prices this fall and winter, given the state of the market currently.

After punching the numbers, sharing our business plans and weighing the pros and cons, the banker gave us his stamp of approval, and we’ll be headed to some cattle sales in the upcoming months, searching for some good deals and hoping we can sell our own calves in our upcoming fall female sale at a premium to help pay the bills.

Clearly, we aren’t following market indicators to hunker down and weather the storm. We’ve added another child to the family and we’re expanding our cow herd, despite what the market signals might be telling us. Granted, I fully realize that without our other sources of income to serve as a safety net, this move toward expansion would more than likely not be possible.

So I’m curious — what are your feelings as we near the fall calf run? Are you exercising caution in your business model, or are you feeling optimistic and are gearing up to take advantage of opportunities that will arise in this market? Do you think we’ll lose some young producers in this market? Share your thoughts, tips and strategies in the comments section below.

The opinions of Amanda Radke are not necessarily those of beefmagazine.com or Penton Agriculture.

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