If you’ve ever watched the Titanic movie from the 1990s, you might remember some actual footage of the sunken ship. With submersibles and robotic cameras, viewers caught glimpses of the somber atmosphere resting at the bottom of the Atlantic.
But did you ever hear about the scene that didn’t make the final cut in the blockbuster film? That’s right; it’s rumored a watertight room was discovered during that expedition.
With great anticipation for what could be waiting inside, the camera crew carefully unlocked the room. To their surprise, what they found wasn’t furniture and passenger belongings – but a bunch of cattle ranchers sitting around playing cards. (Yep, you read that right: cattle ranchers.)
Completely taken aback, the crew asked the ranchers, “Haven’t you guys been down here for like 110 years? Why didn’t you get on a boat or try to swim out or something?” One rancher nonchalantly replied, “Oh, we’re in the cattle business; we understand how this works. This thing has to come back up sometime.”
I stole (and perhaps butchered) this joke from Texas A&M University’s Jason Sawyer, who had attendees of the 2021 NCBA Cattlemen’s College laughing during his presentation. We can all chuckle a bit because, unfortunately, it is all too relatable.
A lot like the fictitious ranchers on the Titanic, the constant turmoil of a series of black swan events has kept cow-calf producers sitting tight and a bit frustrated for over two years. Beginning with the Tyson plant fire in the fall of 2019 and then COVID-19 trailing behind that in the spring of 2020, I’m sure every producer has at one point or another said, “This thing has to come back up sometime.”
And it’s predicted that it just might over the next few years.
As you know, beef cow numbers hit their peak in 2019, and it has taken longer than expected to work those calves through the feeder supply. However, things appear to be turning around with consecutive months of year-over-year declines in feedlot totals and slight cow herd liquidations due to poor economics and drought in the West. All this, combined with a strong beef demand and even stronger international markets, created a solid fourth quarter to close out 2021.
While the revenue half of profitability is looking to be positive in the coming years, the challenge is going to come on the cost side of production, as input and feed costs trend higher.
So pull up a chair, hang tight and manage those costs because these signals might provide the sunlight you’ve all been waiting for.
