This Too Shall Pass
This too shall pass is a proverb indicating that all material conditions, positive or negative, are temporary. How true for production agriculture.
Since 2010, the grain crops region experienced a spike upwards in prices that provided a sense of euphoria to most producers and a sense that they could do no wrong. Mother Nature had just handed us two years of widespread drought in 2011 and 2012. This drastically lowered inventories while demand was constant or increasing. With the “I can’t fail” mentality supported by crop insurance, farmers all over the country changed their long term practices by planting crops on hills and under trees plus buying back Conservation Reserve Program (CRP) acreage. With the extra production acreage and Mother Nature providing decent to good weather for crop development, we are now back to where we started. We didn’t listen to the voice in our head planted in the past by wise people….This too shall pass.
In the same time period for beef producers, Mother Nature supplied dry weather throughout the Midwest and storms in the north that forced dramatic national herd liquidation. Cattle prices spiked to unprecedented values based on national head counts lowering to what the cow herd was in 1950. Nobody stopped to compute what the carcass weight was in 1950 vs. 2010-15. Needless to say, nobody was going hungry. Farmers saw a great opportunity and retained heifers for breeding to sell to the people who just couldn’t resist to enter the market at its peak and ride it down. We didn’t listen to the voice in our head planted in the past by wise people…….This too shall pass.
The effects to producers who varied from their practices have or soon will be, coming to light. As they exit, they will leave excess machinery and livestock on the market further exasperating the current situation. The truisms in production agriculture that have been in place over the years that should have been practiced are:
• Keep your crop rotation and cycle in place
• Expand into the capacity of your operation over time
• Make improvements and investments in profitable years
• Mother Nature will always even you out
Remember these and you should be able to weather the storms. Good, long-term producers practice what they do well and vary little from the proven path. They see production agriculture as a marathon not a sprint. It is a lifetime of investment and sacrifice, and the prize at the finish line is a long time in coming. The American farmer is efficient and invested in modern production techniques and continues to feed more and more people per day both in the USA and overseas.