While congressmen and even President Bush are wringing their hands, trying to decide if the U.S. is in a recession or not, and figuring out how to squeeze maximum 2008 election leverage out of it, ag producers--and particularly cattlemen--are being eaten up by rising costs.
High priced corn, caused by much of the crop being diverted to ethanol production, leads the parade, followed closely by rising fuel costs. It costs real money to buy gasoline and diesel to run trucks and tractors across the fields, and to run pumps to draw up irrigation water out of ever-deepening wells. Rising oil prices also run up fertilizer costs made from petroleum, as well as electricity and other utility costs.
On top of this, banks and farm credit institutions, in the face of the over-hyped and over-blown subprime lending "crisis," are cutting back loan-to-value ratios, repayment terms and loan renewals. Agriculture is largely a credit-based business. You borrow money to get the crop in the ground or the cows bred, and pay the loan back when the crop or the calves are sold. Hopefully there's enough left over to show a profit some years. If you can't borrow or can't borrow as much as you need, it means a job in town for your wife or a night job for you.
Any weather or other natural disaster, bad economy or credit crunch throws this already-bleak picture into disaster. And much of the cause is out of the hands of the individual rancher or farmer. His livelihood is at stake, but in many ways, he is an innocent bystander to games being played out on the national and international stage.
Even at that, most cattlemen are not crying. They suck it up and persevere, glad for the lifestyle and independence of the ranch life. Just like the 92% of Americans whose mortgages are current and in no danger of going into default. You never read about that either, do you?
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