Riding Herd
“The greatest homage we can pay to truth is to use it.”
by LEE PITTS
– JAMES RUSSELL LOWELL
November 15, 2018 • www.aaalivestock.com
Volume 60 • No. 11
Cooking the Books BY LEE PITTS
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nce a month, right on schedule cattle feeders, stocker operators, owners of video auction companies and livestock auction operators get all bleary eyed, start chewing their fingernails, have migraine headaches, are nauseous and can’t sleep. No, they haven’t contracted some kind of chronic cattle disease, they are just awaiting the Cattle on Feed report and wondering how far cattle prices will fall this time. Symptoms may also include diarrhea, ulcers and depression and it’s said there’s no known cure. And yet it’s a disease we give to ourselves.
It’s None of Their Business
NEWSPAPER PRIORITY HANDLING
I was taught quite early in my cattle career that you were never supposed to ask a rancher how many cattle he owned. That would be like asking you’re future father-in-law much money he has in the bank just before you ask for his daughter’s hand in marriage. I find it to be one of the great ironies in our business that once a month cattle feeders voluntarily spill their guts to the USDA about how many cattle they own so that this information can then be used against them. In no other industry is our government so nosey. Do they ask Apple how many I phones they have in inventory, or do they ask writers how many
Risk everything, fear nothing, have no regrets. words they plan to write next month? Does a professional poker player show all his cards to his competitors? Of course not, so why do we? Every week and every month our government issues hundreds of reports regarding the beef business. They range from reports on boneless cow beef trimmings, national steer and heifer estimated grading report, weekly cattle and beef numbers, monthly national grass fed beef report and on and on. I started but lost count at 200 such weekly and monthly USDA reports about cattle and feed, and
they all have an effect on cattle prices. What other industry telegraphs their intentions like this? And who do the reports really help, the cow/calf man, the cattle feeder, or the traders who at any one time may “own” six times more cattle than exist on the face of the earth and who may only own them for a millisecond?
Read the Small Print Take the Cattle on Feed survey for example. It’s conducted in the 16 largest cattle-feeding states which feed 98 percent
of the cattle in the U.S. and is compiled from information from 2,000 known cattle feeders with a capacity of 1,000 head or more. Those feeding at least 1,000 cattle produce 85 percent of all fed cattle in the U.S. According to the USDA, “The Cattle on Feed report includes information from sources believed to be reliable and accurate but no independent verification has been made and we do not guarantee its accuracy or completeness.” Then in even smaller print they say, “Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract and/or commodity option thereon. The risk of loss in trading futures contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an incontinued on page two
As Ranchers Face Drought, USDA Cuts Back a Critical Program BY ALEX LEARY, WALL STREET JOURNAL
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illy Elkins’ pickup rumbled through miles of barren rangeland and came to a stop near an old black cow. “She’s just thinner, not doing so good,” he said. “She’s going to go. She’ll be hamburger somewhere.” Western ranchers are suffering one of the worst droughts in decades, and this week Mr. Elkins is liquidating half his herd of 1,000. He has avoided even deeper losses by offsetting feed costs through a decade-old federal drought-insurance program, which he says has been a “game changer.” But in late August, the Trump administration stunned the ranching community here by unveiling plans to significantly scale back the insurance program in 2019, ratcheting up anxiety in farm communities already upset over retaliatory beef tariffs imposed by China after President Trump imposed levies on its products. “We’re probably some of his biggest supporters. It’s pissed off a lot of people,” said Mr. Elkins, 60 years old and fifth-generation rancher who raises Black Angus cattle on his 50,000-acre Rocking Chair Ranch. “As of right now, we’re not blaming him, but [it] could be a problem politically for the administration.” The White House declined to comment. The USDA said crop-insurance programs
are routinely evaluated and that the goal is to mitigate risk, not make ranchers whole. “Since premium is subsidized, over-insurance results in the producer getting more subsidy than was intended by law, and increasing the cost of the program to the taxpayers,” the department said in a statement. The pasture, rangeland and forage program is a hedge against drought. Ranchers pay a premium—half of which is subsidized by the government—and receive indemnities in times of low precipitation. They use those payments for hay and other supplemental feed or water. “It saved my ass big time,” said Roger Warner, 71, of the family-run Eureka Springs Cattle Co., in southeastern Arizona. In 2017, he paid $60,000 in premiums and got $150,000 in payments after seeing only about an inch of rain over the six-month period of his coverage. The money covered liquid supplement and protein blocks and helped compensate him for a dearth in calves due to poorly nourished cows. “If it rains, I have to pay. It’s not like it’s a freebie,” said Mr. Warner, who has contributed more this year than he has gotten. “I’d like an explanation.” While used across the country, the insurance has been most coveted in recent years continued on page four
Riding With The Big Boys
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ne of the best perks about being a cow writer has been that it served as a gateway to visit many of the biggest and best ranches in America. The highlight came when I got to sleep in the legendary Big House at the King Ranch and dine at a table whose centerpiece was a big silver bowl awarded in 1943 to the seventh Triple Crown winner in history, the King Ranch’s own Assault. During a time when many cowboys are without cows and anyone with a good sized flower garden calls itself a “ranch”, I got to visit ranches in West Texas that were measured in sections, not acres, and anything less than 40 sections was considered a hobby farm. I climbed all over Arizona’s big spreads like the ORO’s, Pruett and Wray and John Wayne’s 26 Bar. I’ve written about many of California’s old land grant ranches and find it sad that I can think of only one that’s still in the same family it was granted to. I got to ride out with the cowboys for a branding on the Bell Ranch in New Mexico. At night we slept in our bedrolls and they told me to cover by boots with my cowboy hat so snakes or scorpions wouldn’t climb in them and surprise me the next morning. Every year I got to go to Nebraska’s Haythorn Ranch for a video sale and in Oregon I got to visit and write stories about Oregon’s MC and part of Peter French’s former empire. As part of Western Video Market I also got to take part in selling the cattle off many of the biggest spreads in the west like the 1,000 head lot of ZX calves we auctioned off in a grand total of 31 seconds. I’ve always been awed by the great cattle barons in history like Henry Miller of Miller and Lux who, it was said, could ride in his buggy from southern California into British Colombia and sleep on his own land every night. It was also said of the notorious tightwad that not once along the way would he eat his own beef because the beef he ate always wore
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