Ken Schmidt has suffered through tough times before. And the veteran Solen, N.D., rancher has this advice for cattle producers now:
Don't dwell on past mistakes. Focus on the present.
"I don't care who you are, nobody makes the right move all the time," he says. "When you come into these bad times, you can't just focus on the bad. It will make you crazy. There's a reason you're in business, so you did some things right, too."
He adds, "This is easier said than done, I know, but it's what you have to do."
Most sectors of the U.S. farm economy are struggling this winter, but the cattle industry is hit especially hard. Large amounts of unsold meat - sometimes described as "mountains of meat" - have pushed down beef prices and hammered producers. One measure: Cash receipts for cattle and calves in 2016 will fall almost 15 percent from the previous year, according to projections from the U.S. Department of Agriculture's Economic Research Service.
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Schmidt, who's been in the cattle business for 35 years, and has been in cow-calf and feeder operations, says the cattle industry is inherently cyclical and brings both good and bad times.
Differences this time
But there are differences in the current downswing, he says.
For one thing, "The market moves around a lot more than it used to," he says. "It's just so volatile. It's hard to understand sometimes."
From the perspective of Schmidt and many other ranchers, "The market swings up or down more than it really should," which complicates risk management, he says.
"Of course, you notice the down more than you do the up," he adds.
In August, CME Group made some changes that cattle producers requested, but producers say more action is needed to reduce market volatility. CME Group was formed by the 2007 merger of the Chicago Mercantile Exchange and the Chicago Board of trade; futures and options offered by the organization help ranchers and others manage risk.
Another difference now from past downswings in the cattle industry is that grain prices are depressed, too. Schmidt also raises wheat, corn, sunflowers and forage for the cattle.
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Normally, having both cattle and crops provides some protection for ag producers. Not now.
"It's basic ag econ: diversify, diversify," Schmidt says. "Usually it works. Usually one or the other one is OK. But when they're both down, like they are now, it's a bad deal."
'Came up really fast'
The current slump in the cattle industry also is unusual because "it came up really fast," Schmidt says. "It caught a lot of people off guard, including myself."
But ranchers and others in the cattle industry shouldn't spend time worrying about that, he says.
"That's water on the bridge," he says. "Don't fight what you should have done. Learn from from your mistakes. Anybody with experience in this business has made some mistakes, but they've learned from them. Just try to be smarter next time."
Schmidt's long experience in the cattle industry tells him "Good times don't last forever. Neither do the bad ones."
