Record high cattle prices together with great forage conditions heading into the grazing season were a welcome relief to ranchers in the West this year until rangeland fires became the overshadowing issue this summer. The loss of grazing was only made worse for many ranchers with the loss of cattle and while lightning was the culprit to ignite many of these fires, the largest fire in California was human caused. Other wildland fires including significant ones in eastern Oregon are also alleged to have the same source of ignition with investigations ongoing.
These circumstances in the West illustrate how the elements for a profitable year in business can quickly change, particularly in the cattle industry where both markets and feed conditions play a critical role. Risk in this industry is significant and must be continually assessed and managed. Ironically, rangeland fire risk is mostly a function of forage conditions – the better the forage conditions, the higher the risk for fire. The grazing season began in eastern Oregon with the best forage conditions in the last few years. But rangeland fire risk was also increased. The risk of lightning strikes may not be manageable, but human caused risk to some extent can be managed.
Market risk is manageable and in a year like 2024, it becomes more imperative to manage that risk. I have consistently pointed out that record prices do not necessarily insure or even result in record profits. My comment at a couple of recent meetings where I was a speaker was that “you can go broke with record-high prices.” Cattle numbers are going to continue to tighten, but the other side of the coin is demand and while we watch the indicators, the products selected in the meat case by shoppers can still be quite unpredictable. How mountains of debt, both public and private, will impact consumer decisions remains a significant issue and market assessment.
Risks to business do not go away. The rangeland fires have only added to that risk and changed the economics of ranches in the western U.S. this year with tough decisions becoming even more difficult. Cattle losses and grazing decisions for the next two years will not be easy and business risk is only increased.
