From the Publisher of The Cattleman's Advocate
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March 2009 07/24/09 5:07:27 PM
March Cattleman's Advocate Comments on page 3
From the Publisher, By Jon Angell
This month’s feature of the shutdown of a large local grain dealer will no doubt be an ongoing story for months and possibly years to come. We would like to believe that Bernard Madoff scandals happen in far and away places such as New York or California but “would never happen here” is just flatly not true. In agriculture, we are maybe more susceptible to such financial calamity. Everyday our rural businesses are in conflict with traditions and practices of the past, against the speed, scale and complexity of today and tomorrow. Part of what made our tradition of a deal on a hand shake is a well established ethical code with a common moral foundation of yesterday. Sadly it appears today that this common moral and ethical foundation we in agriculture share is much smaller and less stable today. We may need to adopt the old Reagan adage used in negotiating with the Russians as we go forward in our own business transactions; “Trust, but verify.” Even so, one of the problems we have is how to verify the trustworthiness of those that we transact business with. It isn’t easy or full proof at all, but might I suggest your first line of defense is a gut check. Often your gut will tell you to watch out before your head ever detects a problem. Risks will always, always be taken in business. Your last line of defense will be to manage the risks that you must take as to be survivable if the worst case scenario comes to be the reality. I fear that the last line of defense was violated by too many involved with the Gieseker grain story. Some of you will remember from the January issue a column that I penned entitled Sellers: Beware of the Outflow of the Tide (article posted at the EMCC website) in which I warned of financial risks that are discovered during economic downturns. Now this article focus primarily as dealing with the livestock side of things. This months feature shows the some of the results of the Outflow of the Tide on the grain side. The article from January was reprinted by Illinois Beef magazine. I believe it was mostly received well by our readers but it did get back to me that a couple of Illinois cattle dealers took offence after reading it in the Illinois magazine, thinking I was talking against livestock dealers. I would comment that wasn’t generally my intent. I first wanted to point out to producers a certain marketing risk that many were not even considering. Also, I wanted to point out the most important responsibility of livestock markets (also often not considered by producers) is to clear the checks. I would like to say that these recent events only solidify my early beliefs as presented in Sellers: Beware of the Outflow of the Tide. I do know the article did some good even if it was misinterpreted by a few. I received a call from a reader the month that the “Outflow of the Tide” article ran. He told me that he sat down and read my paper from front to back and told me how I was depressing him with my articles. It turns out that this young farmer was owed money in the Martinsburg grain collapse but after reading our publication doubled efforts to collect money owed to him. It’s my understanding he was paid in full shortly before the blow up. The question will be if he will get to keep it. My rant on politics and economics from last month generated several responses. Most notable came from Nick Korn who called to say that I was, “right on” in my comments, and to ask if I knew of Larry Burkett and his book The Coming Economic Earthquake (Moody Press, Chicago, I11. • 1991). I had not read the book but was very familiar with Larry Burkett largely through his Christian talk radio show, Money Matters that focused on financial counseling from an evangelical Christian point of view which was hugely popular in the 80’s and early 90’s. In the book Nick mentioned, Burkett speculated growing federal deficits and the ever increasing use of debt by business and households out of control. Burkett pointed out that severe economic times will appear sometime shortly after the millennium unless current polices are changed. Burkett believed that Keynesian economic policies, with ideals for continuing federal deficits and the implicit preference for higher levels of consumption, reduced saving, and a larger role for government in the economy are a means to disaster. As Burkett states in the book that as interest on the debt consumes a larger and larger portion of the yearly federal budget, and more money is borrowed each year to pay the interest on what was borrowed in previous years, there will be a temptation to “monetize” the debt at an increasing rate leading to a calamity not seen since the Great Depression. Burkett questioned whether or not elected leaders would take action in time to prevent fiscal chaos, and believed they would not. Nick said that he read the book when it came out and it had left an impression on him. Nick remembered, “[Burkett] said that he didn’t know when the economic earthquake would come, but from back all those years ago he has described exactly what has happened down to government officials pleading for consumers not to save but to go out and spend.” Let me say that on page 4, brother speaks of those who “think the sky is falling” to which I have little doubt that he would include me. Here is probably my biggest concern that makes me run with the “chicken little” or the “gun, canned food and a bomb shelter” crazy crowd is the blitzkrieg against our basic American founding principles. The new administration has called for and is currently implementing what they believe is their election mandate for as they said, “Change We Can Believe In.” It is my belief that the change we are headed for if not stopped will be disastrous. Let me leave with the following quote: "The most dangerous moment for a bad government is when it begins to reform." --Alexis De Tocqueville
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