Posted December 31st, 2009 — Filed in Bud's Musings
When I write something it always makes me wonder why anybody would read it and why I wrote it in the first place. Then after reading what other people are writing it makes me even more confused about why anyone writes anything. Maybe it is like the person said “Isn’t it amazing that there is just enough news to fill the newspaper” as he noticed that every page was full.
What brought this on was reading an article on the DTN (Minding Ag’s Business). Its title was “Buckle Your Seat Belts For 2010.” I’ll include some parts of the article so we can understand the thinking of people who are doing the writing. It starts out with “As the recession spreads through farm country, profits seem to be vaporizing. At these commodity prices, very few operations in either crops or livestock can project profits.”
Then it goes on to explain how hard it will be to get credit or credit extensions. Then the solution that is given is to “Unlock the cash in your land as today’s interest rates will be the lowest in your lifetime.” Why do we think the solution to a problem is more of what caused the problem? If there is no profit to be seen, why borrow on the land and possibly lose your land?
Then it said to “Love the lender you have as we are in the middle of the worst recession in 80 years.” The person writing this must be very young or my math is wrong because 80 years would take us back to 1929. My memory goes back to 1936 and this is not a business recession it is a mental recession or knowledge recession. Right now, anyone who is doing business with livestock like it should or can be done will have no trouble at all. Because people have been able to borrow money and grow faster and bigger than they have the ability to operate their business does not mean the business is in recession, it only means they are trying to operate beyond their ability. When people try to do something that is beyond their ability bad things tend to happen, and when bad things happen it is always something else that is to blame.
From a business stand point, there was not a year from 1929 to now that had any more potential for success in the livestock business than there is right now. Why would someone say this is the worst in 80 years? Could it be that because things have been so good that it was possible to stay in business without the proper knowledge and just borrow our way into this knowledge mess that we want to call a business recession? The businesses that are really having trouble are the banks that loaned money to the wrong people and the people that borrowed the money. This is just poor business practices not a business recession and will not hurt the people that do use good business practices.
While never is a long time, never try to borrow yourself out of a mess that was caused by borrowing. Sell down and start small, learn from the mistakes and build a business that is sound and recession proof.
A knowledge recession will hurt lots of people and that will not be changed. For the person with the right knowledge it offers lots of opportunities. Use good business practices all the time, don’t follow the people who are making money while doing things wrong. Their time will come and it will not be so good for them. For the people who build their businesses on sound practices and knowledge these times are full of opportunities.