StoriesJanuary 1, 2004

Andrew Kramer

MOLALLA, Ore. -- Rancher Steve Coleman slogged through the mud of his Oregon cow pasture, ignoring the cold rain dripping from the bill of his cowboy hat to scatter hay for a herd of snorting, soggy black Angus beef cattle.

After the discovery of mad cow disease in neighboring Washington state, his herd lost about 15 percent of its value, or about $75,000, Coleman said.

Yet his outlook is not nearly as glum as the weather.

While industry experts are predicting a sharp decline in North American beef exports, in the face of bans from other countries, some ranchers hope to be sheltered financially.

The discovery of the potentially fatal disease followed a mini-boom for beef producers. It came after sales were buoyed by the popularity of the high protein Atkins diet, and a ban on Canadian beef after mad cow disease was discovered in that country.

Coleman drives a late-model pickup. He stores hay in a massive new sheet-metal barn. As with other ranchers, the spike in beef prices this year let him whittle away at debt on such investments.

"This is going to drop the ax on some ranchers," Coleman said. "But fortunately we were able to make enough on the front end of this. We got even with our financial people."

Ranchers are in a better position to weather the downturn than they have been in years, even as mad cow disease throws those gains in doubt, said Dianne Johnston, director of the Oregon Beef Council.

Things were just starting to look up after years of drought and a sour economy, she said.

"Finally, in the last few months, ranchers have been able to put a few dollars into their back pockets," Johnston said. "Hopefully this will be short term."

Although beef prices have fallen sharply -- by 15 cents a pound in a week -- they fell from an historic high, and are still higher than last January, in spite of dire predictions of the effect of mad cow disease.

The price for feed lot-fattened cattle rose 34.3 cents a pound this year, reaching a peak of $1.09 on Oct. 17, according to Dave Weaber, a beef industry analyst at Cattle-Fax, a Denver-based agricultural research company.

After mad cow disease was discovered in a Holstein from the Sunny Dene Ranch in Mabton, Wash., prices fell from 91 cents per pound on Dec. 22 to 78 cents on Dec. 26.

That is a higher price than ranchers saw last January, when fed cattle traded for 74.7 cents a pound.

"As an industry, we probably had the best year that we've had in history," said Dalton Straus, a Central Point cattle rancher, who said he was encouraged by the high prices to buy a new tractor, baler and truck.

Ranchers say the windfall mostly vanished in payments for debts racked up over several lean years. And a crisis may be looming as banks call in lines of credit on cattle ranchers because of the mad cow scare, Coleman said.

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"Banks are going to be awful standoffish in their attitude to this business for the time being," he said. "We're at the mercy of bankers."

Beef trading Monday brought more bad news.

The highest bid for fed cattle was 75 cents a pound Monday on very thin trading around the country, and many packing plants had no bids at all, according to a report by Cattle-Fax.

Beef futures fell 5 cents, the maximum amount allowed, on the Chicago Mercantile Exchange for the third straight trading session. Live cattle for delivery in February -- the current benchmark contract -- fell 5 cents to 81.17 cents a pound.

The futures price for June delivery was 69 cents a pound.

Ranchers say they see hope in suggestions by U.S. government officials that the infected Holstein was born in Canada, but beef industry exports say export markets are likely to remain closed, at least in the near future.

Coleman has gone into a defensive crouch, saying he will not sell cattle from his 800-acre ranch in the foothills of the Cascade Mountains south of Portland until the market improves.

He had intended to sell 250 heifers this winter, but will instead keep them in a pasture until the calves are born this spring.

Buyers quickly told him they were no longer interested, anyway, at least in the near term.

It's not the first crisis the lifelong cattleman has seen.

Ranchers were buffeted by a dairy cattle buyback program in the early 1980s, when agricultural officials decided to thin the country's herd of milk cows, reducing the need for government commodity supports. The cows were slaughtered en masse, dumping cheap hamburger meat on the market in a beef glut ranchers still remember with horror.

In the late 1980s, health warnings about red meat and heart disease caused beef sales to plummet.

Per capita beef consumption skidded from a 79.2 pounds a year in 1985 to 64.6 pounds in 1993.

Consumption rose again to 67.7 pounds in 2002, partly owing to the Atkins diet, a trend Coleman said he hope will help the industry pull through.

"I'm always looking on the bright side, even in these chaotic situations," he said.

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