Sage Mississippi beef producer Gordon Hazard spoke last week in Oklahoma about the state of cattle prices and profitability.

This was in Vinita at a meeting of the Oklahoma Land Stewardship Alliance.

One of Hazard's perennial points is that debt is a dangerous thing and he's weathered many storms by avoiding it and operating a fully-funded cash-based business.

He explains that when he was a small boy in the Depression-plagued South, a company he refers to as Connecticut General was one of the major lenders in the region. He said his family lost their farm to it. As times got harder and that company began to foreclose on farms, it would paint all the outbuildings of a foreclosed farm what he described as "iron red."

The economic damage was so widespread, Hazard said, "You could drive around on the highways and the byways and think you were on the same farm because all the buildings were painted red."

"From that, I became afraid of debt," he adds. "And I'm still afraid of debt."

As is his way, he offered much of his commentary anecdotally.

One was a story we've shared before in Beef Producer. It's a story from his days as a veterinarian and the comment of a wise old man in 1973. Hazard explained he was at the man's small farm because of a sick cow, for which the prognosis was almost certain death. Hazard said he was trying to cheer the man up and shared with him a recent report about how the demand for red meat was so strong that cattle prices, which already were high for the day, were going to keep going up.

The man's response was priceless.

Hazard reported he said: "Doc, ain't no-damn-body what can throw a brick so high it won't come down."

The current state of cattle prices looks extremely high, Hazard said, and he reported he has parked his money in a place where he could get 3% interest rather than own cattle. He's custom grazing steers for others right now.

From the man who always preached sell-buy marketing, this represents an interesting turn of events. Hazard's advocacy of sell-buy marketing had two lines of reasoning.

1. As long as you could buy cattle in the same market and at similar prices to which you sold them, without excessive price rollback, you should have a profit and be able to stay in the cattle business. This is true even with a major price break.

2. With sell-buy thinking, your money is represented as cattle, not money. A decline in purchasing power would not matter if the markets fell because you would have the same purchasing power.

Now he's actually out of the cattle market for perhaps the first time since the end of World War II and says he can't see a way to make a profit.

"And if you can't make a profit with a pencil you sure can't make one with real cattle."

Hazard recalled the heady days of the early 70s, the crash of 1974, and the long recovery afterward. He thinks there are lessons throughout.

He told about buying 900 "little whippoorwill cows" in 1972 at $101 each and breeding them to black bulls. In 1973 he sold the bull calves for $1 per pound and the heifer calves for 90 cents per pound.

"Those little $100 cows raised $400 calves," he said. "Now that's living!"

"I kept those cows. Did the same thing again. Had calves just as good, maybe a little better. The price was 10 cents a pound."

That was in the crash of 1974.

He added, "Now that's a 90% drop in price. I don't think we're gonna have that today but I don't think that brick can stay up there forever."

Perhaps just as important, Hazard recalls the uncertainty of the cattle price recovery through the 1970s and how that affected a rancher friend in western Kansas.

Hazard sold those cows and switched to stocker production. Prices began to creep up and by 1978 or 1979, Hazard recalled, calves were costing 18-20 cents a pound and feeder steers were fetching about 35 cents.

"We were making money big time, there," Hazard grinned. "But I had a friend and he didn't believe that market would stay up."

Hazard said this friend owned a big ranch and plenty of cattle outright, with no debt, and he became convinced the market was at a turning price and must fall.

"He had 4,000 steers and he contracted them at that price and then to make some extra money he sold 100 contracts (futures) on calves he didn't have. The market kept going up and he kept sending in margins and finally he ended up with nothing," Hazard said.

"That's the tale of two bunches of calves and either one of those things can happen. But that's the reason I wouldn't want much debt on a set of cattle," he concluded.

Another speaker at the same conference with Hazard voiced concern cattle prices could not stay as high as they are now.

Allen Williams asked rhetorically "Have cattle prices reached their peak? Probably not. But we may be getting close -- for several reasons."

Williams is not only a beef producer in Mississippi but is also involved with marketing at wholesale and retail levels for several companies with which he consults.

"So, I know what those folks are thinking and what they are saying because they're saying it to me every day. They lived for the last three years with the price increases but I promise you they are screaming now. And they're telling us they can't take much more in terms of a retail beef price increase."

"Here's another thing that's happening," Williams added. "There are projections that pork production will outpace beef production in 2015. The poultry people are gearing up. Their production, starting in the spring of 2015, is going way up.

"We already lost our position as the top protein to chicken quite a few years ago. Now we're getting ready to fall another notch, below pork."

"So we are looking at consumer price-point resistance," Williams warned, adding that the relatively strong U.S. dollar further hurts exportability of U.S. beef and therefore could add to decreases in beef consumption.