Once again the laws of economics have reasserted themselves.

After a huge run-up (remember $1,600 weaned calves?) the cattle market has dropped dramatically and it evidently has still not found the bottom.

This has brought pain and hardship to many people but it is not a new phenomenon. Cattle prices, like prices of all products in a free market, are governed by the law of supply and demand. When demand is high due to short supply, price will be high; when demand is filled by increased supply, prices will be lower.

There are, however, differences between the cattle market and the widget market. When the price of widgets rises due to reduced supply or increased demand, the widget makers buy more machinery and hire more workers to make widgets. This can be a fairly rapid process and the supply of widgets can be increased quickly.

When ranchers decide to expand by breeding more heifers, it will be at least 24 months and probably closer to 30 months before beef from the increased cow herd reaches the consumer.

This time lag and the reaction of producers to changes in market prices combine to create a cyclic price curve that historically averages about nine years from low point to low point. This cycle has been remarkably dependable for many years because it is driven by human nature, which doesn't change very quickly. When prices are going up, people want to be on the bandwagon and when prices are going down, people want off.

Heifers entering the cow herd during the years when the cattle cycle is at its highest are unlikely to produce a single calf that will sell in the high part of the price cycle. These heifers, bought at the high point (if you didn't sell her, you bought her) will most likely leave production during the low price years.

So there you have it. All that is necessary to make money with cattle is to follow the advice of my grandfather, who said, "Buy them when they are cheap and sell them when they are high."

This works every time you do it and people like Wally Olson from Claremore, Oklahoma, can show you how. But it requires a major paradigm shift for most people. It evidently is particularly hard for bankers to get comfortable with the concept.

 There is another pathway to sustainable profitability; one that works in all markets. Get your cost of production down and keep it down. This is not nearly as hard during bad times as it is when things are good.

I had a good west Texas rancher comment to me once that, "We need a drought every so often to make us cut the fat out of our operation."

If we don't have the money, it is easy not to spend. When we are "leaned" down to fighting weight, trying to survive a drought is a good time to look hard at our management and determine how much of what we spend is truly necessary.

The question to ask is: How can we get the same or better results with less expense?

The short answer is: An expense that has to be repeated time after time is a red flag signaling an opportunity to make a beneficial change in management.

I know people who worm their sheep every thirty days the year around. In many cases, the labor and cost of medication required to do this would be sufficient to build the fencing and water facilities needed to instigate a good grazing management plan and do away with the need to worm routinely. Aside from reducing expense, this will increase the health and productivity of the whole soil-plant-animal complex.

For most operations, the winter bill is a major expense. Conventional wisdom says that we need big, heavy-milking cows and calving in the winter so we can sell heavy calves. Some people are finding that moderate sized cows with lower milk production, calving on green grass in the spring make a lot more money with a lot less work. The calves are not as big but there are more of them and the market will consistently pay more per pound for a 450-pound calf than it will for 550-weights.

Animal health expenses: Horn fly control, internal parasite control, and immunizations for half a dozen diseases are expensive in money, labor and stress on animals. Most of these maladies can be controlled very well with selection for genetic resistance for parasites and good grazing management, which improves both hygiene and nutrition.

We have all had cows that stay fat while raising a decent calf. They seldom wean the heaviest calf but they don't require the inputs needed by cows that wean heavy calves. Because these animals have good metabolisms, hormonal balance, and efficient forage intake and utilization, they outperform lesser-sized animals on an economic basis.

Perhaps we should be selecting our replacement animals, males and females, from the cows doing the best job of making money.

My ideal ranch would be one that runs solely on sunshine and rainfall.