Monday, January 14, 2008

Dry Spell

Being a non-economist but a trained econopessimist, I'm anxious to start blogging about The Great Recession of 2008. But first I must indulge in one quick follow-up to the previous post on global warming disclosure, after which I promise to forget about climate change, even though it’s January and one of my kids swears he got a mosquito bite. Not to worry, I told him; probably just a bedbug.

Anyhoo, in the last post I quoted a real lawyer who shared my puzzlement at the failure of climate change to show up in many SEC filings where it might seem appropriate. Here's another example: this 10-Q filed by National Beef Packing Company, the fourth largest beef processor in the country. (National Beef's stock isn't publicly traded, but they do all the usual filings, I assume because of debt issuances.)

OK, I’m no cowgirl, but doesn’t this sound sad? "The cattle herd in the United States (U.S.) remains in a no-growth phase. Following the drought of 2006 in the central U.S., an extreme dryness in the southeastern states resulted in cow herd liquidation in that region during 2007. Retention of females to replenish and grow the U.S. cattle herd remains slow, resulting in long-term cattle supplies that show no appreciable sign of growth in overall fed cattle supplies over the next two to three years."

If I’m understanding this rancher talk, severe drought has played a major role in triggering a multi-year “no-growth phase” in supplies of the only commodity National Beef packages and sells. Yet nowhere in this 10-Q, or the 10-K the company filed in November, does it highlight weather-related risks. (The word "weather" is casually thrown in as one of the factors affecting cattle pricing, but that's it.)

The firm did list as a risk factor its need to comply with pesky environmental regulations, a beef it shares with our good friends at the U.S. Chamber of Commerce.