Beef farmers and ranchers have forgotten or are ignoring what was leaned from the financial crisis of the 1980s. I thought that we learned that production and financial business records were absolutely critical to surviving tough times. The result is that the financial aspects of the business continue to deteriorate to a point that the banker has to step in. By that time most, if not all, equity is gone. And by that time it is really too late to take corrective actions.
Liquidation becomes the only alternative.
The earliest red flag warning is when net cash flow in the beef cow herd goes negative. This happened in some IRM herds in 1994. The second red flag comes up when a beef cow herd's economic profit goes negative. This happened on more IRM herds in 1995. The third red flag comes up when financial profit goes negative.