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Dealing With Double-Digit Interest Rates Through the Eyes of 1980s Cattlemen

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
There were three main reasons farmers/ranchers went out of business in the 1980s: 1) They couldn't adjust their operating costs; 2) They couldn't live within their means; 3) They couldn't service the debt they acquired. (Photo courtesy of ShayLe Stewart)

I've always cherished hearing my grandparents talk about their earlier years, when their bones didn't creak, and it seems like they all but had the world by its tail. I've heard my grandpa talk about days when he stacked small square bales all day by hand to make $7 by dusk, and boy was he ever proud. I've heard about the hardship they endured during the 1980s when they had four small children, a band of ewes, a land note coming due and heifers popping out calves left and right. Some of their stories they tell with shining eyes and a chuckle, but when it comes to talking about the 16% to 18% interest rates that they were paying back then, those stories aren't nearly as easy to tell. You can hear by the seriousness in their voices that those days still haunt them, as they barely made it by.

As we look to 2023, I'm excited for what the future holds. Just last week, the nation's weighted average fat steer price was $148.94, which is the highest the market has traded since August 2015. Fundamentally, the market sits ripe to rally; the nation's cowherd has been liquidated like never before, and beef demand, both domestically and internationally, has remained extremely strong. However, the problem with 2023, and with what the future may hold, looms in our economy and its uncertain state. At this point, I think the only thing certain about our economy is that interest rates are going up, and for an industry that's mostly become accustomed to cheap money, higher interest rates are a devil that we don't know how to dance with.

I'm committed to showing cattlemen their blind spots to hopefully save them from unrecoverable hardships later down the road. As Trey Wasserburger, owner of TD Angus, said in his Sustainable Beef promo video, "This industry has got a paddle big enough for anybody's ass." So, with that being said, I think that high interest rates are a topic we must hit head-on.

I searched the web and drafted some new charts, but ultimately felt like the lessons endured through the 1980s could only be properly told by the individuals who lived through them. That's why I have decided to share three different perspectives on the 1980s from three different cattlemen.

First, I had the privilege of speaking with Jim Taylor, the retired president of Yellowstone Bank in Laurel, Montana, who served in the lending field for over 40 years. Jim began his banking career in 1978 and, as he put it, "Back in those days, it didn't matter if you had a pen of German shepherd dogs or a pen of angus-steers -- you were making money." However, his jokes and sense of humor didn't last long as he bluntly said, "It's quite simple: Producers have got to manage their debt level, and they've got to realize that interest rates are just another operating expense, and that interest never goes up alone. If interest rates are projected to turn higher, you'll find that everything else is more expensive too -- fertilizer, fuel, insurance, everything."

Taylor went on to say, "Surviving high interest rates really comes down to a basic econ 101 principle: You've got to make more money than you spend. Agriculturists are an optimistic group who have a tendency of overestimating their income and underestimating their expenses."

When I asked Taylor how cattlemen today could learn from the hardships endured during the 1980s, he said, "In the 1980s, we lost a lot of good people, a lot of really good people, but there were mainly three reasons why farmers/ranchers went out of business: 1) They couldn't adjust their operating costs, 2) They couldn't live within their means, 3) They couldn't service the debt they acquired."

The next perspective I'm going to share comes from my market mentor, Ken Betschart, who currently markets cattle for Consolidated Beef Producers in Torrington, Wyoming, but was managing a 50,000-head feedlot in Kansas during the 1980s. When asked about enduring the days of double-digit interest rates, Betschart said, "You've got to be ready for your operating costs to go up substantially. It may not seem like a big deal for interest rates to jump from 3% to 6%, but if you've got an operating note of $250,000 dollars, at 3%, your interest expense is $7,500, but at 6%, it's $15,000, which is double what you were paying before, and that's when comparing 3% to 6%. You can do the math on what happens when interest jumps from 16% to 17%, to heaven forbid, we ever see 18% again."

Betschart also shared that, during times of economic hardship, you've got to get creative with different financing options, "If you're willing to work, can keep a job and create a good name for yourself, there are individuals who will do owner financing. So long as you aren't a risky loanee, some investors would rather charge you 5% interest on a note than make the 4% that they are currently making on CDs, and if interest rates in town are upwards of 10%, 11% or 12%, that's a good deal."

Lastly, I'd like to share with you some wisdom from my grandparents, Everett and Karen Hoines, who too lived through the 1980s on a shoestring budget (and hope and prayers) as they had land notes to make and four little children to feed. When asked about the 1980s, my grandpa said, "It was a damn nightmare, and people today just don't realize how hard it really was. We were lucky because we had both cattle and sheep, and back then, we couldn't get an operating loan because the bank was in trouble too. With the diversification of the sheep, we were able to sell wool and market lambs multiple times throughout the year, which helped with cash flow."

When asked about things that they did to persevere through those troubling times, he said, "I can't remember exactly what year it was, but it was when interest was at its peak, and your grandma and I went and bought some cows. The banker wanted to stick us with a variable interest rate, but there was no way we could stomach that. I pitched the idea to the banker that, if I got $1 per pound for my calves, I would pay him 10% interest, but if I got 90 cents per pound for my calves, I'd pay him 9% interest, and if I got 80 cents per pound for my calves, well then, I'd pay him 8% interest -- low and behold, he took the deal. But there was no way that I could afford to pay 8% interest if my calves were only going to bring 40 cents per pound."

I then turned the question to my grandma, who said, "It was my job to cheapen up the way we lived. I raised a huge garden, canned everything I could and even sewed a lot of the kids' clothes. When it came time to hay, I hayed. When it came time to work cows, I worked cows, and when we had sheep to lamb, I was right in the barn, helping get the jobs done."

Although their own individual experiences are all a little different, they all shared the same talking points: Don't get into more debt than you can survive; live within your means and expect your operating expenses to get higher. I don't share this with you to belittle your aspirations for the year ahead, but to forewarn you of a hurdle that could be looming. There's no question about it, higher interest rates will make for a stressed bottom line. But just as they made it through -- with some due diligence, a sharp pencil and the willingness to put up a fight -- we can make it through too.

ShayLe Stewart can be reached at


Cattlemen are eager for supply and demand mechanics to swing their way, but the market isn't completely free of hurdles as bearish concerns about the U.S. and global economies loom. Hear DTN Livestock Analyst ShayLe Stewart's thoughts on the 2023 cattle market at the all-virtual DTN Ag Summit on Dec. 12-13. Full details available at

ShayLe Stewart