Davy Crockett Economics

November 18, 2008

I’ve spent an entire day following the economic crisis that is upon us.

General Motors’ stock hit a 55-year low, and Ford’s is even lower and it has $29 billion in loans outstanding.
Banks worldwide are failing, and the U.S. government is bailing out banks and investment companies that have been driven – or driven themselves – out of business.

The cost of heating oil is predicted to increase 21 percent this winter. Credit card rates are going up and the availability of loans is going down. But at least the cost of gas is dropping.

All this doom and gloom has led me to consider a drastic change in my lifestyle. Instead of driving to the store to buy goods that are increasing in price, I’ll begin growing my own food. I can hunt for meat, and anything I kill can also be used for clothing. I think I’d look pretty good in deerskin pants and a raccoon-skin hat.

There are just a few problems. I don’t have a large enough garden to provide year-round vegetables. I’ve never hunted, don’t own a gun and I’m pretty sure I couldn’t kill an animal if I did happen to find one.

So what will I do in this economy? Probably the same thing your company is doing. I might cinch up my belt a little, cutting back on extra expenses. Like many processors, I’ve made investments in the last few years that wouldn’t be possible today – new buildings, renovations and expansion.

But I – and every other American consumer – will continue to buy food, including fresh and fresh-cut produce. Even though unemployment is at historical highs, the rest of the population, especially the middle class that purchase most fresh-cut products, will be working longer for less money in real dollars.

The trade-off that consumers make when purchasing fresh-cuts will be made clearer when they have to weigh the higher cost with the health benefits and convenience factor.

Are we heading back to a hunter-gatherer existence in America? I doubt it. We need to disconnect from the 24-hour news cycle that tracks minute by minute how much the Dow Jones Industrial Average is falling, which continues a cycle of fear. (The DJIA is a poor indicator of economic health anyway – it responds too quickly and too dramatically).

The economy has suffered for many reasons, but there’s change on the horizon. When the lame duck president leaves office in January, some of the bills stalled in Congress will begin to move. An end to the campaign rhetoric and doom forecasting should help level out the stock market and the bailouts taking place now should start improving the situation for some Americans.

To paraphrase Bruce Taylor of Taylor Farms, the fresh-cut processors and distributors that survive tough economic times will be stronger and more profitable when change does come.