in some cases encourage operators to increase their land and equipment as a basis 

 for further increasing their holdings of cattle. Consequently in times of low 

 prices when holdings are reduced the charge of taxes and interest on land in- 

 debtedness becomes disproportionately large and a reduction of these charges 

 usually involves a liquidation of some of this inventory at a loss. Here is a 

 problem facing the operator today. To what extent is he justified in increasing 

 his ownership of land or acquiring other debt for restocking in response to pres- 

 ent high prices and the prospect that while these high prices will continue for 

 the next few years, they will be followed ultimately by lower prices when pro- 

 duction again overtakes market demands? It is not a question of whether he 

 shall take on any new debt or not, but a question of degree of such indebtedness 

 and of the employment of such new capital in such a way that the increased 

 production resulting from it shall receive the higher prices on basis of which 

 it was borrowed. Obviously the best time to have brought new capital into the 

 livestock business in Montana was during the last stage of low cattle prices 

 when it should now be enjoying a high return. While it is true that many 

 Montana cattlemen, who are large operators, did expand during that period, it 

 is likely that the large bulk of small operators and many new operators will now 

 be found in line for credit extensions based on the present high cattle values. 



NEW PROBLEMS 



Another problem facing the industry today that was not important in the 

 days of unlimited range is that of insuring an adequate feed supply both of range 

 feed and hay for winter feeding. 



A better utilization of ranges is necessary if carrying capacity is to be main- 

 tained. In fact producing capacity of ranges could be increased according to 

 those who have studied this problem. As against inefficient use of grazing lands 

 and the purchase of more land to increase numbers carried, a more efficient use 

 of present units is a highly important consideration. 



In the matter of hay production the question of reserves is important. Good 

 hay years and poor hay years if left to themselves to determine the amount avail- 

 able for winter feeding would result in a highly fluctuating supply. The most 

 successful operators cut all the hay possible each year and feed out hay from a 

 large crop as efficiently as that fed out from a short crop. In this way they 

 build up reserves against the short hay crop years. In years when other opera- 

 tors who are out of hay are selling cattle or buying hay to feed what they hold, 

 the provident operator is selling reserve hay at a good price or is buying cattle 

 to feed out his surplus. 



FLEXIBILITY IS DESIRABLE 



The ideal to be kept in mind by the Montana operator is that of keeping his 

 business as flexible as possible. By flexibility is meant the ability to increase or 

 decrease his output in response to price changes with about the same turnover 

 as that of prices themselves. High prices would then find him with expanded 

 inventories and low prices with contracted inventories. If cattle operators uni- 

 versally did this there would of course be no cattle cycles, but so far as the Mon- 

 tana operator is concerned, he may be assured that human nature is not such 

 that all cattlemen will be likely to do this and with this in mind the Montana cat- 

 tlemen are in a position to add one more advantage to the natural advantage, 

 they enjoy in cattle production. This advantage is that of intelligent use of the 

 cattle cycles to increase profits in periods of good prices and to reduce losses in 

 periods of low cattle prices. 



A REVIEW OF THE SHEEP INDUSTRY 



IN MONTANA 



The importance of the sheep industry in Montana is indicated by the fact 

 that the industry in 1928 returned to growers from sales of wool, lambs and sheep 

 a total of $24,062,000. There were, according to the federal census of 1924, 4,552 

 farms and ranches in Montana reporting sheep compared with 28,755 farms re- 



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