Tuesday, April 19, 2016
The Economy: “A Tearful Farewell at the Ranch”
“A Tearful Farewell at the Ranch”
by Bill Bonner
GUALFIN, Argentina – "When we checked yesterday, the Dow was moving up toward 18,000. Meanwhile, U.S. corporate earnings were sliding. North American shipping volumes were falling. China was borrowing at 10 times the U.S. rate… and its economy was still slowing. Japan was in cuckoo land. And the IMF was joining it, calling for more negative interest rates.
And one luxury condo development in the U.S. is giving buyers a free membership in a private-jet chartering club. Bloomberg has the story: “In the hope that buyers have not become completely immune to fancy treats, a new development in Sunny Isles Beach, Fla., is offering something so over the top that it’s actually in the sky. With every purchase of a condo at the 61-unit Aurora, owners get a one-year membership to JetSmarter. The company lets users charter private jets in 170 countries.
“It’s very competitive here, so why not do something really cool?” says Tim Lobanov, managing director of Verzasca Group, the Aurora’s South Florida-based real estate development company. Normally the membership is $9,000 a year, so this enticement is a bit more dazzling than a free toaster—or a yoga studio. At Aurora, two- and three-bedroom units start in the low $800,000s and go up to about $1.5 million. Sizes range from 1,500 to 2,100 square feet.”
Deals, deals, deals…
Old Habits: And here in Argentina, word comes from a local contact in Salta that a nearby farm is for sale… “The owner is desperate,” says our lawyer. “It’s about 25,000 acres. You could probably get it for about $40 an acre.” “What?” we replied indignantly. “We paid only $4 an acre for our ranch.” “Yes… but your ranch is mostly wasteland.” He has a point. But the neighboring ranch is mostly wasteland, too. (To illustrate what a great investment ranches can be, the owner bought it 10 years ago for $80 an acre – twice what he’s asking for it today.)
On Saturday, our old ranch manager, Jorge, came back to the ranch for his retirement party. He retired in January. But we were away and couldn’t mark the event until this past weekend. As luck would have it, his new home down in the valley, near Salta Airport, is also near a farm where we sent the cattle we could no longer keep. We’re having a drought up here in the mountains – in the last year, just 2.5 inches of rain fell. The grass has dried up. The cattle are getting thin. We sell them off as fast as we can… or ship them to our friend’s farm… which just happens to be near Jorge’s new home.
Jorge goes over every day to check on his old friends, the cows. He keeps his horse at the farm, too. So, he saddles up and rides around to inspect the animals. He does this for his own amusement; the animals would be fine without him. But old habits are hard to break. For half a century, Jorge has been checking the herd on horseback. He doesn’t seem eager to give it up.
“For Many Years of Service…” Friends and family came to the retirement party – an asado (or Argentine barbecue) held on the veranda, for a group of about 40 people.
A lamb “a la cruz” for Jorge's retirement party
“Compadre!” Jorge greeted one of his old friends. The two, about the same age, worked together for almost 40 years. They recalled what it was like when they started: “It was very different… much, much harder. We had about 3,000 head of cattle on the ranch [now we have only 700]. And they were pretty much ranging all over the mountains. We had to round them up on foot because it is too rough up there for horses. But they were practically wild. They were dangerous. And hard to herd. Sometimes, if we couldn’t get them under control, we just had to shoot them with a rifle.
But the worst was in the 1990s. You think this is a bad drought. So far, it’s nothing. In the 1990s… I think it was 1995 and 1996… we had two years of drought back to back. With 8 mm [about one-third of an inch] one year and 12 mm [about half an inch] the next. There wasn’t much we could do. Everything was dying. The grass. The trees. Several of the families here packed up and moved out. Even up in the mountains, the little springs dried up, and the grass disappeared. Half the herd died. We had no way to transport them… and nowhere to send them even if we could. It was very sad.”
After eating several helpings of barbecued lamb and beef – along with salad and big white beans – your editor made a little speech, edited in advance by someone who speaks Spanish correctly. Then we presented Jorge with a silver platter. “For many years of service to the ranch and the people of Gualfin,” we had engraved on it. Tears welled up in a few eyes; we weren’t sure whether the occasion or our clumsy speech was to blame.
A Real Gentleman: We’ve owned the ranch for 10 years. We told the group how Jorge and his wife, Maria, had always greeted us warmly and made us feel like friends and family, rather than foreigners. And how we would all miss them…
We wanted to say more. Jorge is one of the most competent, dignified, and cheerful people we ever met. He has little education. He’s had little contact with the world outside our farm. He’s never been online. And only once, when he was in the army, did he fly on an airplane. But he is a real gentleman.
There was a lot we could have said. But even after a decade, our Spanish is primitive and clunky. This was an occasion that called for careful words. Or maybe not. Maybe we didn’t need any words at all. We gave Jorge the platter. He said a few words of thanks. And we hugged each other. (Later, privately, we gave Jorge another little gift… a few dead presidents to make his retirement more pleasant.)
After the party was over, Jorge was quick to return to his old ways. “Don Bill, I’d like to ride out and see the cattle, if you don’t mind.”“Of course not… We’ll saddle up a couple of horses. I’ll go with you.”
Riding Out: We trotted down the long, wide entrance, then out between the stone walls to the campo afuera – the field outside. We took the familiar path through the gate and into the huge valley.
Don Bill and Don Jorge saddle up to check the herd…
Jorge had been remarkably quiet during the asado. Often, his face inclined toward the table as if he were in deep thought. But now, on horseback, the broad smile returned. We rode down to the river. There was no water in it, just sand. A few birds scared up out of the bushes. The wind picked up. We continued toward the “pass” that leads to a neighboring ranch. The pass is, in fact, impassable, except on foot. In the decade we’ve been here, we’ve never ventured over to our neighbor’s place. Part of the ranch is owned by a Swiss couple, who invited us to visit. This year, we hope to make it over.
Finally, as we approached the pass, the ground turned green. There, the cattle scoured the ground for what was left of the grass. Here and there, a few pools of water remained. “The cows are in remarkably good shape,” Jorge observed. “But you better get them out of here as soon as you can. They’re losing weight. Try to get the calves and the old cows off the land. You need to save the young cows so you’ll have more calves next year. They’ll be okay. We’ve got some hay stored. And we can buy more in Molinos [the nearby village]. They’ll be alright if it doesn’t get too bad this winter.”
We knew all this already. We’d already been over our strategy with the new ranch foreman, Gustavo. But it was good to have Jorge confirm it. No one knows the ranch, or the cattle, better than he does.
We left the river bed. Your editor was mounted on an old horse, Regalito, who was a little hard to control. He always wants to run off. As we fought with Regalito, Jorge rode effortlessly up the side of the hill. We followed… making our way around the north side of the riverbed. In the distance, about a half hour away, we could see the sala – the ranch house – surrounded by the alamo trees and irrigated pastures.
It was a beautiful sight, reminding us of what we were doing there. We wondered if Jorge now saw it differently. Now, he lives in a suburban area, with a few farms surrounded by houses. Cars drive up and down the road. People rush to get to work. Buses pass on the main road near his house. Airplanes fly overhead.
“Our cattle seem to be happy down in the valley,” Jorge volunteered.
“They ought to be. There’s plenty of grass for them. They must feel they have died and gone to heaven."
“But it’s a big change. The young ones adapt quickly. They start fattening up almost immediately. But the old ones find it harder to adapt. Some of them don’t do so well."
“That happens to people, too.”