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“There is no doubt that the growth
of the ethanol industry is an important factor in the run-up in
agricultural commodity prices. But this does not imply that a
change in federal bio-fuels policy would reverse this growth. If
we continue to see crude oil prices in excess of $100 per
barrel, then there is little that Congress or the EPA can do in
the short run to significantly reduce the price of corn short of
an outright ban on producing ethanol from corn.”
See What’s Going On, page 20
“The current economic and financial situation reflects, in
significant part, the unwinding of two of these longer-term
developments—the housing boom and the credit boom—and the
continuation of the pressure of global demand on commodity
prices. The housing boom came to an end because rising prices
made housing increasingly unaffordable. The end of rapid house
price increases in turn undermined a basic premise of many
adjustable-rate sub-prime loans—that home price appreciation
alone would always generate enough equity to permit the borrower
to refinance and thereby avoid ever having to pay the
fully-indexed interest rate.”
See Costs Up—Margins Down,
page 24
You’ll also find insights to causes and effects associated with
the paradigm shift in commodity pricing.
“At a time in the cattle cycle
when cattle numbers should be at or near their highest, the
level of production is not approaching its historic peaks and we
do not see any increases in fed cattle production in the
foreseeable future.”
See Ante Up, page 28
“Little of the world has yet had a chance to make U.S. beef a
part of their diet, and consumers in some of the most populous
nations suddenly have lots more buying power than they’ve ever
had, and they’re gaining it quickly. Plus, world population is
to grow by about another billion folks during the next 10
years.”
See Shock’s Silver Lining,
page 30
Finally, we have a variety of articles exploring other issues
shaping the cattle business this past year, which will also
shape the road ahead.
“The current economic paradigm is
focused on individual wealth and accumulation of land and
capital… If we are concerned about equity and social justice, we
need to seek models that will maintain a broad ownership of land
and resources as envisioned by Jefferson and promoted by the
original land grant university system. Cooperation should be the
guideline rather than uncontrolled competition.”
See Green or Gullible?, page
34
“To maintain consumer confidence in the food supply, eliminate
further misunderstanding of the rule and, ultimately, to make a
positive impact on the humane handling of cattle, I believe it
is sound policy to simplify this matter by initiating a complete
ban on the slaughter of downer cattle that go down after initial
inspection”
See Two Wrongs—No Right, page
36
“Congress claims that this bill increases spending by $10
billion, but the real cost is nearly $20 billion when you
include actual government spending that will occur if this bill
becomes law. Instead of fully offsetting the increased spending,
the bill resorts to a variety of gimmicks, such as pushing
commodity payments outside the budget window. Adding nearly $20
billion in additional costs to the current ten-year spending
level of approximately $600 billion is excessive, especially
when net farm income is at a record high and food prices are on
the rise.”
See Sloth and Trough, page 38
“…genomics research ultimately could yield appreciably higher
accuracy predictions of genetic merit for all animals—including
young, non-parent bulls—and for an even more comprehensive set
of economically relevant traits (ERTs).” See So Cool, page 40
“We’re viewing this as one of the most—if not the most—important
presidential elections in the history of modern agriculture.
This is a watershed moment for agriculture because neither
presidential candidate has any direct ties to agriculture.”
See Changing the Guard, page
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