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Battle Building
The
U.S. cattle business, the national and global economics find
themselves at a crossroads between free-market and government
solutions.
by:
Wes Ishmael |
The sobering reality is that the
standard of living will be declining for a growing and large
number of Americans moving forward over the next 10 years,” says
Bill Helming, a long-time respected economist and business
consultant at Olathe, KS. “The U.S. and much of the world as we
have known it economically, politically, socially and
spiritually has fundamentally changed and will be very different
in the near and long-term future, compared to the past 80 years,
especially compared to the 1990-2007 time period.”
That’s thanks to the national and global economic destruction
taking place, set in motion by unraveling international credit
markets, exacerbated by the commodity bubble and housing crisis
that preceded it.
“The majority of Americans—from individual citizens to
governments—have been living beyond their means for decades,”
says Vincent Amanor-Boadu, an agricultural economist with Kansas
State University. “Well-intentioned but flawed policy decisions,
irrational confidence of finance industry personnel in their own
brilliance and cheap credit that influenced unrealistic
expectations about prosperity over nearly three decades created
the environment for the economic crisis now at play.”
The note has come due (see We are the Entitlement Generations,
page 16 and Popping Perceptions, page 18).
For the cattle business, this economic destruction could mean a
profound shift from the current economic model.
“Changing economic conditions will drive and force fundamental,
major changes in the U.S. cow-calf, stocker cattle, cattle
feeding and beef packing sectors of the U.S. beef cattle
industry,” Helming believes. “American beef consumers and U.S.
beef export customers want now, and will want for a good many
years to come, high-quality, safe, and more affordable,
lower-priced beef. The most cost-effective and practical way to
meet this objective, along with changing U.S. and global
economic trends, is to produce significantly more high-quality,
more affordable ground beef supplies over the next 10-15 years
(see Hamburgers are Us, page 16).”
For the world, the current economic depression means more are
doing without and those already in poverty are losing more hope,
if that’s possible.
“With one in six people going hungry, one child dying every six
seconds, and 80 percent of Sub-Saharan African countries facing
higher food prices than a year ago, the poor and the hungry are
facing one of the biggest crises in our lifetimes,” said Josette
Sheeran, Executive Director of the United Nations’ World Food
Programme (WFP) at a meeting of G8 nations in June. “It is
critical for the world to remember that hunger will have a
permanent impact on children and we may lose a generation unless
they have adequate access to nutrition during this crisis,”
Sheeran warned.
All told, the United Nations’ Food and Agriculture Organization
estimates there are 963 million hungry people in the world, most
in developing nations.
“The world faces the largest humanitarian food challenge in its
history,” says Alex Avery, Director of Research and Education
with the Center for Global Food Issues at Hudson Institute.
“Over the next 40 years world food demand will at least double,
and we have little new farm lands with which to meet that
demand. We really have only more productive farming methods to
use on our existing farm lands.”
Clawing beyond the current economic hole, feeding the world
today let alone tomorrow, will require every bit of technology
and innovation. That’s how agriculture has kept pace.
“If we had achieved only the per acre production of 1960, to
meet today’s food demand we would have had to plow an additional
15-20 million more square miles of land,” Avery says.
“I said that the Green Revolution had won a temporary success in
man’s war against hunger, which if fully implemented, could
provide sufficient food for humankind through the end of the
20th century...” Norman Borlaug said at a speech given at
Tuskegee University in 2001. A godfather of high-yield,
high-conservation agricultural practices and a Nobel Peace Prize
winner, Borlaug continued, “…I now think that the world has the
technology, either available or well advanced in the research
pipeline, to feed on a sustainable basis a population of 10
billion people. The more pertinent question today is whether
farmers and ranchers will be permitted to use it. (see Running
on Empty, page 20).”
The Lines Deepen
For that matter, the urgent question emerging in national
debate, sometimes stated and sometimes not, is whether the
principles of capitalism that make such progress possible will
hold sway, or whether these principles will continue to erode.
“If a detailed, factual study were made of all those instances
in the history of American industry which have been used by the
statists as an indictment of free enterprise and as an argument
in favor of a government-controlled economy, it would be found
that the actions blamed on businessmen were caused,
necessitated, and made possible only by government intervention
in business,” said Ayn Rand, author of When Atlas Shrugged, a
manifesto for laissez-faire capitalism. “The evils, popularly
ascribed to big industrialists, were not the result of an
unregulated industry, but of government power over industry. The
villain in the picture was not the businessman, but the
legislator, not free enterprise, but government controls. (see
Chalk One Down to Antitrust, page 28).”
There has always been a chorus of opposition to capitalism from
those who believe government holds the answers or at least the
placating manna. That chorus is growing louder.
“We’re (the industry) really under siege right now from
activists and from our own administration,” says Colin Woodall,
Executive Director of Legislative Affairs for the National
Cattlemen’s Beef Association. “There are more hungry people in
the world today than at any time in history, yet our Congress is
looking to make it more difficult for us to feed our own people,
let alone people around the world (see Shift Left, page 26).”
There are the activists, of course, those unwilling to let truth
come between them and their cause.
Consider the passage of Proposition 2 in California last fall.
This law will make it a criminal offense (by 2015) in the state
to confine hens in battery cages, sows in gestation crates and
calves in veal crates. Especially aimed at the state’s egg
industry, proponents missed the fact that cages protect hen
health, rather than threaten it.
“We are despondent that California voters didn’t hear animal
welfare experts’ messages warning of higher rates of death in
non-cage systems, increased rates of smothering, increased
incidences of aggression and much more,” said Kay Johnson-Smith,
Executive Vice President of the Animal Agriculture Alliance (see
Moneyed Momentum, page 34).
Then there are those, even in the cattle business, whose efforts
at securing what they perceive to be equality undermines
mainstream efforts to respond to free-market signals.
Think of things like Country of Origin Labeling (COOL).
Proponents argued it would increase the value of U.S. beef at
virtually no cost, even though USDA estimated the first-year
cost at $2.5 billion. So far, all it has accomplished is
alienating the nation’s primary trading partners (see COOL’s
Impact Heats Up, page 22) and offer the new Agriculture
Secretary a format for demanding additional voluntary standards
never included in the law.
Think also of the latest proposed legislation aimed at packer
ownership of cattle ahead of slaughter. The so-called Livestock
Marketing Fairness Act would rob producers of the right to trade
cattle how they want and to whom (see this month’s Riding the
Gap: Increasing Competition through Discrimination, page 136).
Sins of Self-infliction
Of course, even producers in the mainstream are guilty of
kicking rocks while the storms brew which affect them most.
Consider the National Animal Identification System (NAIS).
USDA’s bumbling and fumbling even turned supporters against the
program (see Lost or Found at a Cost, page 24). Yet shooting
down the message and the need along with the messenger makes
little sense as bio-security risks grow day by day.
The most recent reminder of how helpless mankind is to prevent
animal and human health epidemics came with Influenza A (H1N1).
Though initial U.S. hysteria has abated, the virus continues to
percolate and could return with a vengeance this fall (see Pig
in a Poke, page 30).
For that matter, some producers continue to leave proven
technologies on the shelf that could help them become more
efficient and sustainable, along with the industry.
“Simple crossbreeding systems that combine Continental and
English cattle, tempered by genetics that deal with
environmental needs are still incredibly important today for the
commercial cowman to maintain profitability,” explains Bob
Prosser, who, with his wife, Judy, owns and manages the Bar T
Bar Ranch headquartered near Winslow, AZ. “Hybrid vigor is the
catalyst that provides a cost effective way to blend the needs
of the producer and the consumer, while capitalizing on
efficiencies that lead to net profit for producers.
“Most important though, hybrid vigor is the most powerful tool a
producer has to use in avoiding wrecks,” Prosser says. “In times
of climatic, nutritional or immunological stress, crossbred
animals have an absolute advantage over their straight-bred
counterparts when you consider morbidity, mortality and
reproductive performance. That’s why hybrid vigor is a
cornerstone of profit-minded programs.”
Yet, Dave Daley, a fifth generation California cattle producer
who is also a professor of animal science at California State
University-Chico says, “In the past few years, we seem to have
drifted away from crossbreeding to more traditional
straight-bred programs that intend to focus on phenotypic
consistency and end product, but not necessarily on
profitability. Is there a rational explanation for our
unwillingness to take advantage of a proven technique to enhance
economic return? (see Time to Crossbreed, page 80 and
Crossbreeding made Easier, page 111)”
How people respond, what individuals and the nation choose over
the next several years will define the cattle business and the
U.S. itself for decades to come.
“Capitalism has been called a system of greed—yet it is the
system that raised the standard of living of its poorest
citizens to heights no collectivist system has ever begun to
equal, and no tribal gang can conceive of,” Rand said.
“Capitalism has been called nationalistic—yet it is the only
system that banished ethnicity, and made it possible, in the
United States, for men of various, formerly antagonistic
nationalities to live together in peace. Capitalism has been
called cruel—yet it brought such hope, progress and general good
will that the young people of today, who have not seen it, find
it hard to believe.” |
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