Livestock “The greatest homage we can pay to truth is to use it.”
MARKET
Digest M
by LEE PITTS
No Kiddin’
– JAMES RUSSELL LOWELL MARCH 15, 2011 •
www. aaalivestock . com
Volume 53 • No. 3
At The Crossroads by Lee Pitts f you’re like me you’ve grown tired of all the tickle talk and propaganda about what the new proposed GIPSA rules would and would not do. Fortunately, or not so fortunately if you happen to be a cattle feeder, the packers have given us a great example as to why these rules are necessary. And why they may be our last chance to save the independent family rancher in this country.
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A Bad Good Example
NEWSPAPER PRIORITY HANDLING
Although it may be painful for some, let’s go back to February of 2006 when the four largest meatpackers stayed off the cash fat cattle market for two weeks by killing only their captive supply cattle. Was it collusion or a coincidence that all four firms stayed off the market at exactly the same time? R-CALF said it was collusion, while those cattlemen who’d contracted their cattle as captive supply gloated that they could get their cattle killed because they had a sweetheart deal. But at what price? And we mean that in a far greater sense than the price per hundredweight. In 2005, 52 percent of fat cattle were sold on the cash market but by 2010 only 37 percent were. Yet it’s those 37 percent, (often inferior cattle) that
Riding Herd
“When you wallow with pigs, expect to get dirty.” set the price for all the captive cattle. And it just so happened that during the two-week packer boycott live cattle fell $3.00 per cwt. How can captive cowboys think they have such a great deal when they have witnessed both the pork and poultry packers use similar tactics to shrink those industries by 90 percent? We can only surmise that those 63 percent who are held captive today all think they are going to be part
of the 10 percent who will survive. That’s bad math and we’d suggest that such an attitude is both grossly arrogant and stupid. This one example of a coordinated action on the part of the packers clearly shows how the packers have made a mockery of the price discovery system, and R-CALF said so in 2008 testimony before Congress. R-CALF argued vehemently at the time that if this type of attack on our
marketplace was not addressed by Congress immediately, cattle producers would experience this type of problem again and again. Our industry didn’t have to wait too long to see how prophetic R-CALF was. Fast forward to the last trading day of October 2009 when for no apparent reason the cattle futures market fell the limit to $81.65 per cwt. (The cash price at the time was $87.50 per cwt.) Without any hard evidence (because there is little transparency in the futures market) R-CALF postulated that such a move could only have been caused by “a dominant market participant” shorting the futures market. It took awhile but R-CALF would get the proof they needed when on February 7 of this year the Commodity Futures Trading Commission ordered Newedge continued on page two
Is EPA Out of Control? EPA’s power grab will affect all of U.S. society he U.S. Environmental Protection Agency (EPA) is engaging in a power grab that threatens the future of production agriculture in the U.S., according to two state officials. A lack of careful oversight by Congress has allowed the agency’s personnel to contrive policies that lack both scientific peer review and common sense. Bryan Shaw, chairman of the Texas Commission on Environmental Quality, and Charles H. Bronson, who served as Florida’s Commissioner of Agriculture from 2000 to 2010, both warned that if this move is unchecked, the enormous costs will affect more than just agriculture. U.S. consumers and taxpayers will also pay dearly. The officials made their comments in a conference during the 92nd annual meeting of the American Farm Bureau Federation (AFBF) in early January. Shaw said EPA has inserted its own requirements into the Clean Air Act. The agency “is trying to be very creative, making their own rules.” More stringent air emission regulations proposed by the EPA for Texas will set a threshold for most internal combustion engines used on farms and ranches, including relatively
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small machines with 20 horsepower. But the agency’s goal may be even more ominous, Shaw declared. The regulations will force governments and businesses across the nation to adopt different types of energy sources, regardless of the cost. He detects a similar intention in EPA’s approach to carbon sequestration. If allowed to stand, the new regulatory burden will be implemented across the nation. Agricultural producers will face steady price spikes in fuel, fertilizer and transportation. “It is going to raise the cost of everything for everyone else,” Shaw said. As a result, there will be fewer jobs and, as production is pushed to less-developed nations, environmental degradation will increase. “We need to have a more scientifically open and transparent process,” he said. “We need to have an honest debate with the American people about the cost of this policy.” Bronson expressed extreme concern about the EPA’s handling of Florida’s attempts to develop reliable numeric nutrient criteria for continued on page six
ore and more newly married couples are delaying the start of a family, are having fewer children, or are having none at all. And I think I know why: they are getting a dog instead. People are adopting pit bulls from shelters rather than kids from Romania. There are many advantages to choosing a Cocker Spaniel over a kid. They don’t get an allowance, eat the same food every day and they don’t grow out of their shoes every six months. There’s no braces or acne medicine to buy, they don’t carry credit cards and they don’t go to college. And although they may chase cars, they don’t drive them! Dogs don’t play video games, they are eager to play with you any time you want, and when you come home from work they’ll rush to greet you. When’s the last time your kids did that? Dogs are patient, faithful, devoted, reliable and dependable. Have you EVER used any of those words to describe your teenager? About their only bad habit is that they bite, but kids do that too, and unlike a kid, we’ve never known a dog to jump bail. We haven’t even discussed the financial and emotional damage that pregnancy can put on a young marriage. If you have a dog instead of a child there will be no morning sickness, the wife’s stomach won’t balloon to the size of a basketball, and she won’t have to wear specially designed clothes that are not the sexiest we’ve seen. On a related matter, the husband won’t have to live like a celibate monk for an extended period. Even though they don’t talk (another plus) communicating with a dog is much easier than talking to a child. Dogs take criticism without sulking, never say the word “awesome” and they let you know that continued on page fourteen
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