Cattle Market & Farm Reports, Editorials
Apr 18, 2005
by WLJ

Keep border closed
Dear Pete:
First let me introduce myself. I am a past president of the Oregon Cattlemen’s Association—two years. A past member of the Public Lands Council—five years. Twenty-six years as a member of the Oregon House of Representatives. I am acquainted with Dick and Barbara, also knew Nelson Crow.
Reference is made to your article in the March 7, 2005, issue of the Journal, Vol. 84 No. 21. Now Pete, you did not come right out and say you supported opening the border, but it seemed to me you were leaning that way. You have every right to your opinion as I do mine. I would like to see it remain closed for several reasons.
The packers claim they cannot get cattle to slaughter, but I do not believe that. They like Canadian cattle because they are about 35 cents per pound cheaper.
In 2004, we imported 356,623 metric tons of boxed beef from Canada. If we did not import all the boxed beef, maybe our packers could sell theirs for a profit.
We have 33.5 million beef brood cows in the United States. I figured those beef cows at 75 percent calf crop, which would give 25,125,000 cattle to slaughter. There are also 9 million dairy cows in the United States of which their calf crop would add another 8,100,000 for slaughter. That makes a total of 33,225,000 head. Figuring those head at 720 lbs. carcass weight, that gives us 23,920,000,000 pounds of meat. Now there are 296 million people in the United States and at 67 pounds per capita we could feed all of them with 4,088,000,000 more than needed. It would appear there are enough cattle in the United States to supply our needs.
I am not going to use the BSE scare as an excuse to keep the border closed. I just want it closed period. There is no way we can compete with foreign labor when we have a minimum wage and union scale. The imports of all kinds of goods are killing us. There are economists who will look you right in the eye and tell you how great these imports are when they know it is not true. I am not a highly educated man, but I can add two and two. There are many more imported items that are hurting us, but too many to cover in this letter.
I like your magazine. Please say hello to your folks for me.
Denny Jones
Ontario, OR

Death tax repeal?
Dear Mrs. Swenson:
The last time I read the Republican proposal to removed the "death tax" it was going to cost me $410,200 MORE!!!!! than if things remain the same. Why? Because instead of reevaluating the property basis at the decedent's death, it keeps the basis the same for the heirs as it was for the decedent.
My parents bought their farm in 1960 for $35,000. It is now worth about $1,500,000. The way the inheritance law is now we pay NO taxes at all on the first $1,900,000 (for two people). Next year it is the first $2,000,000. In other words, my brother and I inherit the farm tax free.
In addition we get the stepped up basis of $1,500,000 so when we sell it we would pay no taxes.
The farm is in a poor location now because of urban sprawl and my brother and I would like to sell it and buy a farm in a more rural location, but if they change the law we will be seriously
hurt financially and probably won't be able to stay in farming.
The version of the proposed inheritance law I read in the past says that while you don't pay any taxes when you inherit, when you do sell the property you have to pay taxes on the difference between our parent's basis and what it sells for. So if we got $1,500,000 for it we'd have to pay capital gains tax on $1,465,000!!!!! That's 28% x 1,465,000 = $410,200!!!!
Screwing the middle income farmers like me and my brother—not to mention all other average Americans—will increase the amount the Federal government squeezes out of the middle class by billions. The only people who will make out good with this scheme are the SUPER RICH who already have more than they need.
I think a more fair solution would be to leave the inheritance laws as they are, but change the due date to pay the inheritance tax to the date on which the capital asset is sold. That way people who inherit farms, ranches and businesses that are worth more than $2,000,000 wouldn't have to
sell the business to pay the inheritance taxes. Instead they would pay inheritance taxes when they sold the capital asset. That way people who want to continue the family business could do so and not be harmed.
Since you wrote the article on this subject that appeared in the March 14, 2005, issue of the WLJ, I assume you are up on the content of the current legislation under consideration. Am I correct in that if this is passed the stepped up basis will be eliminated? If that is so, I would
think that most farm and ranch groups should be informing their membership and trying to expose this raw deal, rather than blissfully going along with it until it is too late.
I'd really appreciate it if you could get back to me on this and let me know if I am correct or if they have made changes in the proposal that will protect people like me.
Larryann Willis
Tracy, CA

Numbers off
Dear Editor:
These are prosperous times for many in the cattle industry––especially the ranchers in the cow/calf sector. Prices for all classes of cattle are strong. Weather finally appears to be on our side. Some of the areas of drought that led to herd reductions in the Western region of the country appear to have had some recent relief, so even more producers are going to have green grass and plentiful feed.
All of these factors, combined with terrific consumer demand for beef, make for an industry that is faring well. The Beef Demand Index increased by almost eight percent in 2004––the largest year-over-year surge in the history of the index. Per capita beef consumption also rose by about two pounds per person, and per capita spending on beef rose to an all-time high of $240 per year. Consumer confidence in the safety and quality of beef is also at record-high levels.
But some—who say they represent the cattle industry—would have you believe that tight beef supplies are driving up beef prices, and that our favorable market conditions are the result of the Canadian border closure.
They’re not coming clean with the facts. The hard facts will tell you that strong consumer demand is sustaining cattle prices––not tight supplies. In fact, in 2004, the U.S. beef industry had the second largest net supply of beef (production plus imports minus exports) in history at 27.7 billion pounds. The largest year of supply was 2002, at 27.9 billion pounds.
But American producers captured their smallest-ever share of the U.S. beef supply. The United States imported 1.1 billion pounds of Canadian boneless beef in 2004, and Cattle-Fax expects that figure to rise by 15 to 20 percent in 2005. The fact that it will arrive as boxed beef––rather than “on the hoof”––makes little difference to consumers or the price that they pay. But it does mean that cattle feeders, processors and others in the U.S. beef industry miss out on the opportunity to add value to these products.
At the same time, we are bringing in Mexican cattle by the truckload. In 2004, the United States imported as many feeder cattle from Mexico as it did from Mexico and Canada combined in 2002, the last normal year of trade.
Prior to our borders closing, the United States was a net exporter of beef products, representing a $1.4 billion net to cattle producers. Today, we are a net importer. In other words, cattlemen have lost at least $1.4 billion in value, reports the Livestock Marketing Information Center.
Meanwhile, with economic signals strong, we are growing our domestic herd. How do we turn these numbers around and regain our position as beef supplier to the world? Certainly not by disparaging the safety of our product.
The tactics employed by activist groups within our industry do nothing but delay the re-entry of the U.S. cattle industry into key export markets, costing our cattle producers an estimated $175 per animal in the process. Regaining full access to markets such as Japan, Korea and even Mexico depends on normalization of trade based on reasonable, science-based regulations—not creating a hysterical, isolationist environment that wrecks consumer confidence, weakens demand and strangles international trade.
I urge cattle producers to fully commit to continuing to grow global beef demand and building a stronger and larger U.S. beef industry. The first step in this journey is to see through the empty rhetoric and misinformation that is being spread about our industry and our product. When we look at the facts, we know that science-based, fair trade policies are the only environment that will allow us to grow and thrive. Archaic, isolationist trade restrictions may have surface appeal, but they can only take us backward. Be wary of those who like to tell you they are looking out for “the little guy” or “the independent producer.” Crunch their numbers, and you will find they simply don’t add up.
Mike John
National Cattlemen’s Beef Association
Huntsville, MO

R-CALF legacy
Dear Editor,
The R-CALF folks have now been called stupid, arrogant, selfish, and out right greedy in most of the farm press. Borderline state Michigan now has the nation's highest unemployment rate due to major losses in automotive jobs. Here is why it happened: the car people mistakenly thought 'made in USA' would overcome all else, even union wage price cars and rust bucket quality. Hello Toyota-COOL. And, with our big old steel mills and excess capacity car plants, a car company would not want to build a car in Mexico or Canada or Japan or Yugoslavia, would They? They did.
R-CALF, you are about to learn a history lesson, and in doing so, you will go down in history as having destroyed part of the future of beef production in this country. What a legacy for your grandchildren. You are selling their future for a couple of short term bucks per cwt.
Gary Voogt
Marne, Michigan

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