Sep 10, 2010

Time to become an activist

Time to become an activist

It seems like it�s time to become a political activist.

There are a bunch of issues that Congress and the Obama administration need to take seriously this year before real damage is done. The first issue that comes to mind is the death tax. In just four short months, the tax code reverts back to the old one where tax rates increase to 55 percent for estates valued in excess of $1 million. As many of you know, this tax plan can blow up the family farm or ranch. As a matter of fact, any business that is long on assets and short on cash flow will be damaged as a result of this change in the tax code. I suppose this would be another endorsement of our irresponsible Congress. Just remember, you can fix it November 2.

The other thing that is bugging me are the proposed fairness rules that the Grain Inspection Packers and Stockyards Administration was forced to embrace through the 2008 farm bill. I wasn�t able to make it to the now-infamous marketing workshop held by USDA and the Department of Justice in Fort Collins, CO, but from what I have heard and read, I really didn�t miss much. It was pretty much what I expected. From what I understand, it became a free-for-all and everyone walked away with absolutely nothing.

Most everyone I visited with who was at the meeting said that USDA had already made up their mind to go forward with proposed rules that would force packers to record value differences in cattle they purchase, limit packer ownership of cattle, and not allow packers to sell cattle to each other. They say these new rules are intended to help the small stockman and, of course, limit the packing industry. However, if I were a packer, I might be more interested in recording values paid for cattle on large lots versus small ones. Or, I might be interested in simply paying an average and letting it go at that. The less paperwork I have to do, the better.

These proposed regulations have everyone in the business speculating on what the effects will be, which in itself is a problem. No one really knows what�s going to happen. This is where the attorneys come in and get to make millions attempting to interpret exactly what the new law means.

Whether you�re for or against the proposed rules, you�ve got to ask yourself: Is the marketing system we have in livestock trade all that bad? USDA�s own study in 2007 said things aren�t all that bad and they also found that a lot of good has been realized. So, is it worth it to disrupt a system that works?

The concern of folks who want change is the impact of packer concentration. They are also worried about the fact that a lot of hog and cattle producers have left the business over the past 30 years. But change is the reason they all left. We often forget how the meat business has changed over the years. The hog business changed because producers were delivering all kinds of hogs to processors. Different weights, different fat content and other economic traits created problems for the industry and delivered a product that wasn�t uniform. Consumers wanted some consistency in pork and the packers responded by implementing contract specifications. The same is happening in the beef industry. We have become a more consumer-focused industry. Packers, feeders and producers are listening and delivering products consumers demand, and earning premiums for doing it.

Nonetheless, this law will be forced to go through the political system and, if nothing is changed there, it will go to the legal system. These regulations could be a costly mistake for the meat business and livestock producers.

We always knew where groups like R-CALF, Western Organization of Resource Councils, and Farmers Union stand on the issue, but they sure picked some strange groups to align with to further their cause. There, supporting these groups, were Food and Water Watch, the group that produced the controversial video �The Meatrix,� which is an antiproduction agriculture video aimed at school-age kids. They are also allied with the United Food and Commercial Workers Union, who attended the Fort Collins workshop in force. Their agenda was essentially focused on the downfall of Wal-Mart.

It appears that R-CALF thinks that the means justifies the end. And, I suppose radical political groups gravitate to one another, but messing around with these radical groups borders on insanity. I suppose it�s time to give these activist groups a bit of their own medicine and also become an activist by voting in a new Congress that won�t give these groups access. � PETE CROW