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October 2008 Archive for Out to Pasture

RSS By: Steve Cornett, Beef Today

Read the latest blog from Steve Cornett.

Half a baby

Oct 21, 2008

By Steve Cornett


Department of Justice cut the JBS baby in half and both NCBA and R-CALF seemed pleased with the results.

Never mind that’s exactly what JBS expected: Ask for the moon and the stars and feign disappointment when you just get the moon. The bottom line is that the Bush DOJ has approved further concentration in an already concentrated industry.

Personally, I’m a little disappointed they will challenge the sale of National. The sale promised something of a windfall to the cattle producers who built that company and I’d like to see them rewarded. However, I suppose that, politically, DOJ had to stop something.

My biggest question is whether JBS is wise to jump so hard into this industry just as it looks like a month’s time will provide an Obama administration with a big democrat majority in Congress.
 
Were I JBS, I would wonder how much Five Rivers—the feeding company—will be worth if one of the first new laws next year forbids packer ownership—perhaps even “packer control”—of cattle. The next few years don’t exactly bode to provide a sellers market for Great Plains feedlots.
 
But to JBS, that is just pebbles on the mountain, I suppose. They have themselves in position to ride whatever trends develop in the globalization of the beef industry. 
 
If the EU doesn’t want Brazilian beef, they can deliver Aussie. If Japan is scared of U.S. beef, they can send some South American stuff.
 
They can be foreign buyers’ most reliable source, and once international integration gets back on track, that will probably be worth all the millions they’ve spent buying this market share.

That will be good for the cattle industry. Any manufacturer can succeed only with a good sales force, and that is what JBS has.
 
The trick is for regulators in DOJ and the Packers and Stockyards Administratin to keep them and their competitors bidding honest.

Steve Cornett is editor emeritus of Beef Today.

 


 

Arugula-friendly farm policy?

Oct 13, 2008
    By Steve Cornett

             The New York Times devoted its Sunday magazine yesterday to food issues. It’s the same old stuff about how bad “agribusiness” is, what with force feeding Americans cheap, fast food, like we were just so many foie gras geese.
             The main theme might be summed up in Michael Pollan’s long list of policy suggestions, all based on his overriding belief that “when we eat from the industrial food system, we are eating oil and spewing greenhouse gases.”
             There’s nothing new here. It’s the same old stuff about avoiding fast foods and “mass produced food” and “eating local” and avoiding “animal factory” meats. This approach to food has never really gained traction outside the arugula crowd because A)Most of us like fast food; B) Most of us are too busy or lazy to spend hours each week shopping for local products one carrot at a time and C) even if we want to, most Americans cannot afford—or, more accurately, don’t choose to pay for—a New York Times diet.
               Left to our own devices, we Americans will keep choosing what we choose now. The question is whether we will be left to our own devices.
The difference this time is that it looks like the leftier side of the Democratic party—Reid, Pelosi and Obama—may be in unbridled charge the next few years—and they may not like the way we choose to eat. They may decide a bit of health food gabage is in order.
One would presume the mental perambulations of folks at the Times will get more serious consideration than they have in the recent past.
The truth is that if you consider the typical American diet to be a “problem” then Michael Pollan has it right. The reason we have “too much” “too cheap” food is the design of farm programs.
Farm policy has, since the 30’s, been based on attempting to assure that an average farmer in an average year would receive enough profit to stay in business. Which is to say that if you are below average, you don’t get that profit. If you’re above average you get enough profit to expand.
That safety net has reduced the need for farmers to manage risk through generalization. Instead, producers of the subsidized crops have become specialists, and the predictable result is that grain farmers have evolved into incredibly efficient producers
As they abandoned their grandparents’ orchards, chicken coops and feedpens to concentrate on corn and cotton, other incredibly efficient specialists emerged.
That, fundamentally, is the way it happened. On that, I can agree with Pollan and the New York Times thinkers.
Where I think we might diverge sharply would be in what we do about it. I’m not sure I can envision a painless way of getting from where we are to where they want to go. However, I can envision a way to get there with only “the rich” farmers feeling the pain—and so can Mr. Pollan. It involves a lot more farmers on a lot smaller farms. It involves a backdoor approach to what, in other countries, would be called “land reform.”
Again, none of this mattered yesterday. But in the wake of this financial meltdown I suspect we are going to redefine the American economic system in the next few years—and I wonder, given the nature of the powers-to-be, how many of the fundamentals we’ve grown up with will be there when that is finished.
               So you guys should go to http://www.nytimes.com/pages/magazine/index.html and spend some serious time thinking about what the New York Times thinks. Their thoughts may be a lot more pertinent to your business in the future.
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