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August 2009 Archive for Out to Pasture

RSS By: Steve Cornett, Beef Today

Read the latest blog from Steve Cornett.

When Cheap Food is Bad

Aug 27, 2009

By Steve Cornett

The Internet, at least the part folks send me links to, is filled with folks mad at Time Magazine and writer Bryan Walsh just because of a poorly-reported article he wrote blaming farm policy for fat Americans.

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Click here to access the article at Time Magazine.

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Link to e-mail the editors at Time.

I’m glad he wrote it. Maybe it will wake folks up to what’s going on under their noses.

The Walsh piece—“Getting Real About the High Price of Cheap Food”—is nothing new. It is a Cliff’s Notes version of the (Michael) Pollan Principle. And Walsh is hardly the only apostle carrying forth "The News." President Obama has admired Pollan’s thought. Obama’s secretary of agriculture has reminded the press that he considers himself the secretary of food.

Powers-that-be are listening to this stuff.

The Pollan Principle is easily summed up: Modern agriculture pollutes the environment, wastes energy and provides cheap food that contributes to obesity and thus to health care problems—and costs.

You can argue with the merits of the case ( follow this link for one good example) but as you do so, be aware that what you have to say will pass, at the speed of unimpeded sound, into one aural cavity of the True Believers and out the other.

In an earlier day, a Time or Newsweek magazine would have required its reporters to present both sides of such debates. But those magazines have yielded their objectivity in an attempt to adjust to the loudest voice climate driven by talk radio, cable TV and the internet.

What worries me is not that such stuff will drive away consumers. I mean, if the do-gooders can’t get the epicureans among us to quit pork skins and Blue Bell’s exquisite chocolate-covered cherries ice cream, what chance do they have on iron-rich, nutrient dense beef?

What worries me is that these guys have the ears of policy makers. Policy makers who know they don’t have to stage a frontal attack on modern agriculture to destroy it. You don’t have to say, “eat less beef.” You can simply demand more stringent regulation of antibiotics and CAFO standards and employment regulations. There are many ways to attack mainstream agriculture without having to confront the united farm lobby, and if in your heart you believe mainstream agriculture to be evil, why would you not?

Walsh’s piece seems to have found an ear among non-cattle farmers this time. That’s good. He is plain in his argument that the root problem in the Pollan Principle is agriculture subsidies:

"Over the past decade, the Federal Government has poured more than $50 billion into the corn industry, keeping prices for the crop — at least until corn ethanol skewed the market — artificially low. That's why McDonald's can sell you a Big Mac, fries and a Coke for around $5 — a bargain, given that the meal contains nearly 1,200 calories, more than half the daily recommended requirement for adults. ‘Taxpayer subsidies basically underwrite cheap grain, and that's what the factory-farming system for meat is entirely dependent on,’ says  (Union of Concerned Scientists spokesman Doug) Gurian-Sherman.”

A man is not wise to bet against the farm lobby in this country, and would be particularly imprudent to suggest that such charges will quickly and directly impact corn farmers’ subsidies. But if that mind set is informing decisions at EPA and FDA and USDA—if those decision makers truly believe that cheap food is a problem— how open will they be to arguments about how this rule or that rule will raise food costs?

What if they, like Walsh and Pollan, think that’s a good thing? What does it mean that “America has the widest choice of the cheapest food in the world" is considered a bad thing.

It’s a question every agriculture producer in the U.S. should be asking, because such thought is pervasive among the political elite in this country.

Steve Cornett is editor emeritus at Beef Today. You can reach him via e-mail at scornett@farmjournal.com.

A Lackey’s Tacky Take

Aug 25, 2009

By Steve Cornett
 

I’ve been reading Alan Guebert’s fluidly written columns for a long time, but have never been introduced to him. So I don’t know how to pronounce his last name, but presume the “t” to be silent, as in “Colbert Report,” but can’t swear to it.

Now I see he has decided I’m a packer "lackey” for doubting that the concentration of beef packers is responsible for the woes that have befallen cattle producers these last decades.

It surprises me that so many Gueberts are so convinced people who share my doubts have somehow sold out to beef packers. I can’t imagine what they think we get out of this supposed Satanic mortgaging of our first born to cow killers.

Maybe it’s my fault for not being clearer. I’m no fan of beef packers; I know they’re heartless, penny-pinching corporations who make their livings by hiring the cheapest, and often most expendable, workforce to kill cows as fast as possible. Their disinterest in consumer satisfaction and slavish devotion to tonnage and line speed are a big part of beef’s problem.

But blaming them for cattle ranchers going out of business, as the Gueberts do, is like expecting to cure a cold by blowing your nose.

Guebert writes nice columns reminiscing about his days as a farm boy.  I think a lot of the attitude he represents derives from such nostalgia. Hey, me too. I miss the old days, too. I don’t want to see the cattle business chickenized, either. But neither do I want to mortgage the future in some vain effort to have the government recreate Mayberry RFD just so I don’t have to learn how to use the futures market. 

Where is the evidence that consolidation among beef processors is the reason those old days and old ways are gone?

Oh, yes. Guebert provides all the evidence he has:         

“According to data released by the General Accountability Office June 30, the number of U.S. farms with cattle and calves declined 352,000 in the years 1987 to 2007, from 1.15 million to 798,290.

More importantly, reports the GAO, "the fewest number of farms accounting for 50 percent of the sales" in cattle plunged by more than 60 percent during the same period. Only 2,862 farms today account for more than half of all cattle sales in the U.S. In 1987, it took 7,471 farms to reach that tipping point.

Worse, the July USDA Cattle on Feed report shows the U.S. cattle inventory at a 36-year low, just 94.5 million head today, even as cattle producers suffer through one of their biggest, longest blood-lettings.

In short, the packer-led market model that has cut the cattle sector to its smallest size in nearly 40 years, concentrated ownership in its fewest hands ever and now has ranchers and feeders adrift on a rising sea of their own blood is the model the lackeys want to keep?” 

So I guess the evidence is that packers buy cattle AND cattle producers sell cattle AND producers are going out of business THEREFORE it’s the packers’ fault. Case closed. It is with such simplistic analysis that populist arguments sway the kindhearted Gueberts of the world.

Consider this USDA chart of per capita meat consumption in the United States:
chart: Versatile, affordable chicken has grown in popularity

If packer consolidation is the problem behind beef woes, why have the much-more concentrated poultry and pork industries fared so much better? The beef industry is shrinking for a lot of reasons, but the most important is competition from the highly-concentrated, processor-dominated poultry industry. And the growth curve that began for fowl meat in the 1960s began and coincided--not coincidentally--with the concentration of poultry production.

Over the same years, beef packers’ percentage of the farm-retail spread has narrowed while retailers have increased their share. I have never argued, lackey though I may be, that what we need is more packer concentration in the beef industry. My argument is that beef producers need to recognize that the reason poultry is driving them out of business is that the fowl birds have a more efficient business model.

The Gueberts don’t recognize that..

Concentration—packer control—has allowed poultry integrators to cut costs and deliver products consumers like.

In those years of poultry growth—while they were learning to squeeze growers, and popularize McNuggets, chicken burgers and chicken strips—how much improvement have we made in beef production? Well. We’ve made cattle bigger. And blacker.

And we’ve got them bigger and blacker not because consumers want them that way, but because packers prefer bigger to get more yield and hair color is about the best indicator we’ve got in our disjointed system that an animal might marble.

If beef is to continue outselling goats and sheep in this country, producers must find a way to compete with poultry. Hating packers, distasteful as they are, is hardly helpful. The Gueberts may not like the poultry business model. I certainly don’t want beef to go that way.

But facts are ugly sometimes.  If the goal of a business model is to provide continuous improvement and consumer satisfaction, the poultry model of unified practices is far superior to the “every man for himself” model in the beef industry.

We need systems that can emulate what’s good about the way chicken farmers operate: systems like those small producers who deliver beef directly to consumers; systems that reward calf producers for providing verifiable quality to feeders; systems that reward feeders for providing packers with beef consumers like; systems that provide packers with incentives to please consumers and bring them back to beef.

We need more, not less, cooperation between producers and processors. We need more, not less, value-based forward contracting. We need more, not fewer, of the partnerships forged by U.S. Premium Beef and National Beef.

Such systems don’t require big packers, but such systems can work with big packers as the marketing arm. Given the concentration among retailers, there is even some justification for packers to be so large, in fact.

But elements within the Obama Administration and Congress want to close the door on such operations, to enforce unilateral disarmament on the beef industry.

Thanks to Steve Dittmer at the Agribusiness Freedom Foundation for providing this quote from Obama’s man at the Packers and Stockyards Administration:

"I use this analogy when it comes to vertical integration. The herd is stampeding toward the cliff. There is not enough time to turn the herd in poultry. The hog industry is getting closer to the cliff but I think we still can turn the herd. With the cattle industry, it's a little bit further back."

He seems to be saying he will leave the poultry model alone, but force cattle producers to operate as they did back in the “good old days.” That medicine is poison. And as the beef industry continues to atrophy and producers continue to disappear, the Gueberts will say it just goes to prove their point: “We need more government control to keep us ‘independent’” they’ll argue.

That’s just how Gueberts think.

Steve Cornett is editor emeritus at Beef Today. You can reach him via e-mail at scornett@farmjournal.com.

This column is part of the Beef Today Cattle Drive e-newsletter, which is delivered to subscribers biweekly and includes beef industry analysis, market information as well as the latest beef headline news. Click here to subscribe.


 

Mandatory ID Inevitable

Aug 10, 2009

By Steve Cornett
 

It’s not often you get the National Cattlemen’s Beef Association, the cattle splinter groups and the “family farm” activist outfits aligned, but they all have problems with the idea of a mandatory National Animal Identification System.

I’m with them on this. But I’ll lay you odds that we or our kids will see a de facto mandatory program. It will be mandated by consumers and the processing and marketing segments they control if not the government, and it won’t be designed to protect the beef industry from animal disease, but consumers from bad production practices.

If the government doesn’t require it, the government won’t pay for it. That won’t matter much because the cost to individual cattle producers will be minimal and the rewards great.

But it looks like it won’t be administered anytime soon by USDA. The House has eliminated funding for the program and the Senate last week voted to slash its budget.

What’s a bit ironic is that it was the people who think of themselves as protecting  small producers who most strongly opposed NAIS. They are worried about the little costs and problems associated with a government mandated and financed program when what they should fret about is how they will get access once the private system or systems kick in.

Chances are many will find themselves locked out of a commercial system, the same way they’re basically locked out of, say, a national satellite marketing program that requires sellers to offer load-sized lots of similar cattle to participate.

Nobody in the commercial business wants to fool with little guys. Big order buyers aren’t going to stop by a Georgia farm to bid on a half dozen mixed steers and heifers, for instance. They prefer to let the little guys pay the freight and absorb the shrink and expense associated with auctions.

I’ve tried for years to talk big cattle feeders into putting together feeding clubs for little producers, and a few feeders have tried it. But one after another discovers the expense of managing such programs eats up the profit possibilities.

My guess is that we’ll find that “voluntary” animal tracking programs will offer another disadvantage to smaller producers. Unless...

Unless those smaller producers learn to use those ID programs and new technologies and management opportunities that surround them to help coordinate efforts with others to improve their herds and enhance marketing efforts. That’s what all that stuff the anti-NAIS warriors refer to as “significant reporting and paperwork burdens on small farms” can do for small producers who adopt the technology rather than fighting it.

Some have already done it, of course. Others will. 

But others would rather fight than switch. They’ll finally wind up locked out, and they’ll blame the government and “corporate agriculture” for their misfortune. 
 

Steve Cornett is editor emeritus at Beef Today. You can reach him via e-mail at scornett@farmjournal.com.

This column is part of the Beef Today Cattle Drive e-newsletter, which is delivered to subscribers biweekly and includes beef industry analysis, market information as well as the latest beef headline news. Click here to subscribe.


 

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