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July 2010 Archive for Out to Pasture

RSS By: Steve Cornett, Beef Today

Read the latest blog from Steve Cornett.

USDA-GIPSA Gets a Trip to the Woodshed

Jul 26, 2010

By Steve Cornett  

It sounds like Dudley Butler—that “new sheriff in town” President Obama appointed to enforce the Packers and Stockyards Act—ran into a bipartisan buzz saw last week when he showed up at the House Agriculture Subcommittee on Livestock, Dairy and Poultry to defend his proposed rule to hamstring meat and poultry packers.

Oops. I said “hamstring.” Of course, the purpose of the rule is to make the market place “fairer” and a dose of “fundamental change” for the meat business. 

Your reporter missed the hearing. But Kim Watson-Potts, Beef Today editor, caught it and so did Roger Bernard with Pro Farmer. In fact, so did just about everybody I talked to.

It sounds like it was remarkable. The Democratic chair of the subcommittee, David Scott of Georgia, basically told Butler and Undersecretary Avalos that it looked to him like the rules were an attempt to circumvent the will of congress. 

Congress, during their considerable discussion of the issues at hand, had considered and decided against many of the provisions, he said. The message from the Republican side was the same.

You may have noticed in this space earlier that this reporter has mixed emotions about the proposed rules. It’s good that somebody has finally decided to include poultry in the rulemaking process. If you’re going to attempt to make free markets more “fair” rather than more efficient, it’s at least nice if some of the same anti-efficiency rules apply not just to beef, but to the competition as well.

But it also looks like Representative Scott is right. These rules are an attempt to do what congress discussed and agreed not to do—eliminate “captive supplies,” despite any convincing evidence they are contributing to industry consolidation. Or, for that matter, that consolidation is something so undeniably “bad” that it must be stopped at whatever cost to freedom and individual rights.

This writer is not without recognition of the challenge posed by the consolidation of the packing segment and the evolution of the feeder-packer marketing intersection. There’s no reason to doubt that Randy Stevenson was told by a packer buyer than he couldn’t pay more for a certain set of high-value cattle because it would impact the price of a much larger group of basis-priced contract cattle.

Moreover, I’ve no reason to doubt the feedyard owner who told me years ago—during the prompt payment debate of the 70s—that his packer buyer had promised to boycott his yard if he supported the law.

But new laws and GIPSA regulations are not likely to provide a solution we’ll like.

Rather, the industry should be looking for ways to adapt. That means finding new ways to price cattle. As more cattle move on contracts, the cash market gets thinner. You can’t continue to base the whole thing on an increasing thin, decreasingly representative, sliver of the cattle.

We’ve talked about other options. A few people have actually worked out risk-sharing and cost-plus arrangements. I’m not sure how long we’ve been batting around the idea of tying cattle prices to boxed beef values. I’m not sure where it will wind up. But as things change, things will change.  The laws need to allow the market to adjust. 

What the Dudley Butlers want isn’t going to work.  Consolidation is being driven by factors well beyond their control. You and I may not like it, but it is helping provide consumers with more affordable, higher quality products. We’re not all going to be able to make a living growing cattle in the future, I suppose. But by what reasoning do we suppose we have a right—a RIGHT!—to do so?

This is, when you boil it down, the same debate we’ve been hearing in recent years about big box stores driving the mom and pop locals out of business. I never believed that a local hardware man had a “right” to force me to pay more for his products. I’m not sure why, then I have a “right” to feed cattle when others can obviously do it better and cheaper.

We have a right to a fair market. A fair chance. We have a right to start the race, but we don’t have a right to win the blue ribbon.

And USDA just announced an extension to the public comment period. That only makes sense to extend the comment period until at least after the Denver DOJ-GIPSA hearing on these very matters.

And we can hope that the pressure from the Congressmen will make a difference.

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.

 

 

 

More Hot Jobs Stuff

Jul 21, 2010

By Steve Cornett

The Senate is about to extend unemployment benefits for the long-term unemployed. Without passing along any opinions your correspondent may have on that matter, let us agree that such action pretty well renders moot many of the comments filed after last week’s post about the chances of Arizona’s 300,000 unemployed people filling 50,000 seasonal jobs in agriculture.

It’s my mistake that so many readers seemed to think I was berating welfare and unemployment payments. And unfortunate that so many anonymice forgot their manners. Again.

For purposes of the subject at hand, berating the jobless is off-topic.

We need to talk about a serious guest worker program, one that involves minimal red tape. There are several points we should consider.

Point one is that we’re—not even you young folks—ever going to live long enough to see the end of welfare in the U.S. Even if we had the political will to end such programs, employers would have to fret about the work ethic of people who would choose to accept such payments rather than work.  If you don’t believe me, try hiring one of those “will work for food” dudes from the street corners.

A weak work ethic is not something you’ll find to be common in the folks who are now crossing the border. So, point two is that guest workers would be better help

Immigrants would work harder and break less stuff than displaced welfare recipients or unemployed journalists. Trust me.

Point three is, as I mentioned a few days back, these people are already here. They don’t have work at home. There is plenty of work in the U.S., despite the advertised unemployment rate. There will be no law and no fence strong enough to keep the two separated, even if such were the wisest course of action.

Point four: A guest worker program would create jobs for Americans.

I’m remembering Hereford, Texas, back during the bracero program. There were vegetables grown all about. There were packing houses and vegetable brokers.

There was a whole section of town devoted to servicing the needs of the workers. From ropa usada to groceries, there was a whole economy built around them, an industry that provided jobs and entrepreneurial opportunities for local, legal, residents.

That’s all gone now. The region around Hereford has long since gone back to commodity crop production. Yes, Mr. Anonymous from last week, subsidized commodity production. Involving chemicals! There are plenty of illegals available to hire around here, mind you. But nobody is going to try to build a business around them. Too iffy.

Politically, we should recognize that we’re GOING to eat hand-picked, hand-tended, fruits and vegetables in the U.S. The choice is whether they will be hand picked and tended in Chile or Mexico or in the U.S. Will they be subject to U.S. quality controls or not? Will the return to capital and risk accrue to producers and retailers in the U.S. or elsewhere?

The unions—including the near-sainted farm workers union—drove all that out of the country. So who, in the U.S., at least, is the better off for that?

The Obama Administration claims to be all about “jobs, jobs, jobs.” Unless they are prepared to force the unemployed to take those hot, hot, hot jobs in Arizona, they should endorse a serious guest worker program.
 

Jobs! Get ‘Em While They’re Hot!

Jul 15, 2010

By Steve Cornett

Just to follow up on my last blog post about illegal farm workers earlier this week, the Arizona Republic has a take on the issue at that you can read by following this link.

I hadn’t thought of what a test tube Arizona might be for finding out if guest workers take jobs unemployed Americans want.

The story says the state needs 50,000 temporary farm workers—25,000 of them from out of state—and there are 300,000 unemployed workers in Arizona. It says one of the, presumably typical, undocumented workers plans not to make the trip this year for fear the local police will bust him.

From the Republic’s story:

Hector Lopez, 28, is originally from Oaxaca, Mexico, but has worked in the U.S. for 10 years and lives in Salinas, Calif. Four months a year he harvests lettuce in Yuma, where he earns $10 an hour. But this year will be different, Lopez said.

"The truth is, I'm thinking of finding some other alternative because of the new law," he said.

"What I understand is that now police officers can take on the function of immigration and for whatever infraction, they can arrest you and check your immigration status," said Lopez, who said he earns $4,000 a season in Arizona.

Without putting on my old editor’s hat and asking the reporters for evidence that direct quote is actually as verbatim as the quotation marks indicate, let me note that I know something about harvesting lettuce.

My dad left Oklahoma during the Dust Bowl and spent some time harvesting lettuce in California. It was, as per the memories he conveyed to me decades later, sort of tough work, even for an Okie accustomed to mule-and-hoe agriculture. But he took it. So did a lot of his fellow Dust Bowl refugees. In those days, such work was the country’s “safety net.”

So, we have an interesting test here. If you believe the Republic story, the state has 12 unemployed people for each of the outsider jobs. You’ve got a statewide listing that allows people to find the jobs if they want them.

You’ve got farmers who, as any good union member will tell you, will pay whatever it takes to get help. In fact, Mr. Lopez’ $10 per hour is 38% over the state’s minimum wage of $7.25.

So this should all be good news. With 12 applicants for every one of those 25,000 jobs, the farmers should be able to bid the price a little lower.

Right? 
 
Isn’t that how supply and demand works? I mean, assuming the “demand” is really there? 

Let’s see how it works out.

Beef’s Stake in Immigration

Jul 12, 2010

By Steve Cornett  

If you saw the New York Times piece last week on how the Obama administration is conducting “silent raids,” you might have noticed that Gebbers Farms replaced its illegal workforce with legals. But toward the end, we find this passage:

"Show me one American —just one — climbing a picker’s ladder," said María Cervantes, 33, a former Gebbers Farms worker from Mexico who gave her name because she was recently approved as a legal immigrant.

After completing a federally mandated local labor search, Gebbers Farms applied to the federal guest worker program to import about 1,200 legal temporary workers — most from Mexico. The guest workers, who can stay for up to six months, also included about 300 from Jamaica.

NPR did a bit last week on the Newsweek article about the economic resurgence of the Great Plains. A caller from Dodge City was talking about “more jobs than people” in Dodge City. The host asked what kind of jobs. The caller said there was a lot of meat packing.

You could hear the sneer in the host’s voice. “Well, meat packing may not be everybody’s cup of tea,” he said.

No kidding. He didn’t seem to notice that he had kind of made the same point as Ms. Cervantes offered—a point so often made in middle America—about there being a lot of jobs Americans don’t want to do. There are lots of those jobs. I’ve got a few available on my place at the moment, in fact. You probably do too.

Meat packing and orchard tending are good examples of work Americans don’t have to do, even with 10% unemployment. It’s hard, unfulfilling labor. But if you and I are to survive in the cattle business, the work needs to be done, and at wages that don’t force beef prices to unaffordable levels.

Why don’t we let people who want to do that hard and menial stuff do it?

Through the years, I’ve worked with, over and--for a while in college, for--illegal Mexican immigrants. The illegal immigration problem would be easy to fix.

It won’t be with a fence, chain-link, electric or virtual. A fence might help, but like a dam, it won’t hold unless you add a spillway. There is just too much pressure differential on the two sides.
 
But a workable guest program—a “spillway” that allows desperate employers to hire desperate workers—could. When I was a kid, we had such a program. The unions killed it. If the Republicans and Minute Men had much foresight, the administration’s current dilemma might provide an opportunity. 
 
I’m not holding my breath until our leaders work it out. But it could work.
 
What’s needed is for the Republicans to trade the Democrats their 12 million new voters and extreme employer sanctions for a workable guest worker program. 

Yup. I’m saying bring back the bracero program. One that even employers without Gebber Farms’ resources can use.

When I was a kid, my dad employed several braceros. It was a great program for him and for them. They got the going farm wage at the time and government-inspected, decent housing and treatment and the protection afforded by legal standing.

They worked hard. They stole nothing. They took no welfare and no food stamps. We furnished their health care, such as strong, hardworking young men required.

They returned year after year and they loved it. Once a week, as per the rules, we’d take them to town where they would mail their paychecks home. Most had families. One, a teenager about my age, became quite a friend. His money, at first, went to his parents, who were using it to put a son through school. The plan was for the brother to help pay Eliobaldo’s own tuition after he got a good job himself.  

“Al,” as my dad’s Okie tongue had to call him, came back as an illegal for several years after the bracero program was killed. He finally saved enough money to “buy” a policeman’s job in Cuidad Chihuahua. (My attempts to find him since have not been successful.)

Al used his U.S. wages to better himself and his family, and in a small way, his whole country. He did no damage to the U.S. economy. He did work you couldn’t find U.S. citizens to do at the prices we could afford to pay. He wasn’t replaced by U.S. citizens, much less union employees. He was replaced by larger machinery.

His sons or grandsons should have the opportunity to be here now without breaking our laws and without paying some immoral coyote to guide them through a life-threatening desert. They would be if the unions would have allowed it.

Oh, wait. They probably are here. But there is no government oversight—no union control—over how much they’re paid or how they are treated. And, as the Democrats assert, there’s no way to round them up. They have 12 million compadres here, too.

If the goal, as Mr. Obama asserts, is to “bring them out of the shadows,” how about letting them register as guest workers? Give them a green card.

The reason, of course, is Democrats figure they’ll get the lion’s share of votes from illegals given citizenship. Having known a bunch of these guys, I’m not so sure they’re right. But, as somebody has said, the impasse arises because Republicans want the workers and Democrats want the voters.

The Republicans should give way on the voters but, in return, they should demand a workable guest worker program to avoid the pitfall of the 1986 immigration overhaul. That program, which relied on amnesty, employer sanctions, promises of more “border security” and what turned out to be an unworkably complex guest worker program, failed.

By “workable,” I mean one that a dairy farmer or rancher or café owner or meatpacker can afford to use to bring in one or two or 10 or 500 guys. Oversee the treatment and living conditions. Dictate a wage—but don’t require small-timers like me to jump through all the hoops required by current law just to hire a few guys to grub mesquite or hoe cotton.

People from poor countries are already doing much of the U.S. economy’s work, especially factory work. Are we—or the unions—better off because GM hires Mexicans in Mexico instead of the U.S.? Are we better off importing vegetables from Mexico because labor costs in the U.S. have made vegetable production here unprofitable?

I’d argue not. Obama wants “comprehensive” immigration reform badly. Give it to him; build your fence if you must. But don’t make the same mistake we made in the '80s, or 20 or 30 years from now it will all be to do over again. You can’t build a fence high enough any more than you can build a dam high enough to work without a spillway.

It’s a complex political situation. But one part shouldn’t be: Without a solid, usable guest worker program, you aren’t going to stop illegal immigration.

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
eNewsletter, which is delivered to subscribers biweekly and includes beef industry analysis and market information as well as the latest beef headline news. 
Click here to subscribe.

 

 

 

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