May 2009 Archive for On the Udder Hand

Given the size of the federal budget deficit – more than one trillion dollars just this year, and those red ink zeroes will linger long into the future – it’s not surprising then that our lawmakers are looking for new revenue sources.  You know, taxes.  Because while taxes under the Obama Administration may not increase for anyone not rich (i.e. those with less than $250k in annual income), that doesn’t mean that products purchased by the lower and middle classes may not cost more in the future, as part of government design.

Products like soft drinks. And ice team. And flavored milk. 

NMPF put the Senate on notice last week that taxing flavored milks, e.g. chocolate, strawberry, vanilla, and other flavors that are sweetened with sucrose or fructose, is a dumb idea.  Taxes are often quite good at incenting certain kinds of behavior.  Certainly, high cigarette taxes have decreased the rate of smoking, along with ubiquitous public health warnings. 

So if the Senate is successful in taxing any beverage with sugar, mostly with the goal of of reducing deficits and the obesity rate, it’s likely to have fewer children consuming milk, regardless of the flavor. Which means they’ll also be consuming less calcium, which the medicos will tell you is a key nutrient already in too-short supply in kids’ diets.

Mind you, the government’s dietary guidelines say that children in particular should consume two to three servings of milk per day, and those guidelines aren’t picky about whether chocolate milk can be included in the mix or not.  Even the American Academy of Pediatrics agrees that a little spoonful of treacle, in the form of HCFS, makes the medicine, in this case calcium, Vitamins A and D, and other key nutrients, go a lot further.

Too often, the government uses an overly-broad brush to achieve its policy objectives, and fires first without aiming.  That’s what they’re talking about doing here.  The pennies they would raise from a sugar tax wouldn’t really help kids (or adults) lose extra pounds, though they might increase the osteoporosis rate in decades hence.  Bad politics, bad policy, bad tasting.

Fellow AgWeb blogger, and Dairy Today editor Jim Dickrell, recently posed the question of how many cows would CWT remove in its seventh herd retirement?  That question, which many others in both the dairy and beef cattle sectors also had been asking, was answered today.

103,000 cows.  Two billion pounds of milk.  388 farms.  A little more than 1% of the nation’s annual milk production.

But the real answer is not how many, but how does that number compare to people’s expectations.  Earlier this year, some speculated that the real figure needed to be 300,000, or even more.  That’s why some cattle producers got their knickers in a knot, even though CWT in its six-year history has taken out just 275,000 milk cows since 2003.

On the other hand, the 103k figure is 40,000 more than the previous largest-ever round, back in 2004.  It’s a big down payment on the reduction that needs to happen in the national dairy herd, and as the announcement makes clear, it’s just the beginning of a process of reducing the herd in 2009, not the culmination of CWT’s milk supply reduction efforts.

So reaction to this number is all about expectations.  Hopefully those who know the business the best recognize that this is a Goldilocks figure:  not too high, not too low, just the right temperature.