Pro Farmer Editors
The National Cattlemen’s Beef Association (NCBA) sent a letter to members of the U.S. Senate today opposing an effort to include a dairy buyout in the stimulus package. The proposal would use taxpayer dollars to raise dairy prices by buying older dairy cows from farmers, taking approximately 6.5 billion gallons of milk off the market. This would result in nearly 320,000 additional head of cattle entering the beef market, which could drastically reduce the price of beef cattle, says the NCBA.
“The cattle industry is not subsidized by the government, nor do we wish to be,” said NCBA President and Arizona rancher Andy Groseta. “However, we are subject to the unintended consequences of policy directed towards other sectors of agriculture, such as the dairy industry. Flooding the market with beef and driving down the price for our products will be devastating for America’s cattle producers.”
Cattle producers continue to experience record-high feed and forage costs which resulted in over $1.5 billion in losses to the feeding sector last year. Additionally, higher fuel prices, land values, and input costs caused decreased revenue for producers. “All of agriculture is experiencing the impact of the current economic downturn, and the cattle industry is no different,” Groseta explained.
Proponents of the buyout suggest lessening the consequences for the cattle industry by using United States Department of Agriculture (USDA) Section 32 funds to purchase ground beef. A similar plan was implemented in 1986, which did not prevent the cattle market from crashing. The 1986 buy-out resulted in a 25 percent decrease in the price paid to producers for beef cattle and sent the cattle markets to the lowest point we have seen in the last 30 years. In total, the beef industry saw a $1 billion loss from the buy-out in 1986.
“NCBA does not support utilizing taxpayer dollars to both fund this proposed buy-out and to try and mitigate its ill effects on the cattle business,” Groseta stated. “This is a flawed proposal and we urge Congress not to include it in the stimulus package.”