Rural Communities

Published on: 15:19PM Dec 16, 2009

Max Thornsberry

Cow/calf producers in the United States are the foundation of most rural communities. These hard-working men and women drive the economic machine that keeps a rural community alive and vibrant. 

Real estate taxes, primarily derived from agricultural land in rural communities, provide the revenue for our public education system, which is, bar none, far superior in rural communities. Cow/calf producers purchase hardware, fertilizer, feed, vitamin/mineral supplements, irrigation equipment, implements, tractors, hay balers, new pickups, gasoline, oil, propane, tools, electrical supplies, haircuts, veterinary supplies, and veterinary services from small town businesses.

These same hard-working people provide income for physicians, dentists, pharmacists, educators, bankers, and USDA regional offices. A rural community and its economy are dependent upon money changing hands. For a rural economy to exist there must be commerce, and there must be commercial activity involving multiple economic entities. A cow/calf producer sells calves, pays his bills, interest, payments on his equipment, vehicle payment, and land payment, and then goes to town “to trade,” as my Dad would say. That “trade” is in jeopardy.

With the corporatization and centralization of both the poultry and hog production systems in the United States, the ability for an independent hog producer to use economic indicators to plan his business expansion or downsizing is destroyed. Without a competitive marketplace, supply and demand movements based on production and consumption numbers become skewed and unusable as a business-planning tool. I obtained a college education in agriculture at the University of Missouri, which I thought would prepare me to become an agri-businessman capable of utilizing economic indicators to plan my agricultural enterprises. Sorry, Mom and Dad, I wasted your money, and my time.

When competition is diminished in a capitalistic economic model, the movement of the market in response to supply and demand economic indicators no longer follows the model I was taught at the University of Missouri. It is interesting that with the fall of the Iron Curtain and a new government in most of the former communist countries of Eastern Europe, including Mother Russia, a call went out to University of Missouri College of Agriculture graduates. The call was simple: donate a few months to 2 years of your life to go to former communist countries and teach them how to decentralize agriculture.  Much of the time spent would be committed to teaching these former centralized systems of agriculture production how to set up a free market economy – basically how to decentralize their agricultural production systems. While the call went out for Ag School graduates to spend time teaching about free market agriculture, the United States continued to move down the path of a more centralized and consolidated agricultural production system, which, in the process, has destroyed the competitive market economy that drives a free market agricultural economy. 

I attended an excellent agricultural economics presentation this past summer at the Kansas Cattleman’s Association summer meeting in Dodge City, Kan. Dr. Rob Cook, an economist for CattleNetwork.com made an eye-opening presentation on the diminishing cattle numbers in the United States, compared to the prices received for live cattle, and then compared to the import numbers for beef and live cattle. As I remember Dr. Cook’s summary: The United States has the most significant beef-consuming market in the world. Every time the United States signs a free trade agreement with a country, beef exports from that country into the United States increases dramatically. In the first half of 2009 for instance, beef imports from Australia increased by about 50% compared to the same time period the year before.  Uruguayan exports of beef into the United States dramatically increased once it was declared free of foot-and-mouth disease (FMD) and established a free trade agreement with the United States. He told us that U.S. cattle feed lot pens were 58% full, which simply means 42% of feedlot pens were empty as of July 2009.

Many of the smaller countries with which we have signed a free trade agreement have few natural resources to trade. They do trade cheap labor, provide cheaper land and a lower tax rate for corporations seeking to exploit these resources, but they send us what they have in exchange, and that is beef.

We cow/calf producers sometimes tend to believe we are the only really good independent beef producers left in the world. We need a new education on that subject. I have traveled in most of Central America, as well as some South American countries. I visited a ranch in Venezuela that ran 40,000 mother cows. Columbus brought cattle over from Spain on the Santa Maria in 1492, and these cattle have been reproducing in Latin America ever since. Grass there grows 365 days a year. No need for a hay baler, a swather, or hay rake. Labor costs run $5.00 to $7.00 per day, and there are no payroll FICA withholdings. If the goal is to simply purchase beef from where it can be produced the cheapest, we have no hope here in the United States.

I write all this to say that cattle numbers and beef production continue to decline in the United States, and have done so almost steadily since 1979. It continues today. Missouri has 400,000 fewer mother cows than it did in 2006, forcing Missouri into the No. 3 slot for cow/calf production numbers. 

Cattlemen respond to decreasing prices by selling off cows, getting out of the business, or downsizing their operations. In a normal market, the cattle cycle would cycle back up and costs of production would be met. It really makes no difference anyhow. No matter how much we reduce production, importation of beef from other countries simply replaces our reduction in production. As consolidation marches onward, beef imports increase, and cattle producers have no economic indicators to utilize for planning.

As independent cattle producers, we will have to fight to maintain our way of life in this new, one-world government we find ourselves a part of. We must let consumers know that beef production, like all agricultural production, is a national resource, as well as a national security issue, for as cattle production goes, so go our rural communities. It is worth the fight, and the fight has begun.

 

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