Prices Are Up—What Could Possibly Go Wrong?

March 26, 2012 10:41 AM

Never has the outlook for beef prices been so rosy or so, uh, certain. If you’re a member of CattleFax or sat through its annual outlook seminar at the Cattle Industry Convention, you know what I mean—its analysts are as bullish as Muhammad Ali before a fight.

Per capita beef supplies are at historic lows. Prices are at historic highs. Folks are starting to hold onto cattle, which will compound the supply problems and support higher prices even more. If El Niño returns rain to drought areas, things will be even better.

So nothing can go wrong…go wrong…go wrong…

Do you remember the cow that ruined Christmas?

One nonthreatening BSE cow and the market fell through the bottom. What if we get another dose of that mad cow madness? Or a foot-and-mouth disease (FMD) case in this country during these high times? It would take about 10 minutes for every foreign buyer we have to cancel their orders. On one hand, it is a good reason to stay hedged. My spreadsheet says that at these prices, I could afford a little Chicago-style calamity insurance, even though I’m sure nothing can go wrong.

It also argues for getting the World Organization for Animal Health (OIE)—that much-lobbied arbiter of "scientific consensus" on foreign trade issues—to drag itself into a globalized world in which trade is too important to trifl e with. The National Cattlemen’s Beef Association (NCBA) and USDA are on the case with BSE but not FMD.

In fact, NCBA policy specifi cally opposes USDA allowing fresh beef or cattle imports from "clean" areas of infected countries. That makes no sense—well, it does, but not as
much as pushing forward practical rules that would prevent a single case of FMD from devastating an entire country.

Our control strategy for FMD should free us from having to depopulate in the event of an outbreak in one area. With modern communications and new vaccines, we could make FMD a nonevent for everybody who doesn’t get a case on his premises. But so long as that first case means the whole country loses its ability to export, FMD is an ax poised overour heads. If it happens, it will be too late to petition OIE. NCBA did nothing to modify its import-phobic policy at its convention in February. I hope we don't live to regret it.

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