Inability to Compromise Becomes Dangerous
Dec 31, 2012
The inability of politicians and government regulators to find common ground for the common good has moved beyond standing ground on principle and has entered the realm of dangerous.
Exhibit A. The posturing between President Barack Obama and Speaker of the House John Boehner (R., Ohio) has sucked so much oxygen out of the Washington political atmosphere that nothing else can happen in the vacuum. Among its most vulnerable victim is the 2012 farm bill.
At this writing on New Year’s Eve morn, it’s still not clear if the country is taking a dive over the fiscal cliff. Nor is it clear we’ll get a farm bill with—or without—a budget deal. The House filed three separate farm bill motions over the weekend. The first would extend current farm law through Sept. 30, 2013, and contains the Dairy Security Act, dairy margin insurance and the controversial market stabilization program. The second simply extends current farm law through Jan. 31, and third reportedly prevents a four-fold spike in dairy price supports.
Throughout the farm bill debate, everyone thought the dairy provisions—though controversial within the dairy industry—would never be the linchpin in getting a new farm bill passed. Crop insurance and food stamps, billions more expensive than dairy price supports were thought to be, would be the key hang ups. But if current farm law expires today, dairy price supports will once again be front and center.
The reason: Without a new farm bill, dairy provisions revert to permanent, 1949 law. That law stipulates that dairy prices must be supported at 75% to 90% of parity. In November, the parity price for milk was $52.10/cwt. So 75% would be $39/cwt.
It will take the United States Department of Agriculture (USDA) some time to actually implement this support price and make offers to cheese, butter and non-fat milk manufacturers to purchase these commodities at this level. Nevertheless, it would throw markets into turmoil and consumer demand into havoc. The price of a gallon of milk could theoretically double—and make organic milk appear to be the bargain of the day.
More likely, retail sales of milk, cheese, butter and yogurt would plummet. It would be a mess, to say the least. And the need for the government to actually buy product would become acute.
Exhibit B. The inability to reach compromise by government and industry also was manifested when USDA released its final rule on animal identification and disease traceability last week. USDA essentially threw in the towel, accepting 19th century brands and tattoos to combat 21st century globalized disease threats. The rule becomes effective February 28.
USDA had originally proposed much more progressive rules utilizing RFID tags and computerized data bases. But it was thwarted in those efforts—even belittled—by the least progressive elements of the beef industry. The irony, of course, is that these same cowboys will be the first to blame USDA should a foot-and-mouth disease (FMD) outbreak occur in the United States.
Sure, some individual states—particularly in the Midwest--have good disease traceability programs in place. But an FMD outbreak won’t stop at state borders: It will shut down meat and milk movement regionally, if not nationally. And it won’t be for a day or two as USDA and state veterinarians try to trace the disease. It will be weeks, maybe months, before livestock commerce returns to normal. RFID tags, 48-hour traceability and linked computerized data bases would not prevent such a tragedy from occurring. But they stand a far greater chance of getting things back to normal than looking for brands and tattoos.
At some point, politicians and regulators must become the leaders we all pay them to be. Enough is enough.
For more on the farm bill, click here.
For more on USDA’s animal disease traceability rule, click here.