Government involvement impedes recovery
Improved efficiency alone will not overcome industry hurdles.
As the U.S. economy
shows signs of improving,
the hog, broiler and beef
sectors of the intensive livestock industries are breathing more easily with prospects of increased returns.
This is due to both judicious
and forced cutbacks in production during the past year
which have restored the balance between production and demand. Resumption of exports of broiler
parts to the Russian Federation will relieve this
sector of the need to retain product for domestic
consumption with consequential depression of
revenue. Despite these trends, all is not well with
intensive livestock production. There are two
government initiatives which overshadow future
profitability.
Ethanol production still exceeds demands
The diversion of corn to ethanol, now responsible for one-third of our annual crop, continues
an inexorable climb, contributing to the high cost
of feed grains. The production capacity of the
existing first-generation plants exceeds demand,
hence the need to raise the “blend ceiling” from
10% to the 15% as requested by the Renewable
Fuel Association. At the present time, ethanol
is exported, which contradicts the intention of
domestic energy independence. The great na-
tional ethanol energy boondoggle is supported
by taxpayers directly and indirectly. Despite the
vision of Secretary Tom Vilsack, the promise
of long-term fuel from biomass including wood
fiber, switchgrass and now municipal waste is
speculative. The reality is that the technology for
fermentation of other than grains to ethanol is
not currently available for large scale economical
production to meet the Renewable Fuel Standard
of 36 billion gallons of biofuels by 2022. The
GIPSA plan casts doubts.
The second challenge facing livestock production relates to the intrusion of the federal government into the relationship between integrators
and contractors. Recent hearings organized by
the Departments of Justice and Agriculture and
the new rules promulgated in terms of GIPSA
suggest a plan to restructure food production to
the detriment of the large, efficient and productive
suppliers of protein for our domestic and export
markets. If the U.S. food producers wish to retain world leadership in production technology
and efficiency it will be necessary for the current
administration to review its objectives and determine whether our nation intends to continue as
a free-market economy or to have the restraints
of socialism imposed on our successful agribusiness systems.
Simon
