Just as historically short cattle numbers are adding support to the topsy-turvy cattle markets, the dairy industry is seeking to make a buy-out program for that industry part of the nation’s economic stimulus package.
The National Cattlemen’s Beef Association (NCBA) sent a letter to the Senate last week opposing the proposal.
“The cattle industry is not subsidized by the government, nor do we wish to be,” says Andy Groseta, NCBA president. “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.”
Groseta explains the proposal would use taxpayer dollars to raise dairy prices by buying older dairy cows from farmers, taking approximately 6.5 billion gals. 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.
“All of agriculture is experiencing the impact of the current economic downturn, and the cattle industry is no different,” Groseta says.
According to NCBA, proponents of the buyout suggest lessening the consequences for the cattle industry by using USDA Section 32 funds to purchase ground beef. A similar plan was implemented in 1986, which didn’t prevent the cattle market from crashing. The 1986 buyout resulted in a 25% decrease in the price paid to producers for beef cattle and sent the cattle markets to the lowest point seen in the last 30 years. In total, the beef industry saw a $1-billion loss from the buy-out in 1986.
“NCBA doesn’t support utilizing taxpayer dollars to both fund this proposed buyout and to try and mitigate its ill effects on the cattle business,” Groseta says. “This is a flawed proposal and we urge Congress not to include it in the stimulus package.”
Now would be a good time to express your thoughts about it to your senators.