It still seems strange that agriculture is more concerned about the energy bill than the farm bill but that's certainly the case and for good reason. The fallout stands to be greater under the energy bill.
The House passed its version with some amazingly aggressive renewable fuel mandates this week. The Renewable Fuels Standard (RFS) would begin with 9 billion gals. in 2008 and end up with 36 billion in 2022. The ethanol-based mandate would be doubled to 15 billion gals. by 2015. The blender's credit would also be reduced by 5¢ from 51¢ to 46¢ over that time, but the 54¢ ethanol-import tariff would remain in place.
As this was written, the Senate hasn't yet passed its version of the energy bill, but it's likely to be fairly similar, as it relates to renewable fuels anyway. The White House has already promised to veto the bill, not because of ethanol subsidies but the more than $21 billion in tax increases and mandates on oil companies. The bill also continues to stymie exploration efforts in the U.S. and, according to many, will actually increase U.S. dependence on foreign oil.
Despite the failure of socialism nearly everywhere it's ever been tried in the world, the momentum toward socialism in the U.S. is undeniable. Interestingly, while the U.S. moves away from the capitalistic model, the rest of the world -- having experienced the failure of socialism -- is moving toward that old American ideal.
The cattle industry has long prided itself in standing up for individual choice, free enterprise, capitalism, entrepreneurship, free markets and free trade, limited government involvement, etc. But the reality is that our legislators have selected the corn industry over the livestock industry. If passed, this energy bill, in essence, mandates that corn be used for fuel rather than food, and that the livestock industry be reduced significantly in size.
Perhaps it's time for the cattle industry to abandon its idealism and grasp that the invisible hand of the market is no longer going to be allowed to operate in our industry. And while many find repugnant the prospect of ranchers running around Capitol Hill with their hats out for handouts, the fact is ag has largely been reduced to that. Sadly, those segments of agriculture that have embraced this begging lifestyle are the ones most poised to prosper.
Preservation of the U.S. beef industry increasingly looks like it lies in carbon credits, preserving open space, or perhaps building a case that America needs to produce its own meat for national-security purposes.
Viewing the evolving trends, it becomes increasingly hard to argue that our expectation of hands-off government is still viable. Government is now regulating nearly every aspect of production, be it the environment, air, water, or land usage, not to mention food safety, the overall marketplace, even how we are allowed to label our product.
The big difference was that for many years we were able to operate in a vacuum of sorts, which no longer is the case. With ethanol and other programs changing the very structure of our business and spiking our input costs, long-term survival at a scale anywhere close to what it is now will likely rest on our ability to garner enough public largesse to at least offset the costs of subsidizing other segments.
Free enterprise, free markets and allowing individuals to make their own choices are still the preferred route. But in today's political environment, that seems to simply be a nonviable alternative.
I've heard many a person say, "Well, I really don't agree with this handout or that handout, but I have to participate if my neighbors are." That analogy is what the cattle industry as a whole is facing today.