Libyan Unrest Meets The U.S. Cattle IndustryLibyan Unrest Meets The U.S. Cattle Industry
I’m sure most readers would consider the political unrest occurring in Libya today to be as disconnected from the U.S. cattle industry as any two events could be. In actuality, however, the situation illustrates just how interconnected we have become via the global economy. The uncertainty has caused oil prices to surge into the $120/barrel range, and the specter of $4/gal. gasoline threatens an already extremely weak economic recovery
February 25, 2011
I’m sure most readers would consider the political unrest occurring in Libya today to be as disconnected from the U.S. cattle industry as any two events could be. In actuality, however, the situation illustrates just how interconnected we have become via the global economy. The uncertainty has caused oil prices to surge into the $120/barrel range, and the specter of $4/gal. gasoline threatens an already extremely weak economic recovery.
In the past, higher energy prices would have been only a concern relative to the overall economy and its negative effect on beef demand. But, today, we also must factor in the effect of higher corn prices, as corn has become as much an energy product as a feed product.
Most would agree that Libyan leader Moammar Gadhafi is a relic who needs replacing. But the sad reality is there is good reason to believe – from a U.S. security and strategic perspective – that the power void created with his ouster might be filled with something even worse.
I’ve read several reports contending that the expected move from dictatorship toward democracy was only possible via the Internet and the free flow of ideas. I’d be among the first to argue that the discovery of truth is much easier in an era like today when information is more readily available, but we’ve also seen the opposite occur.
The Internet and a wide array of information sources, which theoretically should increase transparency and exposure to ideas, has at times resulted in the cultivation of ideas that don’t stand up to scrutiny. For instance, the Internet has provided ideologues and those predisposed to believe certain things the opportunity to ignore mainstream media outlets. Thus, individuals can bolster their false world views by electing to gather their information from sources with no allegiance to actual facts.
I read a report this week where Gadhafi is blaming the uprising in Libya on al-Qaeda operatives who gave young people hallucinogenic pills in order to get them to revolt. You have to laugh at such a charge, but such statements still work in today’s world.
In promoting their agendas, leaders often attempt to exploit the prejudices of others. We see it in our U.S. political discourse where class warfare is employed to divert attention from real issues. In our industry, we’ve seen a tremendous push by some to blame domestic agricultural production woes on a packer conspiracy that also involves a corporate agriculture and global trade conspiracy.
In fact, these conspiracy theories carry far more weight than Gadhafi’s hallucinogenic pill accusations because they actually revolve around some basic facts. For instance, it’s true that we’ve traditionally had a very segmented and predatory business in U.S. beef production. When packers were making good money, it was usually because they had the leverage and ample supplies, which wasn’t good news for the feeding segment. When feeders and stockers were making money, the cow-calf guys weren’t, and vice versa.
The current market situation is a dramatic anomaly, however, in that all segments are making money. That’s because demand has outstripped declining supplies caused by several major disruptions to the marketplace, which caused the industry to contract sharply. Eventually, equilibrium will be reestablished and we will once again all be at breakeven levels and prospering at the expense of other segments.
It’s in our nature to want to believe that any hardship is the result of others’ machinations. Of course, greed is inherent in human nature, so it’s not difficult to believably invoke the occasional wrong actions of others in validating a grander, all-encompassing conspiracy.
Some of us want to believe that the futures market, packers, corporate feeders, multi-national corporations, global trade and the like are responsible for any lack of profitability. But they don’t stop to ask why the economists from land-grant universities and other institutions have reached other conclusions, or why the largest producer groups are opposed to their solutions.
The great dichotomy of our times is that, while we have more access to information than ever before, we also have the ability to disregard any information that doesn’t support our particular world view. It’s why at the same time that we’ve seen the fall of the Iron Curtain and democracy movements spring up across the Middle East, we have seen the rise of radical Islam and the flourishing of radical hate and activist groups.
For those who truly seek the truth, it’s almost impossible to hide the truth. Folks like Gadhafi force you to draw one of two conclusions – do they truly believe the distortions they are spreading, or do they just believe that the end justifies the means?
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