Congress returned this week from its August recess. With the November elections looming, Congress will recess the end of the month until after the election. During September, Congress is expected to pass the fiscal year 2007 defense appropriations bill. Most of the other appropriation bills, including ag, will be considered after the election.
Other issues to be considered will be port security, judicial nominations, minimum wage, tax extenders and the estate tax. Many issues will be put on hold until after the election.
Expect a number of issues to be raised by both parties this month that will have no chance of becoming law. These issues will be used to energize the base of both parties for the election. We will have to wait until after the elections to see many issues addressed.
-- P. Scott Shearer, Washington, D.C., correspondent
Over the objection of meat groups and USDA, the House of Representatives overwhelmingly passed H.R. 503, "The American Horse Slaughter Prevention Act," Thursday. The legislation, which prohibits the shipping, transporting, moving, delivering, receiving, possessing, purchasing, selling or donation of horses and other equines to be slaughtered for human consumption, passed by a vote of 263 to 146. The measure now moves on to the Senate, where Senators John Ensign (R-NV), a veterinarian, and Mary Landrieu (D-LA) have reintroduced an identical measure (S. 1915).
The new law effectively would shut down three foreign-owned plants that annually process about 40 million lbs. of horsemeat for human consumption, mostly to Europe and Japan. The three plants include Dallas Crown in Kaufman, TX; Beltex Corp. in Fort Worth; and Cavel International in DeKalb, IL.
"The bill sets a dangerous precedent by banning a livestock product for reasons other than food safety or public health," says Joy Philippi, a pork producer from Bruning, NE, and president of the National Pork Producers Council (NPPC). "We're very disappointed by this vote, which clearly was based on emotion, not science."
With no financial provision for care of these animals included in the legislation, tens of thousands of unwanted horses presumably will be placed in unregulated horse adoption facilities or abandoned. Lawmakers approved the bill despite a recommendation from the House Ag Committee that no action be taken on it, and despite the Energy and Commerce Committee discharging the measure without a recommendation.
NPPC says it supported a bipartisan amendment to H.R. 503 offered by Reps. Bob Goodlatte (R-VA) and Collin Peterson (D-MN) that would have ensured sufficient certified sanctuaries to care for abandoned and neglected horses before a ban on processing them could take effect. The amendment failed on a 177-229 vote.
USDA says 65,976 horses were harvested in the U.S. in 2004, and 91,757 in 2005. The American Association of Equine Practitioners estimates basic subsistence care for an additional 70,000 horses annually would cost $1,825/horse/year. That's just the first year. Then there are the subsequent years of care, and that for the millions to later join them.
In fact, 32,000 wild horses and burros (many of them more than 10 years old) currently are being maintained in pens by the Bureau of Land Management at an annual cost to taxpayers of $160 million/year.
A recent analysis, "The Unintended Consequences of a Ban on the Humane Slaughter (Processing) of Horses in the U.S.," found a ban on horse processing would actually do more harm to horse welfare in this country. Commissioned by the Animal Welfare Council (www.animalwelfarecouncil.org), the study by nine university researchers found a horse-processing ban would devastate the horse market by devaluing horses as much as $304/horse.
In a Sept. 6 letter, USDA Secretary Mike Johanns wrote to the House of Representatives' Committee on Ag listing reasons why the agency opposed H.R. 503. Among them were:
I'm as guilty as anyone. I read the public opinion surveys in the Japanese media citing large percentages of Japanese consumers being concerned about the safety of our product. I got an uneasy feeling when I read only one retail chain had picked up U.S. product, and everyone else was taking a wait-and-see attitude. Even the most optimistic knew it would be a long hard fight to regain our market share in Japan.
However, as difficult as it is to get a clear picture of things in our own country (what with the media tending to understate the positive, overstate the negative, and emphasize the minority viewpoint), it's even more difficult to get a clear picture of true sentiments half a world away.
During a recent taxi ride, my foreign-born driver characterized the situation in an illuminating way: "America expects success too quickly. You fought a war of independence, you struggled for decades to create your democracy yet you expect others to do it in a few short years, without the leadership you had.
"You start a business, and if its sales don't meet expectations one quarter, you demand a change in leadership. You have a fight and you break the most sacred of promises -- marriage vows. As a nation, you've enjoyed so much success you expect it instantly.
"The rest of the world hasn't been so blessed. It understands that when success doesn't materialize instantly it still can be achieved. The terrorists know it, the world knows it -- the U.S. tires quickly. Despite your optimism, you elevate those who preach the negative," he said.
So it is with Japan. Yes, it will be a long hard fight but the doomsayers who claimed Japanese consumers didn't want, and wouldn't eat, our product were obviously wrong.
This week, Yoshinoya D&C, the Japanese chain that rose to prominence with a rice-beef bowl dish made with U.S. beef, announced it would again serve U.S. beef but supply would be limited to 1 million servings the first day, and that they will not be able to offer it regularly because of the limited supply created with the 20-month-age rule. Thus, they'll limit their offering of U.S. beef to the first five days of the next couple of months.
Other outfits are signing on with U.S. beef as well (Read "U.S. Beef Availability Slowly Growing In Japan," also in this issue). The major limiting factor doesn't seem to be consumer demand at this point, but that the supply chain simply can't meet the demand for product.
Are there concerns about the safety of U.S. product? Absolutely. But the reports that U.S. beef had become the equivalent of radioactive waste to the Japanese consumer appear to have been widely overstated.
My cabbie was right that Americans expect success and we get restless quicker than other cultures when things don't immediately go our way. But I think he far underestimates our commitment to succeeding.
Is U.S. beef the preferred choice of the Japanese consumer right now? No. Will U.S. beef regain its lost market share in a short time frame? Probably not. Will U.S. beef once again dominate the Japanese beef market? I wouldn't bet against it.
-- Troy Marshall
The fed market saw the futures market set or approach contract highs again this week. Meanwhile, boxed beef prices rose sharply following the Labor Day Weekend, indicating clearance and demand was better than expected (there had been concerns that with the East Coast being hit with wet and dreary conditions, consumption would be below expectations).
The experts last year told us the highs of the cattle cycle were in. Tonnage and numbers would grow, record energy prices would hurt a demand already weakening with the fading of the low-carb diet fad, and corn would be higher, with significantly less acres being planted. All this meant cattle prices were headed lower.
They were right on every point or assumption, but demand continues to surprise despite higher energy prices. The economic slowdown simply hasn't materialized, expansion hasn't continued as expected due to drought, and available supplies of feeder cattle will likely not be any larger this fall as feedyards have already placed record numbers of last year's calf crop.
What's more, near-ideal growing conditions in the eastern Cornbelt are hinting at an approach of last year's record harvest, on fewer acres. Export markets are reopening and the market sails along. Now there are rumblings that if export growth absorbs the extra tonnage, if the resiliency in demand continues, and if expansion finally kicks in with heifers being held back rather than heading to feedyards, we may not set new highs but we may certainly test the same levels.
-- Troy Marshall
Philosopher Thomas Carlyle said: "A man lives by believing something, not by debating and arguing about many things." So it is with many decisions that face ranchers in day-to-day management.
One can have great wonderings about his or her breeding program -- Can one breed do it all? Are hybrids inconsistent? Can I get the growth the industry is demanding and still keep my cow herd at an efficient mature size level? And EPDs, a host of new technologies from DNA markers to ultrasound, market signals, and genetic antagonisms, all can provide endless discussion.
But perhaps the genetic side is a bad analogy because there's a tremendous amount of data and science on these topics. Marketing, on the other hand, might entail such questions as: Should I retain ownership, expand, reduce, sell on a grid, buy protection, bet on the come, purchase grain? Again, the list is endless and while there's sound data and a lot of opinions, nobody knows the answers -- except in hindsight.
This could be said about a whole range of management decisions in the cattle business. But knowing exactly where things are going may not be as important as having a vision of where you want to go, what you believe in, and moving forward aggressively along those lines.
Faye Wattleton, said, "The only safe ship in a storm is leadership." You may not know where the market is heading, but odds are you have a strong belief/understanding of whether you want to retain ownership. And, irrespective of whether you believe national ID is a good thing, you know there are substantial premiums for source- and age-verified cattle.
Whether you like Angus, Simmental or some combination of breeds, you know how you want those cows to perform, what they must do to be profitable, and the list goes on. The key is having a core belief on where the industry is heading, decide on your direction, and act decisively to position yourself.
No one can predict the future accurately but those best prepared for the future are those who take time to develop sound beliefs on the general direction, and then lead their operation in preparing for that future.
-- Troy Marshall
In the days, weeks and months following Sept. 11,2001, the U.S. was awash in heartbreak, and unified in its mourning of the incredible losses sustained as the Pentagon burned, the World Trade Center towers collapsed and a pitched cockpit battle between killers and victims sent a passenger plane slicing into the Pennsylvania earth.
Much more than human life was lost in that fateful day. In the frame of about 1 hour and 15 minutes, the security of a nation and a people largely untouched by the senseless terrorism that had become all too common across the rest of the world was violently shaken. Life hasn't been, and never will be, the same.
Americans stood shoulder-to-shoulder in the aftermath of those acts in New York, Washington and Pennsylvania. I still remember how quiet the world seemed for about four days when all air traffic was shut down over the U.S. Do you remember the feeling of solidarity among all Americans? The sea of red, white and blue that was the millions of U.S. flags waving in front of homes and buildings, draped from highway overpasses, and displayed on vehicles and clothing.
Monday, Sept. 11, marks the fifth anniversary of that horrific day when terrorists killed almost 3,000 in New York, Washington and Pennsylvania. In honor of these 9/11 victims, their families, friends and loved ones, as well as those involved in the front lines of this ongoing struggle, Americans are being asked to fly the U.S. flag on Monday.
God bless America.
-- Joe Roybal
The national average price for a gallon of diesel dipped below the $3 mark for the week ending Sept. 4, reports landlinemag.com. According to the U.S. Energy Info Agency, the national average price fell 6¢ to $2.967/gal., down from $3.027 the week before. It was the third consecutive week of falling diesel prices.
Every U.S. region reported a decrease. The Midwest recorded the biggest drop -- 8.9¢/gal. to $2.937, followed by Gulf Coast region at 5¢ to $2.872. The West Coast region as a whole fell 3¢ to $3.199.
Meanwhile, Chrysler CEO Thomas LaSorda made news last week by issuing a forecast on U.S. gasoline prices saying the U.S. automaker expects gas prices to remain at $3-$4/gal. for the rest of this decade. The New York Times report also cited Ford's chief sales analyst, George Pipas, as agreeing with the projection though he didn't cite a price range.
Asked whether gas prices had peaked, LaSorda said he hoped so but added Chrysler's business model is based on gas prices remaining in the $3-$4/gal. range for the next 3-4 years.
Also this week, AP reported a trio of oil companies had tapped a petroleum pool four miles beneath the surface of the Gulf of Mexico and 175 miles off the coast of Louisiana. Led by Chevron, the find could boost U.S. reserves by more than half. Chevron estimates the new field could hold up to 15-billion barrels of oil and natural gas. The U.S. currently uses about 5.7 billion barrels of crude annually.
-- Joe Roybal
Sen. Ben Nelson (D-NE) introduced legislation to establish the Biofuels Investment Trust Fund, which would invest revenue generated by the ethanol import tariffs into renewable fuels research and development. Nelson says, "There's no better way to decrease the need to import ethanol than by increasing domestic supply through research. The U.S. must continue to push ahead with research and development of biofuels, and cellulosic ethanol represents the next generation of this important alternative, renewable fuel."
-- P. Scott Shearer, Washington, D.C., correspondent
U.S. beef will be back on South Korean dinner tables as early as October, following South Korea's decision yesterday to drop its ban on U.S. beef, in place since December 2003. South Korea's Ministry of Ag and Forestry says U.S. beef is now safe for consumption following inspections of U.S. processing facilities. The move is only a partial lifting of restrictions, however, as only boneless meat from cattle younger than 30 months of age will be allowed into South Korea.
A Korea Times article says studies show a large number of consumers prefer Korean beef over foreign imports. And the government says "it won't be easy for U.S. beef to win back consumers, as the trade system is more complicated than it was prior to 2003."
According to a Korea Rural Economic Institute report, the price of domestic Korean beef is expected to drop by as much as 39% with the availability of U.S. beef. Korea was the third-largest market for U.S. beef before the import ban, and accounted for almost 70% of overall beef imports to South Korea in 2003.
-- Joe Roybal