There's a lot at stake for the cattle industry in the upcoming farm bill. The cattle industry has always taken pride in not being subsidized and not accepting undue government meddling in our business. It's also always been a strong advocate for individual choice and allowing the marketplace to work. Some argue the industry has paid a price for such independence, while others argue it's a cheap price and well worth it.
The farm bill promises to have a big impact on the livestock industry, but the biggest might be indirect in terms of how the new program affects feed grain, hay and other input costs, land values, water use, conservation, etc. But the new farm bill also promises some smaller direct impacts as a result of the ever-expanding conservation titles, and such issues as country-of-origin labeling (COOL) that will likely be addressed.
There's a misconception within the industry that the loss of political clout by R-CALF will dilute the attention on marketing issues that seem ubiquitous in every farm bill debate. But packer ownership of cattle, forward contracting and alternative marketing arrangements were major hot-button issues before R-CALF was ever conceived, and that hasn't changed with that group's demise. There were populist champions of these causes in the '70s, '80s and '90s, and they still exist today.
I wouldn't argue with those who claim these debates are a colossal waste of industry time. We all agree that because of the disparities in market power and knowledge, a close eye must be trained on the marketplace to make sure it's allowed to function efficiently. But the economists continue to say the same thing and each new study seemingly validates the last one, so it's unlikely we'll see any major shifts that will bring an end to the value-based marketing revolution.
However, there are two marketing issues that we're likely to see some resolution on -- national animal ID and COOL.
- It's obvious national ID will never occur as a voluntary program; there's not enough economic incentive from an individual producer's standpoint to drive that kind of adoption because such a program is geared to avoid major health outbreaks and food safety concerns. There are those who will continue to push hard for a national ID program, while others will push to keep it voluntary and, in effect, non-existent.
- COOL is very much in the same boat. With insufficient economic incentive for it to happen on a voluntary basis, COOL will become a reality only by government mandate.
Don't be surprised to see some sort of compromise develop whereby both national ID and COOL become mandatory. The ironic thing is advocates for both issues have been largely aligned against each other but find themselves in the same boat. Both sides have abandoned the argument that the marketplace will drive it -- they cost far too much, with too little perceived benefit.
National ID has always been about animal health and consumer safety. These are roles government must play, so it's easy to argue for government involvement. As a result, COOL advocates are trying to make COOL about animal health and consumer safety. To do this, however, they probably have to concede a traceback capability.
The ironic thing is the two issues are probably irreversibly linked. Both will remain voluntary, which renders national ID useless for its intended purpose. Meanwhile, that assures that COOL will never take place on any wide basis because of simple cost vs. benefit analysis. Only by both becoming mandatory will both parts to the same puzzle protect the U.S. beef herd, markets and consumer.
The political realities are rather easy to decipher. The question is whether either side is willing to accept the cost of achieving its aim?
As mentioned before, the industry has been divided on marketing issues for decades. Once the industry exits its ceremonial squabbles in the coming farm-bill debate, however, it's important that it speak with one voice on the issues that will actually affect producer profitability.
The major difference in this farm bill compared to those previous is that the interests of the corn industry and livestock industry are no longer so tightly linked. In addition, there's a whole array of groups who are involved in the debate who are solidly aligned against livestock. That means we're more isolated and more under attack than at any time in the past.
-- Troy Marshall