The opponents of value-based marketing see the Grain Inspection, Packers and Stockyards Administration (GIPSA) regulations proposed in June as their last best hope. And, it’s difficult to argue that point because the current dynamics in Congress aren’t expected to last – Democrats could lose control of both chambers of Congress in November.
To be sure, the populist message has a sympathetic ear, and the arguments haven’t changed. But neither have most of the facts. The debate will be very similar to the national economic debate going on. Cow numbers and cattle producers are declining. Absent of land appreciation and increased size of production units, standards of living are declining. Producers' share of the consumer dollars are declining, etc.
To some degree, all these things are true or at least partially true. There will be a lot of discussion about the “Wal-Martization” of America; and, if the data and economic models don’t show packer concentration and modern marketing arrangements as the cause, the data will be deemed wrong or changes made that the land-grant university economists are bought and paid for by the packers and/or retailers.
That is where this is going to get ugly. Everyone agrees that our industry must increase demand to get healthier. But, the question is how can we improve things while still allowing freedom and opportunity?
As is always the case, equality is a wonderful concept but requires both the removal of freedom and opportunity to achieve it. Facts won’t decide this debate; emotions and political muscle will.
Both sides are acutely aware of what is at stake. For one side, the success of their movement is at stake; for the other, it’s their very survival. In a nutshell, the health-care debate has come to the cattle industry.
One view says that all the changes over the last 20+ years in our marketing structure have led to a concentration of market power and to fewer producers and smaller margins. The solution is to regulate away the factors that allowed these changes to take place, and replace market forces with government mandates.
Don’t be surprised if the debate doesn’t take the shape of similar debates on health care and financial reform, which actually saw the dominant players protest then support reform. They did so because they realized these changes will actually raise barriers to entry and replace market risk with security.
Of course, it will have similar unintended consequences of accelerating the consolidation of production while making it more difficult to compete domestically against other proteins or in the global market. Of course, when the direction of the industry is determined by GIPSA bureaucrats instead of the invisible hand of the marketplace, protectionism and a retreat from the global marketplace will also have to become part of the debate because one can’t exist without the other.
Ironically, Europe is showing us the long-term results of this model – a feudal system that relies on government subsidies to exist as it finds itself unable to compete. Will the American consumer be willing to pay the costs of removing the drivers of the marketplace?
The opponents of modern marketing arrangements know that this has to be accomplished before the November election; it’s a once-in-a-lifetime opportunity and they’re prepared to go to war. This isn’t conjecture on my part, one of their foremost leaders told me so in a phone conversation. This was after his email newsletter implied that I had been bought and paid for by the packing industry. On Wednesday, another organization launched another personal attack directed at me.
Thankfully, nobody has ever told me what to write, and threats won’t keep me quiet. I’ve been wrong many, many times, and I may be wrong here, as well.
A cattleman approached me a year or so ago and said he enjoyed my editorials, though he didn’t always agree. I told him that was okay; after all, I said, even I don’t agree with everything I’ve written in the past.
The personal attacks are fine, but it really does irritate me when one accuses me of saying things I know are not in the best interest of producers. I love this industry, my family is 100% reliant upon it, and my greatest career goal and motivating factor is to make a positive contribution to this industry.
While I want our cattle operation to be profitable (highly profitable, in fact), I want my children to have the opportunity to participate in it if they so desire. Disagree with my opinions all you want, but question my motives and commitment to this industry and you are going too far – in my opinion.