Tommy
Well-known member
HATS OFF TO R-CALF - 8/29/05
Posted on DTN by ProgressiveAg.com
R-Calf, the new kid on the block with cattlemen's groups, is deserving of a very special thank you from US cattlemen as they have been primarily responsible for 3 of the most profitable year's of cattlemen's careers!!! Their steps to prevent the Canadian border opening were of primary importance to keeping US cattle prices up almost 30% from prior levels FOR 3 YEARS!!! This was not only critical to pushing and keeping cattle prices at all time highs for 3 years, but also provided a glimpse into the real impacts of Canadian cattle imports into the US. This has far reaching implications not only for US trade policy on livestock, but also many other domestic issues concerning trade.
Not only is the group responsible for huge profits in cattle, but they also are inspirational examples of what can be done with limited resources, defying Presidents and large companies of the power plays common against smaller farm players. Lets review the impacts and their results on how the US looks at trade policy.
First, R-Calf defied the Bush administrations 'Big Boy' USDA tactics by not listening to their power plays, and instead pulling a power play of their own over the big, bad USDA. Its got to be inspirational to the little guy in the US, as they had the guts to stand up to supposedly insurmountable odds to hold cattle in Canada (much longer than this analyst ever expected!). Whether you agree with their views or not, you can't help but admit they accomplished much with their little guy mentality. In the course of their stubborn refusal to give up, they ended up teaching a lot of "know it all", PH. D. Economists (and market analysts) a few things new about economics. While most of us expected the Canadian border to open after 1-3 months (as USDA announced), instead R-Calf kept it closed for 3 years or more. Contrary to all the expert economist opinions, it kept cattle prices up 30% from previous levels for the entire period (and still prices are high). Even though they lost in the end (USDA did finally get the border opened), the money made by cattlemen during the 3 years was well worth the battle. After all, most cattlemen made more money in each of the past 3 years than they had in their entire careers to that point!!! Profits must have been up 1000% (yes, one thousand percent, not one hundred) or more in each of the past 3 years, and only 'creative accounting' for tax reasons can be much different than that. Remember, a 30% increase in price from a 1% profit margin is a 30x increase in profits!!! Yes, little price differences in small margin products are important!!!
2) While economists and the government likes to tell us that free trade is good for the US, there can now be no doubt in anyones mind that free trade is bad for cattlemen. Whether you're a Land Grant University trained economist or not, you can't help but admit that all your professors were wrong, and the supposedly uneducated "cowboys" were right. Cattle imports from Canada are killing our US cattle price. A 9% cut in total US beef availability seems to have produced a 30% rise in prices. And this didn't just occur for a short period of time, instead it lasted 3 years!!! That puts the long term elasticity of demand at about 3.2 for cattlemen, meaning that for every 1% drop in supplies, there is a 3-4% rise in prices. Clearly, cattlemen are not better off by free trade. This not only has implications for cattlemen, but also groups such as sugar producers, steel mills, textiles, labor unions, and all other groups with an interest against free trade. This little cowboy insurgency could embolden special interest industry groups against free trade. Big time economists (even the likes of Allen Greenspan who lambasted trade protectionists last week) who speak out for free trade might not make as big an impact as before. Will the 'cowboys' of the world listen now when University economists (who have never seen a cow) try to explain how free trade benefits US consumers so much??? Will they care about US consumers when they are losing money on the farm??? It was almost laughable how some economists and government people tried to insist that high cattle prices would in the end be bad for cattlemen. Who are they trying to kid??? If the Sec. of Ag can convince cattle farmers that high prices are bad for them, they should be in sales (like selling eskimo's ice???), not government work!!!
3) Although economists are good at 'proving' that free trade is good for the US economy and consumers, will producers of competing goods with imports care as much in the future??? While this might embolden producer groups in import heavy industries, perhaps Mr. Greenspan is right, it could hurt the US economy in the end??? But still, the politics of free trade might have suffered a severe setback.
4) How many land grant economists will come out with research studies the next few years explaining "it wasn't the closed border" that pushed cattle prices higher for 3 years??? Odds are, lots!!! But no matter whether you claim Atkins diets, South Beach diets, new demand sources, changes in world markets or wealth, or whatever else economists can dream up - who will believe it? The facts are that cattle prices never were even close to recent 3 year price levels, and close the Canadian border (even with US mad cow cases shutting down US exports) and prices soar. Atkins diet crazes were started before the price surge, and ended long before the border opened. How can that be the reason for cattle price rises??? The odds of any other event catapulting cattle prices that much are slim to none, no matter how many economists try to refute it. Common sense is still common sense! Any other conclusion should be laughed out of existance!!!
5) Power in cattle groups may shift considerably toward R-Calf and away from other groups. Only incompetence at R-CALF for many years can cause them to lose the loyalty they so clearly deserve from cow-calf producers. It'll be interesting to see if they will be that incompetent. Perhaps it may not be a bad idea for R-CALF to hire their own economists, so they can gain credibility with the rest of the world like they have with cow-calf producers???
Hats of to R-Calf, responsible for the highest incomes for cattlemen ever!!! Now what will they do with their new found legitimacy???
Posted on DTN by ProgressiveAg.com
R-Calf, the new kid on the block with cattlemen's groups, is deserving of a very special thank you from US cattlemen as they have been primarily responsible for 3 of the most profitable year's of cattlemen's careers!!! Their steps to prevent the Canadian border opening were of primary importance to keeping US cattle prices up almost 30% from prior levels FOR 3 YEARS!!! This was not only critical to pushing and keeping cattle prices at all time highs for 3 years, but also provided a glimpse into the real impacts of Canadian cattle imports into the US. This has far reaching implications not only for US trade policy on livestock, but also many other domestic issues concerning trade.
Not only is the group responsible for huge profits in cattle, but they also are inspirational examples of what can be done with limited resources, defying Presidents and large companies of the power plays common against smaller farm players. Lets review the impacts and their results on how the US looks at trade policy.
First, R-Calf defied the Bush administrations 'Big Boy' USDA tactics by not listening to their power plays, and instead pulling a power play of their own over the big, bad USDA. Its got to be inspirational to the little guy in the US, as they had the guts to stand up to supposedly insurmountable odds to hold cattle in Canada (much longer than this analyst ever expected!). Whether you agree with their views or not, you can't help but admit they accomplished much with their little guy mentality. In the course of their stubborn refusal to give up, they ended up teaching a lot of "know it all", PH. D. Economists (and market analysts) a few things new about economics. While most of us expected the Canadian border to open after 1-3 months (as USDA announced), instead R-Calf kept it closed for 3 years or more. Contrary to all the expert economist opinions, it kept cattle prices up 30% from previous levels for the entire period (and still prices are high). Even though they lost in the end (USDA did finally get the border opened), the money made by cattlemen during the 3 years was well worth the battle. After all, most cattlemen made more money in each of the past 3 years than they had in their entire careers to that point!!! Profits must have been up 1000% (yes, one thousand percent, not one hundred) or more in each of the past 3 years, and only 'creative accounting' for tax reasons can be much different than that. Remember, a 30% increase in price from a 1% profit margin is a 30x increase in profits!!! Yes, little price differences in small margin products are important!!!
2) While economists and the government likes to tell us that free trade is good for the US, there can now be no doubt in anyones mind that free trade is bad for cattlemen. Whether you're a Land Grant University trained economist or not, you can't help but admit that all your professors were wrong, and the supposedly uneducated "cowboys" were right. Cattle imports from Canada are killing our US cattle price. A 9% cut in total US beef availability seems to have produced a 30% rise in prices. And this didn't just occur for a short period of time, instead it lasted 3 years!!! That puts the long term elasticity of demand at about 3.2 for cattlemen, meaning that for every 1% drop in supplies, there is a 3-4% rise in prices. Clearly, cattlemen are not better off by free trade. This not only has implications for cattlemen, but also groups such as sugar producers, steel mills, textiles, labor unions, and all other groups with an interest against free trade. This little cowboy insurgency could embolden special interest industry groups against free trade. Big time economists (even the likes of Allen Greenspan who lambasted trade protectionists last week) who speak out for free trade might not make as big an impact as before. Will the 'cowboys' of the world listen now when University economists (who have never seen a cow) try to explain how free trade benefits US consumers so much??? Will they care about US consumers when they are losing money on the farm??? It was almost laughable how some economists and government people tried to insist that high cattle prices would in the end be bad for cattlemen. Who are they trying to kid??? If the Sec. of Ag can convince cattle farmers that high prices are bad for them, they should be in sales (like selling eskimo's ice???), not government work!!!
3) Although economists are good at 'proving' that free trade is good for the US economy and consumers, will producers of competing goods with imports care as much in the future??? While this might embolden producer groups in import heavy industries, perhaps Mr. Greenspan is right, it could hurt the US economy in the end??? But still, the politics of free trade might have suffered a severe setback.
4) How many land grant economists will come out with research studies the next few years explaining "it wasn't the closed border" that pushed cattle prices higher for 3 years??? Odds are, lots!!! But no matter whether you claim Atkins diets, South Beach diets, new demand sources, changes in world markets or wealth, or whatever else economists can dream up - who will believe it? The facts are that cattle prices never were even close to recent 3 year price levels, and close the Canadian border (even with US mad cow cases shutting down US exports) and prices soar. Atkins diet crazes were started before the price surge, and ended long before the border opened. How can that be the reason for cattle price rises??? The odds of any other event catapulting cattle prices that much are slim to none, no matter how many economists try to refute it. Common sense is still common sense! Any other conclusion should be laughed out of existance!!!
5) Power in cattle groups may shift considerably toward R-Calf and away from other groups. Only incompetence at R-CALF for many years can cause them to lose the loyalty they so clearly deserve from cow-calf producers. It'll be interesting to see if they will be that incompetent. Perhaps it may not be a bad idea for R-CALF to hire their own economists, so they can gain credibility with the rest of the world like they have with cow-calf producers???
Hats of to R-Calf, responsible for the highest incomes for cattlemen ever!!! Now what will they do with their new found legitimacy???
