Harrington's Sort & Cull
John Harrington DTN Livestock Analyst

Friday 09/14/12

What the Farm Bill Could Mean for Meat Demand

You've heard the "art" of legislation compared to the messy business of sausage making? I used to think the illustration was spot-on.

But after watching the congressional botching of the farm bill set to expire at the end of the month, I'm pretty sure this traditional comparison unfairly gives Bratwurst and Braunschweiger a bad name.

When the summer began, someone asked me to assess the chances of getting a new farm bill passed before the elections.

"Zero and none" shot from my jaded lips like a bullet.

For some reason, I can remember feeling a little embarrassed by my own skepticism. Maybe such knee-jerk cynicism was totally uncalled for. After all, the nation was suffering through the worst drought in generations. Surely even the most self-serving politicians could seize the critical day, rise above sad, old habits and truly serve the common good.

Nah.

Unfortunately, my gut feeling now seems completely justified with the fractious House even unwilling to vote on the bill crafted by its own committee.

House Speaker John Boehner is unwilling to vote on the Senate's version and equally unwilling to risk sausage production in his own kitchen. More generally speaking, no one is willing to accept the danger of letting the other side look good.

In short, it's classic pre-election paralysis.

Yet this crowd always finds some way to keep limping from one crisis to the next. They may not be skilled surgeons (or even sincere med students), but powers-that-so-desperately-be always seem to find a dirty medicine cabinet full of makeshift bandages and tourniquets (aka one-year extensions, continuing resolutions).

Forget about sound policy. Just be thankful the bleeding has temporarily clotted.

Excuse me. I can hear myself getting too cynical again.

The truth is that this latest round of congressional do-nothing has left a particularly annoying burr under my saddle. Both sides have thrown around the issue of food stamps as if the only relevant considerations were either budgetary restraint on one hand or a compassionate safety net for poor consumers on the other.

While I agree that both of these factors deserve to be part of the important food stamp debate, there's a third reality that sound food and farm policy ignores at its own peril: Food stamps represent a major economic force that works to significantly support farm, wholesale, and retail prices.

Don't think for a moment that retail beef and pork could have commanded record prices this year in the face of 8%-plus unemployment without consumer spending steeled by food stamps.

U.S. Ag Secretary Tom Vilsack got it right the other day when he told members of the National Farmers Union that program detractors were wrong in acting like food stamp recipients and farmers are from two separate worlds.

"The benefits recipients spend on food stimulate the economy and 14% of that money ends up in farmers' pockets."

Frankly, with the price of meat set to jump significantly again in 2013, beef and pork producers will need all the help they can find in terms of consumer buying power.

According to estimates just released by The Food Institute, the impact of this summer's drought is likely to hit consumers in 2013 hard, raising the year's grocery bill for a family of four by $351.12. Higher grocery bills will be most notable in the meat section where a family of four can expect to pay $44 more in 2013 than this year.

So once the finger-pointers return from the election and really roll up their sleeves over a new farm bill, I hope most are somehow smart enough to check their ideologies at the door and preserve food stamp spending at a respectable level.

Contrary members of Congress, these are extraordinarily crippling times for your meat-producing constituents. Whatever else it may mean, the food stamp program represents a critical engine of demand that must be preserved.

For more from John see www.feelofthemarket.com

(AG)

Posted at 5:33PM CDT 09/14/12 by John Harrington
Comments (6)
Good insight and analysis. Something not thought of during the bu sy harvest season. Thankyou John.
Posted by MICHAEL T HORA at 9:14AM CDT 09/18/12
Ditto...but I wonder, did ANY of these apparatchiks ever see "Miracle On 34th Street"?
Posted by Ric Ohge at 10:25AM CDT 09/19/12
Folks. Every program or cause sounds right in the small bubble it lives in. We simply do not have the money anymore!! We cannot continue to spend as long as it butters our slice of bread. The crumbs you get back our nothing compared to what goverment takes. We need a real market with everyone considering their daily costs. Not an artificial one supported by mass goverment spending. Someone has to pay the bill. Either we will in bankruptcy or our kids and grand kids in massive debt.
Posted by Unknown at 6:32AM CDT 09/20/12
We produce meat and feed that is used to produce meat on our farm. The economic benefit to us from food stamps is likely important to the economics of our farm. However their is a greater good to come from them which is a better diet for a huge number of children who are not living in luxury at least having a diet somewhat better than what they might otherwise enjoy.
Posted by David Dowell at 11:10AM CDT 09/20/12
As I would expect, from these comments it is illustrated that the Farmers "get it". I wouldn't have expected less. So, when does D.C. catch on? "Time to drain the swamp."
Posted by Ric Ohge at 9:45AM CDT 09/21/12
Lets all get government aid and we will be rich!
Posted by HOWTON FARMS at 2:54PM CST 12/20/12
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