Sunday, January 1, 2012

Exports Hurting US Economy

Cattle publications (and too often formal educators) try to convince us that the cattle and beef industries are one and the same. They are not. One difference is in the import export market. While some registered cattle producers may market a few animals to foreign markets, it is not something which the average producer does. On the other hand, every producer of boxed beef is after the premium they can receive from exports to other countries.
While exports can be a good thing for the economy, what is often forgotten is that the economy begins at home. There is a point at which exports benefit a few while making the economy bad for the rest of the economy. This is currently demonstrated by hay exports.
Much of the country has been ravaged by both drought and wildfire. Hay prices are through the roof. Many are paying $300 a ton per hay with it being forecast in some areas to top the $400 mark by the first of February. On the surface this would seem to be a simple matter of supply and demand. Between the drought and fires the demand for hay is higher which would automatically drive up the cost of hay. However there is another factor affecting our hay supply which is driving the cost up. A record amount of hay is being exported to China, partially because it is actually cheaper to ship it to China than to points within the United States.
While economists view this as a good thing for the trade imbalance, it is detrimental to our overall economy. This is driving up the cost of both beef and dairy products for consumers who are suffering enough in this down economy. While it would seem logical that trade agreements and export laws would take our own economy into consideration before allowing either exports or imports. Unfortunately economists too often consider the balance sheets between our country and others without looking at the effects upon our own general population.
That is the difference between the cattle and beef industries. The beef industry can benefit by premiums, either in actual price, or lower shipping costs. The relationship between the cattle industry and beef industry is similar to that between mining companies which supply iron ore and steel manufacturers. As cattle producers we are providing the “beef ore” for packing companies to turn into beef.
We can not depend on them for our individual economic situation to be better, nor can we expect the government to protect our interests. As such, our only formula for success is to keep our outputs low enough that our inputs cover the costs with enough left over for a livable profit. We need to manage our forage so that we are planning ahead for the times of drought an/or low prices. We cannot avoid all outputs, but we need to manage them so that what outputs we do have benefit our output to input ratios. This includes everything from handling our cattle in a way which reduces shrink, to making our infrastructure less costly to maintain to how we manage our household purchases.
This last has been made a bit more simple by the internet. We can now purchase everything from vaccines and tools, to clothing, and even some foods and have it delivered without the expense of driving a couple of hundred miles to town. One such opportunity is provided by Country Outfitters. A few weeks back I was approached by them to do a product review in exchange for whatever I wanted to order. I browsed through their products and was surprised at their variety and prices. As it is winter, I chose the Carthart® arctic lined coat. It had the quality you know is going to be there, including a long lasting brass zipper rather than the cheap plastic ones used by other manufacturers. The prices are comparable to what you find at stores in town, yet you don't have to make the trip. With calving season upon us Country Outfitters an be your own on ranch store if you find yourself in need of extra winter wear or a new hat to wear to the stock show.