The USDA received a bit of a surprise this week when a letter with over 25,000 signatures was delivered to Secretary of Ag Tom Vilsack. The letter calls for a suspension of Farm Service Agency direct and guaranteed loans to new or expanding specialized hog and poultry facilities. Given the nature of the livestock markets these days, maybe it’s not a surprise that tens of thousands of people signed this letter. Perhaps the real surprise is it took a petition like this to communicate the obvious: we don’t need more factory farms pumping out more product.
As we’ve written here before, taxpayers are funding a program than in effect provides the very ammo that an industry is using to kill itself (and several innocent bystanders) with. During the past several months, some in the pork and poultry industry have asked the USDA to spend millions of dollars of tax money to stabilize low prices caused in part by overproduction.
Here’s the irony: the USDA continues to guarantee loans to new and expanding CAFOs, the very operations contributing to the overproduction. The agency is doing this despite calls from agricultural economists to cull herds and reduce production as soon as possible. We’ve now got 547 million pounds of pork in cold storage, which is 25 percent higher than the five-year average, according to Rhonda Perry of the Missouri Rural Crisis Center.
This merry-go-round is getting expensive. Based on USDA data, FSA direct and guaranteed loans for new hog and poultry building construction for fiscal years 2008 and 2009 totaled a whopping $264,466,341. During the past 10 months, USDA has purchased $55 million and $42 million worth of surplus pork and poultry, respectively, in an effort to provide assistance to these stressed, over-capacity livestock markets. Now the pork industry wants more pork purchased by the government to the tune of $100 million.
“Farmers I know and work with can’t believe the government is making these loans,” says Paul Sobocinski, a southwest Minnesota hog producer and LSP organizer. “It doesn’t make sense.”
That’s why this spring and summer LSP joined with other members of the Campaign for Family Farms and the Environment (Missouri Rural Crisis Center and Iowa Citizens for Community Improvement) in collecting signatures for the letter that was sent to Vilsack this week. A lot of farmers signed-on. But also supporting the petition were many non-farmers who don’t like seeing their tax money going to waste.
When similar oversupply situations occurred in the past, USDA suspended the use of loan programs for the construction of these specialized facilities. Specifically, USDA issued a directive on Jan. 8, 1999, suspending all direct and guaranteed loan financing for the construction of specialized hog facilities, citing concerns that Farm Service Agency loans could exacerbate the crisis of oversupply and low prices that were affecting the hog industry. At the time, USDA was quoted in the January 8, 1999, Federal Register as saying:
“It is inconsistent with USDA policies for FSA to continue to finance construction of additional production facilities through direct loans and loan guarantees while other agencies within USDA expend resources to ameliorate over-supply conditions.”
In other words, it’s time to take the bullets out of the chamber.