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 kicker: the USDA continues to guarantee loans to new and expanding CAFOs, the very operations contributing to the overproduction. The phrase, “the left hand doesn’t know what the right hand is doing” comes to mind. At least you hope that’s all that’s going on.
Groups like the National Pork Producers Council would like the USDA to stabilize prices by, for example, buying up excess pork. Indeed, on March 31 the Agriculture Department committed to a $25 million bonus pork buy. That came almost exactly a year after the NPPC got the USDA to implement a $50 million buy-up of pork products. Last month, the NPPC asked the USDA for an additional $50 million pork buy. Get ready for a long summer of such requests.
“As to what we might ask for in the future, I wouldn’t rule anything out,” NPPC President Don Butler was quoted by the Red River Farm Network as saying last week. He went on to state that members of the pork industry are “free-market traders and we’d like to remain that way.”
Actually, industrialized livestock operations have a history of sticking their snouts into the taxpayer trough, as LSP and other members of the Campaign for Family Farms documented in a special report last winter.
Big players in the hog industry claim they have a right to such tax-funded buy-ups because of the recent swine flu outbreak. True, the flu has put a damper on retail pork sales in recent weeks. But at the core of the current basement-level prices for hogs is massive overproduction by specialized CAFOs—overproduction that predates the flu outbreak.
Specialized CAFOs are built for one thing, and one thing only: pumping out as many animals as possible in as short a time as possible. When you are that specialized, it’s very difficult to adjust production levels (let alone species) in response to market conditions. Frankly, it’s not a very innovative, or nimble, way to produce livestock, and we shouldn’t be subsidizing it with our tax money.
University of Missouri swine economist Glenn Grimes says the hog herd needs to be downsized, and that lenders will likely make credit tighter in the next several months to bring that about.
That’s why it’s particularly egregious that the USDA continues to guarantee loans to new and expanding specialized hog and poultry facilities, which are contributing to the very overproduction that taxpayer dollars are being used to try and remedy. The USDA’s guaranteed loans to specialized operations are contributing to further consolidation of the marketplace, putting more independent family farmers out of business.
This vicious cycle has got to stop. It’s not good for family farmers, rural communities or the environment. It’s certainly not good public policy.
LSP and other members of the Campaign for Family Farms and the Environment have launched an initiative to get the USDA to suspend government-backed loans to new and expanding specialized hog and poultry facilities. There’s a precedent: when similar market situations arose in the past, USDA suspended loan programs for the construction of such specialized facilities. This statement from the Jan. 8, 1999 Federal Register says it all:
“It is inconsistent with USDA policies for FSA [Farm Services Agency] 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.”
Does that situation sound familiar?
Click here to sign an online petition calling on Agriculture Secretary Tom Vilsack to suspend guaranteeing loans to these specialized operations. The petition will be sent in by Aug. 1 or so. For details, contact LSP’s Adam Warthesen at email@example.com or 612-722-6377.