Sunday, December 07, 2008

The Bailout: Lessons for the Beef Industry

I recently came across this disturbing story. It is speculation that the EPA may want to impose air pollution taxes on cattle and hog producer's.

One person in the article is quoted as saying: "We certainly support making factory farms pay their fair share," he said.

But now, lets look at this closer- the tax is speculated to be as follows:

'It would require farms or ranches with more than 25 dairy cows, 50 beef cattle or 200 hogs to pay an annual fee of about $175 for each dairy cow, $87.50 per head of beef cattle and $20 for each hog.'

First of all the term 'factory farm' has been misused to the point of becoming meaningless, but a producer with only 25 dairy cows or 50 beef cattle is hardly a 'big timer.'

Now as an aside, is this even necessary? With beef production becoming more efficient and environmentally friendly by the day, do we really need government interference?

And, given the current state of science, are such drastic actions to prevent climate change even necessary? While many scientists agree that human activity may be contributing to increased temperatures, the science is still uncertain as to there will be drastic consequences of this. And given the consequences, economists are much more uncertain as to the appropriate policy response.

Currently, America does a great job producing beef and feeding the world. We used to have the world's top rate cars and financial institutions. Then the government got involved. Socially planned interest rates, government sponsored enterprises, and political pressure to make bad loans led to the housing bubble and the financial crisis. Stringent environmental standards and 'deadly' fuel economy standards have forced automakers into having to loose money producing low quality 'fuel efficient' cars that no one wants in order to be able to sell profitable trucks and suv's. If left alone more resources could have went into making our trucks and suv's run on less gas. ( see 6 Myths about the auto industry) Now they are swimming in red ink.

Getting back to the point, if these sorts of taxes and regulations go into effect on the farm, we may eventually reduce ourselves from being a modern science-driven industry of independent producers to a heavily subsidized, low tech, group of small farmers looking for handouts.

Do we really need to sidetrack the livestock industry with unnecessary government interference? Currently less than 1/2 of 1 % of federal money is spent 'on the farm' compared to the $700 billion bailout and more to come for the financial and auto industry. Lets not create a 'food crisis' and another industry that will need a bailout.