The following is the opinion and analysis of the writer:
Ronald Eustice
President Trump claims to be a friend of the American farmers. He has strong support in rural America and farmers played a huge role in his election. His talk about importing Argentine beef to lower prices at the supermarket is sending shockwaves across rural America.
The president does not understand the complexities of the cattle business. It is imperative that farmers and ranchers tell Trump and their elected officials the best way to help the consumer and stabilize beef prices is for the government to stay away and let market forces solve the problem. History tells us market manipulation by our government has proven to be a disaster.
I have been involved in the cattle business all my life and served 22 years as executive director of the Minnesota Beef Council. Let me share some history:
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The Economic Stabilization Act of 1970 was a law that authorized the President Nixon to implement wage and price controls to combat inflation during a period of economic instability. The legislation gave Nixon unprecedented legislative powers and was “a political dare” the Democratic-controlled Congress thought Nixon wouldn’t use but he called their bluff. After the initial burst of popularity — which lasted long enough to boost Nixon’s landslide re-election in 1972 — the program failed spectacularly and ushered in nearly a decade of “stagflation” — high inflation coupled with slow growth, which reduced living standards for millions of Americans.
Government and private forecasters alike failed to recognize that during the price-freeze period, demand had grown exponentially, putting such severe pressure on supplies that within months, prices of nearly everything —commodities, foodstuffs, minerals and petroleum — soared, an inflationary shock that left the economy in shambles.
In 1973, President Nixon clamped a ceiling on retail and wholesale prices of beef, pork and lamb — freezing them in a move to soothe consumer unhappiness over soaring food costs. Farmers and ranchers retaliated by withholding cattle from slaughter, chicken farmers drowned baby chickens, and meat disappeared from store shelves. Nixon declared an embargo on exports of soybeans to lower the price and avert an impending shortage. Nothing worked and it took a decade to recover from Nixon’s action.
Lessons from Nixon’s folly remain highly relevant. First, it’s Congress that lays the foundation for an imperial presidency with unconstitutional delegation of authority to the executive branch. Today, the Republican-controlled Congress rubber stamps Trump’s every move. Rarely does a Republican legislator question the president and then at great risk.
Another harebrained idea concocted by the Government was part of the 1985 USDA Farm Bill. The Dairy Termination Program, also known as the Whole Herd Buyout, was a government initiative aimed at reducing dairy production by purchasing entire herds of cows. At the time, I was directly involved in the export of 12 thousand heifers to Indonesia. Many of the animals were involved in the “buyout.” This program implemented to stabilize the dairy market and ensure a supply of milk for consumers offered a cash payment for dairy farmers to slaughter or export their herds.
The program provided $1.8 billion to reduce the nation’s herd of 11.1 million dairy cows, heifers and calves by 1.55 million over an 18-month period. The goal was to slash production of milk, which the government had stockpiled as cheese for years, by 8.7%. Thousands of dairy farmers exited the business as a result. Cattlemen opposed the buyout from the onset, saying it would swamp the red-meat market which it did. Cattlemen lost millions of dollars as a result of reduced revenue caused by the massive dairy cow slaughter.
The program temporarily reduced milk production but caused a major shift from smaller and moderate-size dairy farms to the huge mega-production units we have today.
These are lessons worth pondering when the Trump administration is proposing new government interventions on an unprecedented scale. It brings cold chills to farmers when a government official shows up at the farm gate and says, “I’m from the Government and I’m here to help you.” It’s time for farmers and ranchers to demand farm policy that puts America first and that means fewer tariffs and more exports.
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Ronald Eustice grew up on a Minnesota dairy farm and has been involved in the cattle business throughout his lifetime. He and his wife have traveled extensively and live in Casas Adobes.
