Drought impacting livestock industry as farmers face bankruptcy


 http://cbc.ca/stories/2002/07/09/auction020709
Livestock sales are now reaching record levels in parts of the Canadian west, as drought has destroyed pasture lands and driven the price of feed to three times the norm. According to the story on the CBC site it is now to late for rain to save the drought stricken parts of the west, and the year is ruined. "It's a situation that's gone from bad to worse. Earlier this summer there's was hope rain could turn things around. Now it's too late. "Farmers don't sell until they absolutely have to. This is a sign that they have no where to turn," said Sheldon Wilcox of Nilsson Bros. Livestock Exchange, which is auctioning off the cattle."

It is much harder to get information on the state of agriculture in the Western United States, but given the continent wide severity of the current drought, the situation cannot be much better there. As well, the water logged corn belt (a strip up the center of the continent, spreading into Manitoba) was flooded all winter long and then flooded into the spring, and flooding is just as bad for crops as drought, so the problems could be more wide spread than what we are hearing at the moment. (According to some reports I have heard, the flooding has turned a natural desert area in central Manitoba into a lush grass land, which is just about as weird as the wide spread drought else where). The flooding has caused disasters for Manitoba agriculture in Canada, and I can only assume that it has not been a blessing to the central Corn belt in the United States either. You might recall that the Republican administration, normally 'free market' and 'laissez faire' just introduced a huge ten year hundred billion dollar 'farm aid' package out of the blue a few weeks back, and given that I think one should often 'read between the lines' when encountering a story like this one, this would seem to be a tacit admission of the severe hardship building up on the American farm as well.

Farmers have been facing troubles for years, as the world wide food glut has driven down the price of commodities to below or just above the cost of production, and has led to the rapid expansion of the large 'corporate estate' as farmers have been forced out of business (many of them then getting jobs as tenants on these large operations). Some of these huge corporate holdings own large swaths of land, huge elevators and storage facilities, have interests in the rail lines and transportation, all of it dwarfing the familiar small grain silos and grain trucks that have characterized the family farm over the last century, and furthermore these huge estates can survive on the razor thing profit margins of modern agriculture, while also profiting on the low land prices, not to mention the bankruptcy fire sales. This situation has existed for years, but now the process is bound to accelerate, given that farmers were struggling with pencil thin returns in the past, and now, with debts to pay to banks and operating costs and land taxes and crops ruined, we can pretty well predict what the outcome will be (I have taken to calling it the 'return to feudalism').

A second problem is related to the culling of the cattle herd. This could have effects both on the fast food stocks but also a ripple effect on the price of agricultural commodities in general, since for example, pigs eat 80 per cent of the corn produced, cattle 80 per cent of certain grains, and in truth, globally, the livestock industry is one of the props that keeps the enormous food production of modern agriculture from swamping the world with produce. I read, last year, a report on the USDA site about experiments in feeding pigs 'excess bananas' and other exotic sounding produce, which shows just how pervasive the livestock business is in maintaining the modern agricultural system under laissez faire market forces. (There is no 'food shortage' requiring 'genetic engineering' to 'feed the starving masses of the world'. Rather there is a food glut, a glut that would become even more severe without all those cows and pigs and chickens and so on around the world who consume most of the grains produced, and who are also being experiemented on to see if they can live on such things as bananas, which also require a market when productions expands. Under the current economic system dollars matter and hunger does not, so a cow, chicken, or a pig with a dollar will eat while a billion humans beings go hungry because their pockets are empty. The situation is so distorted that in the United States pigs eat 80 per cent of the corn grown each year, propping up the corn farms, people eat only 10 per cent, and 10 per cent is used for industrial purposes. It's called 'market forces' and I just mention this to point out the ripple effect of the drought and the impact on the livestock business, from a purely laissez faire economic point of view, and also to point out how unneccesary 'genetic engineering' is, at least from the way it is usually hyped (a solution to the world hunger). it would seem here that they way the food situtation is manipulated under the current economic model (unhindered market forces being 'always right' and the most 'correct' model) is a fine example of what Noam Chomsky was speaking about when he described the 'manufacture of consent' along with every other product in our economy (since most people will consent to 'engineering' food supplies if they believe they are going 'solve the world wide food shortage and starvations', but the famine is an illusion, a product of a system and not systemic to the earth and 'the forces of nature' but rather a product of political and ideological forces, and this sort of thing is harder to get consent for, while the former is easier to both manufacture and sell. It is things like this that say a lot about the moral foundations of such a culture.

But I digress...

A large sell off of livestock can only have a ripple effect on the farming sector which make a bad situation even worse, for the reasons mentioned above, although a large drought and large floodings reduce production as well, which might help, thinking purely in terms of laissez faire economics, by not introducing even more redudant produce into the glutted markets. We'll have to leave it to an analyst to balance all this out and see how it all works out in the end. However, there is no balancing out an empty cheque book and expanding feudal agriculture (some of these corporate outfits own a majority of the land in certain states already) well this seems to be the trend of the future given the wave of coming bankruptcies. It remains to be seen if we will once again see waves of impoverished 'Okies' moving to other parts of the country to the great resentment of everyone already there, driving down wages after all in the desperation of desperate farmers to find jobs where there just never are enough jobs to start out with.

This might be another digression, but most people think the Federal Reserve and Greenspan represent a government department, but actually the board is privately owned by bank stock holders, and it is actually private shareholders then in the end who decide interest rates and so on. For years the Reserve has had a policy of maintaining a constant rate of unemployment of around 5 per cent, to keep wage pressures down, and if unemployment drops you can be sure those bank stockholders will jack up interest rates to 'slow down the over heated economy' (to quote the quote you usually hear at those times). Nevertheless event hough maintaining a base of unemployed is de facto policy (and hardly 'laissez faire' either when you stop and think about it) this has not stopped governments from 'ending welfare as we have known it'. You can get three years worth and that's it, according to what I have read, and you also just can't food stamps as readily as before either, the program having becoming a fraction of its former size in recent years. So I suppose putting it altogether, this means that farmers can look forward to three years of welfare, food stamps, if they can get them, and then its off to be Okies and drink up those 'Grapes of Wrath' and face the anger of the whole country who, after all, won't want those hard up Okies putting even more pressure on a constantly pressured job market. I suppose that when you think about it, this would be a fine example of some people being to 'clever' for their own good, since keeping millions jobless is one example where free market forces are deliberately aborted and the market is not allowed to perform in the 'free and laissez faire manner', and welfare gutted while taxes are cut, a special example of welfare for those who deserve it most, I would suppose, and now, with the low low interest rates not doing the trick in jump starting a boom everyone would need to cope with the building series of disasters, it remains to be seen how it all works out at the end of it all. Welfare was a paltry couple of per cent of the budget, even before it was gutted, being dwarfed by defense spending, as just one example, making gutting the program nonsensical and heartless, especially now with a jobless 'recovery' underway, unemployment stubbornly increasing, and the end of the road having been reached for drought stricken farmers for this year in any case. Einstein was clever, as well as being good at mathematics, and his argument was that the internal contradiction in the present laissez faire system is best demonstrated by constant pressure to reduce wages and cut jobs for efficiency which sooner or later capsizes the entire economy, since no one is left with money to buy everything being so efficiently produced, and his mathematical argument is still the most sensible analysis of what we have come to know as 'Reaganomics' that I have ever heard (for example, while you can make short terms gains by exporting jobs to sweatshops, who are you going to sell the cheaply produced goods too - this pretty well sums up that internal contradiction.)

Not to the hard up farmers in any case, already pummelled by years of low commodity prices and low land prices and fixed costs, and now in the final disasterous blow, wide spread drought and the even weirder flooding...It will be interesting to see how all this turns out at the end of it all, compounding contradictions building upon one another for years and now the final nail seeming to be pounded into the coffin at the end of it all (after the current Hoover like U.S. administration just violated the 'gospel' and brought in a huge farm welfare package a few weeks back - which pretty well contradicts those food stamp cuts and welfare savings which will now never be realized - sort of like robbing Peter to pay Paul - in one pocket and now it flies out the other...sometimes you just can't win for losing...)