The stockpiles of frozen meat inventory are the highest in history. This means that we have to eat our way through this pile of red meat, while at the same time, seeing livestock prices begin to collapse.
How long this will take is anybody’s guess, but you can bet that Easter hams are going to be cheaper than Thanksgiving turkeys.
Compound this with an unprecedented stockpile of corn and one has to wonder what the bottom will look like.
Because of this wishful thinking syndrome (wishing prices to go higher) of most farmers, the storage capacity in this country is bulging at the seams with old crop corn. The unwillingness to sell at prices below the cost of production has only made things worse — and the result is going to be continuing lower corn prices.
As farmers begin emptying their bins to make room for the new crop, it may start to turn ugly. This is what happens when you don’t have a marketing plan. If you’d had a plan, you would have locked in prices well above the cost of production. Here again, there hasn’t been a lot of margin for quite a while, so farmers have been reluctant to lock in a price. But be assured that locking in a small profit is better than taking a loss.
Further, compound this with the world trade market, and it gets the attention of President Trump, who is now proposing a 12 billion dollar “Band-Aid.” This isn’t going to do anything but help the rich get richer — while forcing even more farmers out of business. The President’s intentions are admirable, but it may be too little too late for many farmers.
Twelve billion dollars spread over tens of thousands of farmers (nationwide) will be a temporary fix for some, but for the unsophisticated farmer with limited resources, he’ll never see a penny of this limited one-time subsidy.
Most farmers aren’t tapped into full-time business associates such as accountants, lawyers, and business planners. Therefore, their path to this money will never see the light of day. They just aren’t equipped to compete with corporate America.
It’s too bad that the National Farmers Organization didn’t work out, as this is precisely the kind of service they had to offer farmers. They had both the marketing and business expertise that would have kept farmers afloat. But because of greed and a sense of empowerment that finally drove a nail in the coffin, there weren’t enough buyers and sellers left to negotiate.
This left a pretty empty void in the marketplace, both concerning commodity production and viably identifiable markets. You can’t force feed a market any more than you can produce without justifiable cause. Just because you have a passion for a particular kind of production, doesn’t mean there is automatically a market. This is where the NFO could have been a more sustainable marketing force, still doing that which they originally intended — THE VOICE OF THE AMERICAN FARMER.
The NFO never had the clout of that of the U.S. government, so those that were seemingly, independently getting along were hard to bring into the fold. Only those who were struggling appeared to listen.
But when the government speaks, people listen with their hands out. It doesn’t matter if they are rich or poor – they come to the trough like a herd of pigs at feeding time. This is what will happen with the 12 billion dollar bailout, but will it really bailout anybody or just add to the coffers of the rich?
Isn’t this what happened in the case of most all other government programs? Perhaps the biggest was the CRP program, where more than three million acres of farmland has been paid for by Uncle Sam. This amounts to nearly 10% of the farmable land in this country, to the tune of more than two billion dollars annually paid to people who never had to get their hands dirty, turn a furrow, or wonder what it’s like to not have enough money to pay the hired man on Saturday night.
In most cases, the CRP land is of low productivity, sub-standard land that didn’t really help to take much farmland out of production, as was intended. Not unlike that of the dairy cow buyout some years ago that was designed to lower milk production. It, like the CRP program only eliminated the less productive cows from the herd. Therefore, it had little effect on market prices, but had a massive impact on the bank account of those that probably needed it the least.
The NFO couldn’t make it happen, as it didn’t have the dollars to throw at it, and the government only makes things worse by throwing the money in the wrong direction.
So what is the answer to a stinky market outlook? Could it just be that farmers will figure it out on their own if left alone to deal with the marketing forces of supply and demand?
