A Few Thoughts by John Nalivka: Margins and regulations
Uncertainty and volatility have been the watchwords of the U.S. red meat and livestock industry over the last 3 months as the Administration has taken global trade as a major issue for the U.S. economy. I do believe that this will come to a positive resolution over the next several weeks, but in the meantime, the challenges posed by rising costs of production in agriculture will continue. Consequently, this issue needs to be taken seriously as both over-regulation and high-cost energy resulting from government policy are critical contributors to those inflated costs.
It is obvious the health of U.S. agriculture is critical to all Americans. We depend on a high-quality supply of food. But, perhaps, more importantly, food that is produced in the U.S. by American farmers and ranchers. This is the definition of food security and at times, I question whether that notion is as high on the general public’s priority list as it should be.
Secretary of Agriculture Rollins has expressed publicly the importance of U.S. agriculture followed by a statement that USDA is here to help the industry with that help directed toward financial programs. I would suggest that we are at the point that we need to get beyond simply looking at USDA programs to help farmers, but instead, assess and correct core issues causing financial stress. Financial performance in a business is the end-result of both revenue and costs of production. There are many supply and demand factors that impact both revenue and costs with weather being one of the most significant in agriculture. We can generally predict the weather and make decisions accordingly, but we cannot change it.
In addition to weather, production costs in U.S. agriculture are also significantly impacted by government regulations – both Federal and State – that are too numerous to list and U.S. energy policy which also concerns regulations. Addressing these two critical costs to producing crops or livestock also tackles the issue of the long-term sustainability of individual farmers and ranchers and U.S. agriculture. I have been involved in litigation concerning the impact of Federal lands policy regarding grazing permits and wild horses on individual ranches. This is just one example and the list of regulations on agriculture is not small nor is the impact.
It’s time to get down to basics regarding the long-term financial well-being of U.S. agriculture and our food security. The focus must go well beyond USDA programs toward resolving the negative impact of regulations and unlike weather, regulatory activity is controllable.
