We’re glad the political season is about over—we are sure there will be some contested races, as there always are. It appears that the Republicans didn’t have as big of a red wave as they thought. They will gain the House, while the Senate looks like more of the same—dead, even.
The markets didn’t appear to like the results, as nearly every market index was lower, from commodities to stocks. At worst, it looks like more of the same, which is essentially gridlock. This president can’t do much unless he uses an executive order.
The Democrats pretty much lied to Sen. Joe Manchin (D-WV) that they would take up his energy infrastructure permitting legislation for his vote on the Inflation Reduction Act, which was a joke for inflation, but green energy fans will love it.
The markets shunned the oil companies and perhaps for good reason. President Joe Biden said in a campaign speech that his administration is going to close down the coal industry, and there will be no new drilling for oil. Biden had a lot of guts to say that, or something else.
We all know that the transition to green energy will be slow, but it will come. Oil and gas will always have a place in the energy plan. If the country wants to grow, we will need more energy, especially if everyone is expected to drive electric vehicles.
Some of the things this administration is doing are causes for concern. Cattlemen have made enough noise in the last few years that Congress felt they had to do something, and a lot of market proposals were put forth. I don’t think we are going to see any antitrust cases toward the meatpacking industry. Those attacks have been the same and come around every 20 years or so. But if something were to come out of the Justice Department, it would have already happened.
I saw an item in the Cattle Report that bothered me; I will run it verbatim so there is no misunderstanding what USDA may be thinking: “The Oxford English Dictionary defines equity as ‘a situation in which everyone is treated equally.’ The intent is freedom from bias or prejudice. This is certainly a noble objective and a principle with which few would disagree as a standard for fairness. The problem is the term is being subverted and distorted to change its meaning and intent in both agriculture and other segments of our society.
“Equal opportunity to compete is vastly different from assurances of an equal outcome. The proposition that every beef producer has an equal opportunity to compete in the marketplace for best price is at the core of free enterprise. Assuring every beef producer, the same price for the same type animal, is an affront to any competitive marketplace.
“There are invidious movements originating in the Biden administration to mandate non-discriminatory pricing for all beef producers with a litmus test to verify all producers are paid the same price. Price points discovered through negotiation are all about discrimination. Buyers discriminate by selecting from the varying asking prices by sellers to select the optimum fit for their particular needs. Markets are made through tough negotiations that allow each seller the chance to achieve best price for that seller after considering all the buyers in the marketplace.
“Should the government regulatory apparatus mandate equal prices for all producers, no longer would it be necessary for producers to fight for better prices because superior prices would not be permitted. This would quickly evolve into a government-controlled marketplace eliminating the very core strength of American capitalism—competition. There already are enough myths created by the processors intended to convince each beef producer they are getting the best price. The variables for cattle transactions are never ending. Weigh-ups, genetics, business, history, integrity of the parties, flesh conditions of the cattle, and more including intangibles such as sellers spin, and they all go into a negotiation over price. Parsing those trades for equal treatment would be impossible. The entire industry should be supportive of allowing all persons interested in producing beef equal access to the marketplace, but the price point achieved for selling their cattle must be earned through competition.”
This business will not survive without competition and integrated meat-producing systems. In the 1990s, the beef industry was suffering. Consumers just didn’t like anything but hamburger. Today, with competition, we are selling more different cuts of beef for more money because of quality and competition. Average pricing will do nothing but harm the cattle industry. So let’s be vigilant with this new Congress. And above all, pray for rain. — PETE CROW
