Can the military save America's ranchers?
August 15th, 2012
01:39 PM ET

Can the military save America's ranchers?

By Jennifer Rizzo

As the nation's ranches and farms endure one of the most severe droughts in decades, the Obama administration has ordered the Pentagon to look into purchasing a "second helping" of all things meat.

Economists and political analysts who spoke to CNN's Security Clearance, however, aren't optimistic that the administration's plan will bring much relief to the livestock industry, though it may help Obama politically.

The Defense Department is reviewing its purchases of beef, pork and lamb to see if room can be made to buy more now and freeze them for later.

The military already buys approximately 94 million pounds of beef, 64 million pounds of pork, and 500,000 pounds of lamb each year. That food gets eaten by troops around the world, even in combat zones like Afghanistan.

As part of the same directive, the Department of Agriculture will be buying up to $170 million worth of meat and poultry.

"Farmers and ranchers will have an opportunity to sell more of their products at this critical time, and taxpayers will get a better price on food that would have been purchased later," White House spokesperson Jay Carney told reporters earlier this week.

This can be seen as an "opportunity" for the Defense Department to purchase meat it will need in the future at a lower price today, according to defense budget analyst Todd Harrison with the Center for Strategic and Budgetary Assessments, but economists say the purchase isn't much more than a drop in the bucket for the livestock industry

"It's not going to make very much of a difference," said Jim Dunn, an agricultural economist with Penn State University. "This is one day's meat consumption," he said, referring to the $170 million the Department of Agriculture is directed to spend.

The epic drought has destroyed corn crops, forcing prices to sky-high levels. Livestock feed is primarily made up of corn, so ranchers have to dig very deep to feed the animals they plan to sell. As it becomes more expensive to produce heavier cows or pigs, ranchers are selling off their livestock sooner than usual.

With more product on the market, meat prices drop and with them the profits the ranchers need to buy more feed. The measure announced by the Obama administration is meant to raise the prices of meat by taking more product off the market.

But Dunn points out that the meat isn't disappearing. It's just going into the freezer.

"The meat is still hanging over our heads," he said.

Bruce Babcock, an economist at Iowa State University, agrees that the impact is questionable and that the purchases are just delaying the inevitable.

"Essentially what you are doing is taking purchases that will happen in the future and bringing them to today," he said.

The livestock industry must shrink to be able to afford the cost of corn, he said, meaning that some cattle and hog ranchers, for example, will begin to disinvest and reduce the size of their herds.

"The purchase is delaying the day of reckoning because what it does is, it will raise their prices somewhat now and it will allow them to purchase more feed, but that feed cost isn't going to go down for a year," Babcock said.

Even though the purchase is expected to make only a blip in the market, economist Bob Young, with the American Farm Bureau Federation, says you have to see any movement towards higher prices as a positive.

"It can't hurt," he said. "They're sucking product out of the system."

And with a presidential election just months away, the directive to move meat product off the market can also be seen as politically motivated.

"The people being hurt by the drought and the drop in meat prices are the farmers, the ranchers," said budget analyst Harrison. "So any move to help stabilize the market or keep prices from falling too far can be a political gain."

The meat purchases are more symbolic than truly meaningful for the Obama administration, which has criticized Republicans for blocking a $500 billion farm bill, said Dennis Goldford, a political scientist at Iowa's Drake University. Congress started its summer recess on August 2 without passing the bill, which includes relief for farmers and ranchers reeling from the drought.

"Here's an attempt on the part of the administration to get some credit among producers in the agricultural industry for being responsive to their economic difficulties under current conditions," Goldford said.

But he added that the move should not be seen in a cynical light.

"It's important to voters that their elected officials understand who their constituents are and the problems they face," he said.

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Filed under: Budget • Military
soundoff (19 Responses)
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  6. Marvin

    You stupid Americans! The issue of this story is global warming and no it is not a scam you uneducated nincompoops!
    It IS caused by human actvity and it can be REDUCED but you believe in all this disinformation out there because you are illiterate.
    Next Person to comment please dont try to sound intelligent while trying to refute me by using big words.

    August 15, 2012 at 11:22 pm | Reply
    • Cam

      If Americans are illiterate, why are you expecting we'll read your message? Interesting.

      August 16, 2012 at 1:13 pm | Reply
    • ed gein

      Think I'll head up north to the Arctic and see if I can melt a few caps with the heat of my balls.

      August 16, 2012 at 5:15 pm | Reply
  7. George Patton

    It has become self evident that this jerk Obama will stop at nothing to get himself reelected, taking full advatage of the current drought among other things. We need to start looking to other countries for food production like Argentina, Brazil, Russia and even Cuba and purchase food products from them instead of just playing politics!!!

    August 15, 2012 at 7:12 pm | Reply
  8. lynne

    Cattle are not designed to do well on corn, if the herds were range fed, grass fed, without the 'grain finish' that North American producers do, costs would go down, and the dependence on environmentally unfriendly production of feedstocks would diminish. Had lots of grass fed beef in Australia, and source in in Canada as well, much prefer it.

    August 15, 2012 at 5:32 pm | Reply
    • The Despot Lincoln

      Corn fed beef is poison.

      August 15, 2012 at 7:43 pm | Reply
    • Andrew

      You know a lot of cattle designers?

      August 20, 2012 at 3:26 pm | Reply
  9. TCIM

    I will not post again.

    August 15, 2012 at 4:40 pm | Reply
  10. Hahahahahahahahahaha

    Look at all those "Red States" asking for a government handout!!!!!!!!! Hahahahahahahahahahahahaha

    August 15, 2012 at 4:24 pm | Reply
  11. Swamp man

    Republican politicians prevented the passage of a farm bill. Republican politicians aren't about doing what's best for the nation and helping the nation, they're only about being in power. What does it matter if a democrat was responsible for the creation of a bill or if a wants a bill to pass, if the bill is a good bill meant to help Americans? For the Republicans to stop a bill because it would look good for their opponents even though by stopping it they harm Americans, this makes them UNAMERICAN! They are like all those dictators in the world. Dictators don't care about their nation and well being of its citizens, they care about being in power and the benefits of that power. The republican party is Kim Jong Il, Qaddafi, Saddam, Assad all rolled into one!

    August 15, 2012 at 3:28 pm | Reply
    • Dan

      Really? And the Democrats aren't about staying in power and holding on to the benefits that come with it? BOTH parties are un-American. They're both part of the problem. It's not limited to one side of the other.

      August 15, 2012 at 4:57 pm | Reply

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