Obama Dumb Idea of the Day

Posted by Jeff Carter
on August 15th, 2012

On Monday, Secretary of Agriculture Tom Vilsack announced a buyback program for pork, lamb, chicken and catfish. Coincidentally, President and desperate candidate Barack Obama was out in Iowa trying to stem the Romney/Ryan momentum. Yesterday he touted his new program.

“Today the Department of Agriculture announced that it will buy up to $100 million worth of pork products, $50 million worth of chicken, and $20 million worth of lamb and farm-raised catfish”

Lamb mainly fattens up on grass, but the drought is killing all the grass. If you have driven around the midwest at all lately, all you see is fields of brown. The leaves are already turning and falling off trees in many parts of the corn belt. Catfish, hogs and chicken all use grain as a primary feed source. Those farmers are feeling the heat of the drought the worst. Cattle farmers are also feeling it, but their herds were down prior to this so there is less to cull.

Of course, the funny thing about that amount of pork, it only buys around one day of kill. It’s a meaningless blip. The hog market ($HE_F) reacted predictably. On Monday, it had a furious rally. Yesterday, it went up a little more. Today, it’s off sharply and currently sits where it closed on Friday.

The drought is driving up grain prices. ($ZC_F, $ZW_F, $ZS_F). That’s putting pressure on livestock producers. At these prices, they lose money on every head of cattle or hog going out the door. Word from the field is that a lot of producers are sending animals of the female persuasion to market. Anecdotally, on my drive south, I saw a sign where a farmer was selling his prize bull.

Livestock producers asked for relief from the federal government in the form of reduced ethanol mandates. But, because the Obama administration only believes in green energy, or “energy above the ground”, they won’t budge. This puts livestock producers in a terrible pickle.

Short term, prices of meat should tank. The effects of the drought aren’t going away soon. Longer term, the price of meat should skyrocket. If you have the room in your home, buy a freezer.

Thanks for the link, The Daily Crux

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