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Government Shouldn't Put Its Money in Hogs

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Price support keeps weak producers alive when they should go out of business.

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Twenty four Senators and 63 House Representatives have completely lost their minds over pork bellies. Apparently the free market doesn't work, hog farmers aren't making enough money, and the government owes farmers a profit no matter how much stuff they grow or raise.

Consider USDA Must Buy Pork 'Immediately,' Hog Executive Says:

The US Department of Agriculture must make funds available immediately to buy pork to keep hog farmers in business, the head of the second-biggest US producer told a House of Representatives subcommittee.

Government pork purchases worth $100 million have won the backing of a bipartisan group of 87 lawmakers to support prices for farmers, who have lost money since 2007. Hog futures have dropped about 25% in Chicago since April 23, when swine flu began making headlines, depressing consumer demand and curbing exports to major markets including China and Russia.

Lawmakers need "to encourage and work with the Secretary of Agriculture to immediately make available" funds for government pork purchases, said Rod Brenneman, the chief executive officer of Seaboard Foods LLC, a unit of Merriam, Kansas-based Seaboard Corp. He testified before a House Agriculture Committee panel that oversees the livestock industry.

Lawmakers led by Senators Al Franken, a Democrat from Minnesota, and Richard Burr, a Republican from North Carolina, asked Agriculture Secretary Tom Vilsack to increase US spending on pork in letters earlier this month.

The group of 24 senators and 63 representatives asked Vilsack to buy more pork in the year that began October 1 through government food programs. The US Department of Agriculture bought $165 million of the meat a year earlier, including $30 million announced on September 3, according to Justin DeJong, a USDA spokesman.

The USDA may have less to spend on pork this year because of fiscal restraints, Vilsack said in an interview last week. He said the department is reviewing its plans for this year with an eye toward maximizing available funds for pork producers.

"We have to be sure we husband our resources and use them wisely," he said last week.


No One Owes Farmers A Profit


It's absurd to think the government or anyone else owes farmers a profit anymore than computer-consulting corporations or real-estate agencies are owed a profit.

Yes, farmers have a rough life. But everyone unemployed or underemployed has a rough life now. Farmers are raising too many hogs and prices are low. The solution, in my view, is to raise fewer hogs, either voluntarily or involuntarily via bankruptcy.

When the government steps in and offers price supports, it keeps weak producers alive when they should go out of business. It encourages more production of unwanted goods, those goods stockpile up, and then finally the US government dumps the excesses on foreign markets at whatever price it can get. The latter is an enormous source of aggravation for struggling emerging market countries.
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