Bailout Nation

An interesting article in the New York Times:

“For the government to print money at the expense of taxpayers as opposed to requiring or going about a receivership and wind-down of any insolvent institutions should be troubling to taxpayers and regulators alike,” said Josh Rosner, an analyst at Graham Fisher & Company and an expert on mortgage securities.

“The Fed has now crossed the line in a very clear way on ‘moral hazard,’ because they have opened the door to the view that they are required to save almost any institution through non-recourse loans — except the government doesn’t have the money and it destroys the U.S.’s reputation as the broadest, deepest, most transparent and properly regulated capital market in the world.”

Food for thought...

Maybe that's why the pork industry isn't quite as nervous as it should be with respect to expansions and new builds here in Indiana, despite the gloomy forecasts experts have been giving it:

"Excessive pork production combined with feed price escalation has the North American pork industry on pace to suffer the most damaging financial year ever, said a Purdue University expert."

Thing is, if they're expecting help (or bailouts) this time, they best not be looking toward the taxpayer, because word on the street is they're Fed up. (yeah, poor pun - but I couldn't resist)

What is our Govt. saying about the future for ag?

Check out this recent forecast put out in December 2007 by the USDA:

USDA Agriculture Predictions to 2017: "Pacific Rim nations and Mexico are key markets for long-term growth of U.S. pork exports. Higher income countries of East Asia increase pork imports as their domestic hog sectors are constrained by environmental concerns. Mexican pork imports rise rapidly, driven by increases in income and population. Brazil is constrained in its pork trade by the presence of foot-and-mouth disease, but continues to be a major pork exporter to markets such as Russia, Argentina, and Asian markets other than Japan and South Korea."

Did you notice something odd in the above quote?

Please permit me to highlight this:

"Higher income countries of East Asia increase pork imports as their domestic hog sectors are constrained by environmental concerns."

If I understand correctly, East Asia's hog sector is constrained by environmental concerns, ergo they'll import more from countries where, say, there are maybe less environmental concerns and/or constraints?

~ shaking my head here ~

Maybe it doesn't make you pause for thought, but I have to admit, it struck me as an odd thing to say by the USDA.

Anywhooooo, here's another important reason why taxpayers won't be too sympathetic toward government handing out subsidies, grants, etc. with respect to larger farms in the years ahead:

"Although net farm income initially declines from high levels of 2007 and 2008, it is projected to remain historically strong throughout the projection period, and reach record levels beyond 2011. Growth in export demand contributes to increases in agricultural commodity prices and gains in farm cash receipts. Increases in corn-based ethanol production also provide a major impetus for this strong income projection. Higher commodity prices lower government payments for price-dependent program benefits, although annual CRP payments increase. With lower government payments, the agriculture sector relies increasingly on the market for its income. Cash receipts represent more than 90 percent of gross cash income in the projections, up from about 85 percent in 2005."

Keep in mind... "The report assumes that there are no shocks due to abnormal weather, further outbreaks of plant or animal diseases, or other factors affecting global supply and demand."

Since our Fed is pretty thin from bailing out the billionairs in recent weeks, I'm guessing they won't have much available to help in any upcoming catastrophes ...like the massive floods swirling throughout the midwest these past few days (and prior).

In other news, I spoke to a friend of mine down in southern Indiana today. He told me about the Michellen (sp?) tire plant layoffs (and other shut downs going on in his area).

Thousands of jobs disappearing in his area...

Times are tough.

Money's tight.

So please don't ask taxpayers to dig deeper.

Thank you.

Meanwhile, while most will be watching the Markets, I'll probably be staring up at the skies on Thursday night searching for a hint of the Auroras this spring equinox.

World finds out about USA beef scandal

You know the world is watching when the news about the Hallmark/Westland Meat Packing Company scandal hits the headlines of a Beverage Industry magazine targeted to industry insiders.

Industry concerns follow massive US beef recall
by Linda Rano:

19-Feb-2008 - The largest meat recall in US history has reignited fears that the US Department of Agriculture (USDA) is not taking adequate measures to ensure the safety of the nation's meat supply. (link)

This particular online news service also publishes a monthly full-color glossy magazine (yes, real hold-it-in-your-hands hard copy) of breaking stories in the beverage industry, as well as print and online ezine publications for other industry niches including Nutrition, Health, Food Safety and more. Their publications span the globe with their largest subscriber bases in the EU.

After the BSE scandal that rocked the UK beef industry, you can safely bet they're closely monitoring the entire Hallmark/Westland Meat story as it unfolds here in the USA.

voluntary recall of "approximately 143,383,823 pounds of raw and frozen beef products"

To be fair, the way I understand the situation, the meat wasn't fully recalled (ie sent back to the supplier) but instead, it was placed on "hold" by institutions/schools/etc. until the USDA completes their investigation to determine whether or not the meat is (or isn't) safe for human consumption.

So maybe "recall" is a bit too strong a word (for now?) in the article referenced above...

Even so, it's the first time I saw an actual number published with respect to how much beef is involved. Imagine. 143,383,823 pounds!!!

Which brings me to Indiana Senate Bill 123 regarding labelling of meat and dairy products. Apparently it might get a dusting off for reading soon. Here's a quick synopsis:

Citations Affected: IC 15-2.1; noncode.

Synopsis: Meat and milk products. Authorizes the state board of animal health to provide voluntary grading and certification relating to meat and meat products. Provides that a person who knowingly or intentionally forges a grade or certification commits a Class D felony. Requires the board of animal health to review, study, and make recommendations to the legislative council about claims made about milk, milk products, meat, and poultry marketed to the general public.

Effective: Upon passage; July 1, 2008.

What do you think? Should we send a strong message to the Industry? This is your chance to get involved by contacting your reps regarding the Bill -- your choice.

School Lunch Program - Got Beef?

In case you haven't heard... the Hallmark/Westland Meat Company story is shocking parents across the country while School lunch program operators across the nation are being instructed by USDA officials to "pull the beef from school lunch lines as a precaution."

Video shot at the Chino slaughterhouse during an undercover investigation by the Humane Society of the United States shows downed cows, animals that are too sick to walk, being prodded with forklifts, poked in the eyes and blasted with water.

"The attempt was to make them so distressed and to cause them so much suffering that these animals would get up and walk into the slaughterhouse," said Wayne Pacelle with the Humane Society.[link]

The Humane Society of the United States says it turned over a video showing cattle being abused at a Chino slaughterhouse to the San Bernardino County district attorney's office in December. After a month with no legal action, the animal protection agency posted some of the video on its Web site this week and turned over 96 minutes of recordings to the U.S. Department of Agriculture, which oversees slaughterhouses.[Emphasis added - link]

The U.S. Department of Agriculture launched an investigation into the company on Wednesday after the Humane Society of the United States released a video that appears to document workers abusing cows that are too injured or weak to stand. (link)

...and were it not for the undercover video filmed by the Humane Society, what would have happened?

After all, Westland and its parent company, Hallmark Meat, are "the second largest supplier of beef to the USDA's commodity procurement branch, which distributes the beef to needy families, the elderly, and also the schools throughout the national school lunch program," according to the Humane Society of the United States. (link)

The USDA Response to the Media Attention?

The USDA, in its news release, said it was "unfortunate" the Humane Society "did not present this information to use when these alleged violations occurred in the fall of 2007."

The Humane Society, in its statement, said it had turned the information over to "California law enforcement officials" at that time, and "local authorities asked for extra time before public release of the information." (link)

Sidenote: Yes siree, I imagine the USDA would have liked to see the video back in fall of 2007... maybe it would have prevented them from buying "...more than 27 million pounds of ground beef from Westland in 2007 as part of the government-subsidized National School Lunch Program." (Emphasis added - link)

In another Response from USDA:

In any case, there's no evidence that meat from so-called 'downer' cattle entered the food supply, USDA official Kenneth Petersen told reporters during a telephone news conference Friday. (link)

And another:

Federal officials emphasized that a hold is not the same thing as a recall. The beef could later be used if the USDA OKs its safety. (link)

And in case you didn't know this;

...Westland, the second-largest supplier of beef for the National School Lunch Program, was named "supplier of the year" in 2004-2005 by the Agriculture Department. It has delivered beef to schools in 36 states.

The USDA today stopped Westland from supplying meat to federal food and nutrition programs pending the outcome of its investigation. While the workers in this video have been fired, the Humane Society says the most shocking thing about the abuse shown here is that it happens all the time.

Some responses from the political side:

February 1, 2008-- Congressman Leonard Boswell is pushing the USDA to examine recent reports of inhumane treatment of animals. (link)

Sen. Dick Durbin, D-Illinois, sent letters Wednesday to the agriculture secretary and the head of the Food Safety and Inspection Service (FSIS) asking for an immediate investigation into the safety of ground beef being used in the National School Lunch Program. "The treatment of animals in this video is appalling, but more than that, it raises significant concerns about the safety of the food being served to our nation's children," Durbin said. (link)

Federal regulations call for keeping downed cows out of the food supply because they may pose a higher risk of carrying E. coli, salmonella contamination or mad cow disease. (link)

Several School Boards across the country have been pulling beef from the menu until they can be certain no supplies came from Westland. Some of those School Boards reporting in the news are located in the following states (partial list, no specific order): California, Washington, Oregon, South Dakota, Illinois, Minnesota, Utah, Hawaii, Florida, Texas, Iowa and New York. For a large (and growing) list of news reports on this story, check out this link.

Now I'm guessing that Hallmark Meat Packing has become the "hallmark" brand for how NOT to run a slaughterhouse/packing plant?

Aw, heck, here's one more reported USDA response worth mentioning:

USDA officials said that despite the apparent abuses, Westland meat products have always passed stringent government purity standards, and they do not believe the company's beef is unhealthy. (link)

What the ...?

Even if you don't get sick eating the Hallmark/Westland stuff, you might get sick watching the 96 minutes of video. Yes, there are animal rights violations. Now that's an education our kids shouldn't have to receive -- in any manner, shape or form -- because it simply shouldn't BE happening -- PERIOD.