Wednesday, January 10, 2007

Beef - it's what's in the cross hairs...

Sometimes you don't know whether to laugh or cry. For example, consider this headline from Green Business News:

Miliband muses on farm farts ban

and this excerpt:

While it is unlikely that this will result in a "fart-tax" with civil servants chasing cows round with breathalyzer style methane measurers, Miliband did argue that farmers should act to reduce methane emissions by feeding cattle different food, breeding them to live longer, altering the handling of manure and getting farms to generate "biogas" or "biofertiliser" from animal waste.

Extending the polluter pays principle to farming would likely lead to higher food prices, but Miliband insisted that climate change could provide an opportunity for farmers, as it has done in other sectors. [More]

[My emphasis]

No, this is not some sophomoric humor rag, but a serious report on a speech in the UK. After we pause for rude jokes, I'll point out what did trigger some speculation on my part.

The "polluter pays" principle is popping up more often in environmental discussions. I'm not sure I disagree. It is a straightforward way to get the cost of externalities included in the price of consumer goods.

Oddly, the polluter-pays principle is accepted by both sides of the environmental issue. The right seeks to define it in terms of private property:
A correct interpretation of the polluter pays principle would detine pollution as any byproduct of a
production or consumption process that harms or otherwise violates the property rights of others. The
polluter would be the person, company, or other organization whose activities are generating that byproduct. And finally, payment should equal the damage and be made to the person or persons being
Inanimate objects and the environment do not incur costs, people: do. It is not merely the physical
property that is being damaged, but the interests of the owner. However, most advocates of PPP rarely
talk about harm to people. Instead, they misappropriate the economic theory by redetining the concepts
of cost and damage to apply to things rather than to people. The statement above is typical. Polluters
are said to be those who “damage” or impose “costs” on the environment. [More]

The more familiar version of this axiom accords more rights to the the physical world itself. That is where it gets tricky. As long as my actions on my property do no measurable harm to anyone else, am I polluting? Can I cut down all the trees and re-shape the land to suit?

Strong property rights advocates have held this position for some time, but technology is catching up with them. Just as with the "cow-emissions" stories, we are now able to measure many more forms of "pollution" than before. And doubtless, attorneys are working to use those measurements to demonstrate downstream "harm" that would make recovery of damages legitimate - and the effort billable.

So like many private property defenders, I'm thinking this is a good time to begin negotiations before all the effects of my activities can be traced clearly back to me. (At a visit Tuesday at the EPA, I learned of efforts to use bacteria-tracing to see whose animal doodoo is in the creek). For environmentalists, accommodation is not such a bad idea either, as we have now had enough examples of polluters simply committing corporate suicide (bankruptcy) when challenged adversarially.

But back to the cows. As global warming unmistakably gathers momentum, I expect some of these now-silly ideas to be translated into costs for cattlemen. Either manure digesters or feedlot size limits or feed restrictions - the possibilities are significant.

Now add in feed cost increases due to an escalating market demand for corn. (We are finding out DDG's are not the simple substitute for corn, BTW). Corn farmers could be the unwitting tools of animal activists who want to decrease meat consumption. Some health advocates would likely be smiling as beef prices especially escalate beyond frequent consumption range from most budgets.

So do I think the beef industry is doomed? Oddly, I believe, not here in the US. Beef prices (retail) will rise, and consumption may stagnate, but our beef industry could still emerge strong if it is the best global competitor for the beef consumer dollar. Other producers/packers will have to battle our scale, efficiency and brand power to maintain market share.

Still corn producer's fickle abandonment of their long-time #1 customer - the cow - is short-sighted. The problem is serious for poultry and hogs, but the feed-conversion ratios suggest that beef could be the hardest hit.

On top of all that, factor the loss of grazing ground from conversion of CRP acres. Although that risk may be overstated.

It may not be Marlboros that kill the cowboy - it could be corn farmers.


Anonymous said...

When did CRP become available for grazing except in a drought disaster?

John Phipps said...

Fair point - not having any, I had forgotten that was emergency only. In fact, releasing CRP early could be a bonus for livestock producers.

What dawned on me after I posted was how expensive would hay have to get to compete with other crops - especially if you have irrigation.johnwphipps