Some days it's pretty easy to be an almost-vegetarian

From today’s Globe and Mail: Ottawa to pay farmers $50-million to slaughter hogs

In an unprecedented move, the federal government plans to pay hog farmers up to $50-million in total to slaughter as many as 150,000 breeding swine.

Farmers will receive $225 for every hog they kill, so long as they agree to wipe out their entire breeding herd and stay out of the hog business for three years. The government hopes the program will reduce a glut on the market that has helped drive down prices.

I understand that farmers tend not to be experts in economics, but any farmer so oblivious to the market in which they operate that they can’t understand “falling price + rising cost of feed = losing money” deserves to go out of business. Of course, this is the classic argument against bailouts, that they reward the stupid and non-competitive; they’re never done for economic reasons, only political. Apparently Big Pork* swings a big stick in Ottawa.

Another point: if we assume the slaughtered pigs are to be sold for meat, farmers and the government might as well brace for another price drop as 10% of the pork supply (and probably not the highest quality pork either, as I don’t think they’ll cull the best pigs) plops into supermarkets all at once. If, on the other hand, the slaughtered pigs aren’t to be sold as meat but simply done away with, that seems overly wasteful. Starving kids around the world and all that. Just give it to some food banks, for chrissakes.

* if there’s not a lobby called “Big Pork” there really ought to be

[tags]pork farmers, pig cull[/tags]

0 thoughts on “Some days it's pretty easy to be an almost-vegetarian

  1. You know, I see this sort of bailout as an extension of the subsidization practice I learned about in the book I just read. In the book they talk about why American farmers have come to grow so much corn: because it’s become an easy-to-grow, high-yield plant, the most efficient mean of getting carbohydrates from land (like soybeans are for gettign protein). Then industry started to use corn everywhere (HFCS, feed, preservatives, ethanol, etc), and so a powerful industrial lobby for it developed. Then the 1973 US farm bill replaced the New Deal (which provided loans) with direct payments to farmers if corn prices dropped.

    Well, what does a farmer do if he has a guaranteed price for a crop? He grows more of it, and the market price drops, and industry is happy, and the farmer’s happy because he has his guaranteed price, and the taxpayer (who pays) can’t see the trail so he doesn’t care. The glut of corn means they find new ways of using it, and the system self-perpetuates.

    In this case, though, there’s little else they can do with pork (other than give it away, as you say), so the government is going the next logical step and paying them to kill the system and stop the cycle of price drops. This makes more sense than perpetuating the system, doesn’t it?

    I tell you what, I’m going to the farmer’s market.

  2. I’m not saying it’s a good idea to perpetuate the system. I’m saying there are ways to do it — like letting some of them fail, as they would any other industry — that don’t reward people for making a bad business decision.

    The self-perpetuating system works fine until they run out of secondary uses for the corn (or slaughter the pigs) and the price falls through the floor. In a normal industry, in an efficient market, the low price would force some producers to leave the industry, reducing supply, putting the price back at an equilibrium point. However, as long as the government bails farmers out the market doesn’t correct itself.

    I have no problem with bailouts for emergencies — massive drought, foreign economic crisis that a farmer or industry couldn’t reasonably foresee, etc. — but this was a case where farmers ignored the fact that markets can turn sour, and used a political tactic to account for their mistakes.

    I’m far from a proponent of unfettered free markets, but political bailouts never make sense.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s