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Published February 15, 2011, 11:19 AM

GIPSA rules ensure fairness, independence in industry

REVA, S.D. — Many livestock organizations representing our livestock industry are at odds over the correct interpretation and the intent of the proposed GIPSA rules.

By: Vaughn Meyer,

REVA, S.D. — Many livestock organizations representing our livestock industry are at odds over the correct interpretation and the intent of the proposed GIPSA rules.

Battle lines have been drawn and sides have been chosen based upon the speculation of repercussions for our industry in the event the rules are placed into effect.

In all our efforts to repudiate the other side of the GIPSA issues, are we failing to grasp the overall vision of our leaders for the underlying purpose of these rules?

During the negotiations of the 2008 farm bill, was there a trend or noticeable element that was missing in our economy that might propagate a negative profound effect upon the future societies of this great country? In other words, what catalyst induced our Washington leaders to suggest agricultural reforms?

The answer to Washington’s renewed interest for a fair agricultural playing field might parallel the teachings of Carl H. Wilken, a noted economist, who, throughout the mid-20th century, provided testimony to various committees of Congress. Wilken theorizes several thought provoking principles of which the foremost is that income only can be created through industries — private and corporate — that extract their raw materials from the land. Secondly he notes of these industries, including agriculture, mining and petroleum, agriculture is the exclusive renewable resource and any other income creation is “unearned income” such as credit established both private and government, which becomes a tax on society because of interest charged.

Multiplier of seven

Using Wilken’s principles, an economy is balanced when agriculture products receive 100 percent of parity as all labors throughout the economy ideally will receive 100 percent compensation for their endeavors.

This balanced economy is because of the “multiplier of seven” which relates to the number of times agriculture wealth is recreated as it is spent for goods and services throughout our society.

However, when parity for raw materials falls below 100 percent, all stages of an economy suffer by that same multiplier of seven.

For every dollar of farm income lost, the national income looses $7, thereby forcing labor to seek unearned income or credit. This credit maybe in the form of loans, welfare, subsidies, unemployment, reduced savings and other means, but all forms are burdensome to the economy, as they require servicing interest, which in modern times is astronomically increasing debt. It requires about $5.50 of national income to service $1 of interest made necessary by capital debt creation.

In livestock production, we have witnessed an alarming contraction of family involvement in the past four decades. This erosion of family participation primarily is reflective of staggering production costs coupled with business portfolios centered on profitability rather than past family legacies.

Don’t get me wrong; there is nothing wrong with managing for profitability, which is essential for the stayability of our operations.

However, without family and individual management, will the forces of mass production overshadow the cattle industry and lead us to vertical integration synonymous with the poultry and hog industries? Will a shrinking U.S. cow herd caused by less producer involvement expedite the exodus of the cattle industry abroad similar to other nonagriculture industries?

These are questions that statistically are becoming relevant trends today, and I for one think Wilken’s economic principles prioritize agriculture production as a key for U.S. economic survival.

Essentially, rural America is the guidance system for economic growth coupled with our self dependence for feeding ourselves.

The GIPSA picture

With livestock production accounting for more than 70 percent of agriculture revenues, the final version of the GIPSA rules will play an important roll in safeguarding agriculture as well as the sovereignty of our nation.

Our ancestors migrated to this country and shaped this land after suffering oppression in their homelands because of faltering economies, which had allowed their agricultural production to become valueless.

In the United States, we have fertile lands, superior technology and the keys of family ownership and participation, which are the envy of the world.

The GIPSA rules may well be the “last stand” for agriculture and Democracy in the United States.

The GIPSA rules not only ensure a future for future generations, but they also honor the pride and independence with which our forefathers settled this great nation.

Many of our past leaders have proclaimed, “The buck stops here.” However, farmers and ranchers proudly can proclaim, “The buck starts here and we are the foundation of our nation.”

Livestock producers can demand fairness in the market place and promote national independence through support for the GIPSA rules by contacting their Congress members.

Editor’s Note: Meyer is a Reva, S.D. rancher and chairman of the South Dakota Stockgrowers Association’s marketing committee.