Tag Archives: Nevada agriculture

Get Along Little Dogie, but not to Asian Markets

The President was pleased to tell anyone watching his Twitter feed that his trip to Asia was a Wonderful, Biggest Ever In History, Success.  Not. So. Fast.  Especially “not so fast” if a person is in the cattle business, and most of the cattle business in Nevada is in the northern part of the State:

“Range livestock production is predominate in Nevada with well over half of the farms raising cattle or sheep. The highest concentrations of cattle are in the northern part of the State. Cow-calf operations are most common type of operation and Elko county ranks among the leading counties in the Nation in number of beef cows. “

So, when the administration announced it was pulling out of the Trans Pacific Partnership the rug got pulled from under any notions that Asian nations would increase their importation of beef from the US.  The Japanese and Chinese governments announced their own policies, and neither was amenable to imports from America:

“Japan announced it was increasing its tariff on imports of frozen beef from 38% to 50% until next April. The decision affects all countries with which it does not have a free trade agreement. That would include the United States.

Second, according to reporting that appears to be exclusive to Politico, the agreement the Trump administration made with China required that the beef be free of artificial growth hormones or additives that make the meat leaner. Unfortunately, most of the U.S. cattle industry relies on the hormones or the additives or both, according to the reporting.”

When Trump touted “America First” that translated to “America out of the market” as the administration bumbled through bilateral agreements.  The result was predictable, US beef imports to Japan dropped 26% from last year. [FBN]  Those who advocated bi-lateral, as opposed to multi-national agreements, argued that the former would allow negotiators to directly address issues.  Obviously, that didn’t happen.  Meanwhile, back in Beijing:

“The role of China in global beef markets has evolved rapidly in recent years.  Despite being a large beef producing and consuming nation for many years, China has never been a player in global beef markets until recently.  For many years China neither imported nor exported much beef. However, since 2012, growing beef consumption has resulted in a rapid increase in beef imports as consumption outpaced beef production in China.  China emerged as the second largest beef importing country in 2016.  Major beef suppliers to China in 2016 were Brazil (29 percent of total Chinese imports); Uruguay (27 percent); Australia (19 percent); New Zealand (12 percent) and Argentina (9 percent).   In 2017, Chinese beef imports are projected at 950 thousand metric tons, up 17 percent from 2016.”

So, can we expect progress on opening Chinese markets to American grown beef as a result of this recent trip to Asia?  Probably not.

“Business deals announced by the president are tentative agreements that may not be fulfilled. And while the president railed against what he viewed as systemic flaws in the U.S. trading relationship with its Asian partners, he neither publicly requested nor received specific assurances to address issues like market access and intellectual property theft.”

The beneficiaries of this administration policy appears to be the Australians.  An agreement reached last March allowed greater access to Australian imports of frozen beef: “The joint statement between China and Australia means the number of meat processors permitted to export chilled beef to China will increase from 10 to 36, with another 15 expected to have pending approvals fast-tracked.” [AuBC]  The applied tariff on Australian beef is 8.4% with an elimination of the 12% to 25% tariffs eliminated by 2024. [MLA.au]

The bottom line seems to be for all the boasting and bombast from the White House twitter line, the Asian trip produced ZIP/Zero for western US cattle producers, including those in Nevada.

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Filed under Economy, Nevada economy, Politics

Voices in the Wilderness

When the Northern Nevada Development Authority compiled its study of agriculture in Nevada (pdf) the report offered some insight into the political views which inform economic practices.

Unsurprisingly, the report cited the following survey results concerning the lack of expansion or “impediments to business growth,” “The biggest impediments to business growth were identified as laws and regulations (23.0%),transportation costs (20.9%), cost or availability of goods or materials (15.3%), reduced consumer spending (10.2%), and financing (10.2%).” Also unsurprisingly, the Federal government was the “impediment” for 65.5% of the respondents, 20.2% cited the state, and 10.8% blamed county or local governments.

“Regarding Federal agencies, the primary challenges for Nevada Agricultural companies are reported as excessive fees, burdensome permits, adjudication and process time and the lack of empathy in dealing with real world issues.” [AgriNV pdf]

The problem with words like “excessive,” “burdensome,” and “lack of empathy,” are that they describe qualitative impressions rather than quantifiable factors.  Let’s look at the fees first.

Grazing FeesNow, we might ask is the grazing fee “excessive” when it’s $15 in Nevada, but $19.40 in California? Or $33.50 in Nebraska? Or $17.50 in Colorado. Or is it “excessive” because the fees are $9.00 in Arizona? Or, $13.50 in Washington? [NASS]  For those wishing to delve into the weeds and details of the formulation, the National Agricultural Statistics Service provides the calculations. (pdf)

Is it “excessive” when the price at the Fallon Livestock Exchange (pdf) ranges from $144 to $242/per for steers? From $118 to $210 for heifers?  And, we should note at some point that states without federally available land for grazing have their cattle operations on private land, land often subject to modified property taxation.  Eastern growers complain Western ranchers are getting a government subsidy, while Westerners complain about the cost of transporting cattle.

There are those who accept the notion that “ranching for profit is an oxymoron,” however, this doesn’t have to be the case.  A major caveat should be inserted at this point — size matters.  Because profit margins tend to be tight the larger operations will almost inevitably be more profitable than the smaller ones.  IF the ranch is not one of the major models, then keeping labor costs low is essential, as is placing more emphasis on grazing than on feeding.

There are two other factors which bear consideration. First, the debt/equity ratio is an essential factor just as it is in any business.  For example, some cattlemen have fallen for the siren call — buy more land — or buy more ‘stuff’ — and profits will increase.  However, there is a point at which the debt level impinges on the credit capacity and the manager/rancher is headed toward the predictable financial disaster.

Secondly, altogether too many ranches have too much overhead.  There are buildings, shops, assorted equipment, etc. all of which must be depreciated and all of which can be a drain on the business end of the operation. [BFmag]

Are fees “excessive” if the rancher is getting a reasonable price for the cattle at auction, BUT has a ranch too small to be economically viable in this general economy, or has taken on too much debt, or has too much overhead, or has hired or taken on too many people on the payroll?

And, those “burdensome regulations?”  Is a regulation burdensome if it entails too much time to fill out paperwork? Or, if it cuts the profits? Or, must it do both?  Is the regulation a burden if it requires the individual to change methods or means of production instead of maintaining the status quo?  If a person were to consider any imposition a burden if it caused him or her to make any changes in means or methods then nearly all restrictions of any nature could be considered “burdensome.”  In short, the term may well be an instance in which an ideological expression is translated to an economic factor.

Here’s where the conflicting interests in a multi-faceted economy come into play.  The rancher may want to graze cattle ‘fence to fence,’ but the local tourism sector may need for grasses and other vegetation to remain on stream banks to enhance the trout fishing which draws enthusiasts and their dollars to the communities along a river.  The rancher may want to let cattle munch down the fire prone cheat grass in an area, but fire fighting interests would be better served if the burned areas were restored with alternatives to invasive vegetation, which might need to be restricted until the new vegetation takes hold.  A rancher may not consider local wildlife much more than pests, however in a wider, broader, view the wildlife may have environmental and economic value beyond the measure of a ranch’s profit margin.

Lacking empathy?  If we accept the definition that empathy is the ability to understand another person’s condition from their perspective, then other questions arise.  Are the respondents to the survey looking for empathy or sympathy?

Empathy generally means that one person understands the situation in which another person finds him or herself; sympathy acknowledges the condition and seeks to offer comfort or support.  A official may very well understand with some precision what a rancher is concerned about, but a rule or regulation might easily be such that there is little comfort or support which can be rendered.  If by ’empathy’ the individual wants the official to fix his or her problem, make it go away, or modify general rules so that he or she doesn’t have to make any changes then this goes well beyond empathy, and often beyond sympathy.

Generally speaking none of us wants to readily admit that a goodly portion of our problems are of our own making.  And, it’s entirely more satisfying to assert that they are the result of onerous forces beyond our control.   So, when we hear from an individual that “excessive fees,” “burdensome regulations,” and “lack of empathy” prevent him from creating a better business (of any type) how do we factor in his possible superfluous overhead? Her potential debt to equity ratio which impinges on management flexibility? His prospective over-extension of employment costs? Her conceivable  lack of capacity to utilize economies of scale?

How do we interpret responses such as “the federal government is impeding the expansion of my business” when we don’t know if the operation in question, whether agricultural, commercial, or industrial, had any viable capacity for significant economic growth in the first place?

It’s not that agriculture is unimportant, or that we might be justified in  dismissing the complaints out of hand. Agricultural activities add about $5.3 billion annually to Nevada’s economy.  The sector employs approximately 60,700 persons.  Alfalfa hay is the predominant crop, worth approximately $232,100,000 in a 2012 USDA report. This makes sense considering that cattle operations represent 62.5% of all agricultural receipts, or about $732,883,000. [AgriNV pdf]  However, the numbers pale when we consider that the total civilian workforce in the state totals 1,367,000. [BLS] Thus agricultural employment is about 4.4% of the total Nevada labor force.

The voices are real, they are in the wilderness, and they are complaining.  However, the time it takes to get permitting accomplished will not be reduced by cutting personnel from the Department of the Interior, or from the Department of Agriculture.  The time available for the BLM officials to attend to individual problems will not be enhanced by stripping its budget or freezing the number of people who can be hired to fill vacant positions.

Wishing that the Taylor Grazing Act had never been enacted, or that the Federal government didn’t exist, or that  clean water regulations don’t matter, will not make it so.  Empathy for “real world” issues means coming to terms with the business environment in which any enterprise must operate.  Even in the wilderness.

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Filed under anti-immigration, Economy, Politics

Not Very Home On The Range? Romney and Public Land

Former Governor Willard Mitt Romney doesn’t seem very ‘home on the range,’ that is, he’s not sure what the purpose of public land might be.   He told Nevadans:

“So I haven’t studied it, what the purpose is of the land, so I don’t want to say, “Oh, I’m about to hand it over.” But where government ownership of land is designed to satisfy, let’s say, the most extreme environmentalists, from keeping a population from developing their coal, their gold, their other resources for the benefit of the state, I would find that to be unacceptable.” [TP]

A brief primer:  Public land is public — many people use it.  And, many of the people who use it run cattle. As in cows. As in hamburger. As in Americans consumed about 26.4 billion pounds of beef in 2010. [ersUSDA ]  The USDA adds the following information:

“Range livestock production is predominate in Nevada with well over half of the farms raising cattle or sheep. The highest concentrations of cattle are in the northern part of the State. Cow-calf operations are most common type of operation and Elko county ranks among the leading counties in the Nation in number of beef cows. Northern Nevada is also home to the vast majority of the sheep.”

In these counties conversations are often sprinkled with terms like AUM’s, that’s the grazing fee set for western states.  Nevada ranchers pay a $12.50 AUM.  There’s a formula for that here. Once the cattle and calves are raised for sale, quite often on public lands,  they account for 39.2% of the total agricultural output in the state.  The output isn’t making anyone rich, 81.2% of Nevada’s farms and ranches are family owned, and the net farm income is $137,760 (this figure includes other, larger producers of potatoes, hay, etc.) [USDA]

Mining takes place on public lands in Nevada. The BLM has a handy guide describing the process for a mining company to get approval from the agency for mine operations in Nevada.  (link pdf) And, the agency notes that one very common reason for application approval delay is that the operators have provided insufficient baseline data on the proposed operation.  No one is keeping anyone away from the Gold.

Hunting and fishing happen on public lands. The Nevada Department of Wildlife is funded in four categories, and the department describes its income as follows:

“The license dollars that come in each year are used as match to the federal funds. For instance, most federal dollars require a 3-1 state match; for every $3 of a project we do using federal funds, we must add $1 of state dollars, or volunteer hours, or in-kind match (donations). In addition to license dollars a variety of other sources are also used as match, for instance nonprofit grants and Question 1 bond dollars can also be used for state match, as well as volunteer hours and in-kind match (donations of equipment.)”

We will gladly sell you a hunting license, a trapping license, a fishing license, and we will register your boat.  Nevada also sells duck stamps, trout stamps, deer tags, upland bird tags,  and mountain lion tags.  [See more]  Then we would be pleased if you stayed in our motels, bought gas from our service stations, ate in our restaurants, and purchased food from our local groceries.  We would politely ask that those happily hunting and fishing in our climes would listen when we tell you  “You can’t get there from here,” so we don’t have to engage in search and rescue attempts to find you.

What former Governor Romney appears to be grousing about are claims that wilderness areas prevent other commercial operations.  However, sauce for the Sage Hens  is also sauce for the Hungarian Partridges — and if a commercial operation invades a hunting area then there’s obviously a trade off in economic terms.  When the numbers are crunched, the total acreage set aside as wilderness in Nevada comes to 731,367, which sounds like a very big number until we convert the 109,806 square miles of this state into acreage and the number comes up as 70,275,840 acres. Thus the Wilderness designation applies to only 1.04% of our total land area.  Surely that isn’t too much to reserve for hunters, the hikers, and the fishing fans.

But, there’s nothing like getting a zinger into a GOP exchange about those “extreme environmentalists” to spice up a Republican plug for promoting the interests of polluters and exploiters.  Perhaps it’s too much to ask that GOP presidential candidates detach the epithets from words like environmental and ecological?

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Filed under 2012 election, Mining, Nevada economy, public lands, Romney