Texans bridle at US dairy herd buyouts
Pilot Point, Texas
The battered steel door swung open and a 505-pound heifer came bucking into the paddock. As the rain and hail thundered down on the tin roof above us, a skinny cowboy cracked his whip at the frightened beast, yelling ``Hyaa, hyaa!'' and jumping onto the fence when the heifer darted too close. The auctioneer chanted out prices, too fast for these city ears to understand, but not too fast for the men sitting in the front row. Every now and then one would raise his hand until, finally, the auctioneer's voice fell silent. The heifer sold for $260, or about 52 cents a pound.Skip to next paragraph
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Trey Hamlett, a young, sandy-haired ranch manager at Skyview Ranch, shook his head slowly. ``I can't afford to sell at these prices,'' he said.
Mr. Hamlett may soon get a reprieve, however. After a favorable court decision -- and with the possibility of agricultural damage in the Soviet Union -- cattle prices on the futures market have been rallying.
Hamlett came to the livestock auction in this town of 2,211, some 60 miles north of Dallas, ``not to sell, just to get a feel for the market.''
A month ago, cattle prices plunged after the government announced details of a program to reduce the number of dairy cattle by 1.55 million, from a total of about 16 million dairy cows and heifers, over the next 18 months. The ``whole-herd buyout program'' is supposed to reduce milk production by 12.3 billion pounds and save the government some $2 billion to $3 billion in costs of buying and storing surplus milk.
The government is paying 14,000 dairy farmers to send their cattle to slaughter and stay out of the business for at least five years, and presumably for good.
The prospect of all those cows, calves, and heifers coming onto the meat market sent cattle prices plummeting -- more than 20 percent in some places.
In the last week, however, the tide has turned for cattlemen. On Tuesday and Wednesday, traders bid up cattle prices up the maximum allowed in a day.
In part, that was caused by the fire at the nuclear power plant in the Ukraine. In 1984, the Ukraine produced 22 percent of the Soviet Union's meat and 23 percent of its milk. Traders speculated that the Soviets may have to import meat.
``In a very basic sense, the Soviet nuclear mishap jolted everyone back to reality,'' says Dale Durchholz, research director at G. H. Miller in Chicago. ``It created enough commotion that brokers started saying, `What am I doing being negative on meat prices when prices are already low?' ''
Cattlemen also won a case in the courts. On Wednesday, a federal judge in Lubbock, Texas, ordered a preliminary injunction on the marketing of dairy cows under the whole-herd buyout program. He told the US Department of Agriculture (USDA) to come up with an orderly marketing plan by June 1.
``It was the lack of such a plan that drove prices down,'' says Darrell Wilkes, spokesman for the National Cattlemen's Association, which filed the suit.
The Cattlemen's Association says many dairy farmers brought their herds to market as soon as the program would permit, which was in April. The cattlemen wanted a plan that would smooth out the flow of dairy cattle into the meat market.