Global warming is a serious problem…wait…global cooling is going to destroy the world…wait…oh, we are just calling it global climate change now because the “experts” can’t decide if we are getting hotter or colder?  Sorry, I got confused.  The old adage of counting your chickens before they hatch or putting the cart before the horse seems to bare fruit here.  We can all agree and/or disagree about the validity of the climate change debate but what I want to focus on is best described by Jerry Mcguire “Show Me the Money”.  Lets take a look at the affect of the latest attempt to bow at the alter of Climate Change.

The legislators on capital hill are debating the American Clean Energy and Security Act of 2009 (HR 2454) which is designed to restrict emissions from industry with a focus on industries that survive on coal, oil and natural gas.   This 1,427 page bill which has passed the House is on its way to the Senate which has about a 50/50 chance of passing.  If the Senate does pass it, it is highly likely that the President will sign it thus becoming law.  So what does this mean?  The

Given these statistics, why in the world would our “representatives” push this legislation through the House?  I posed this question to a Missouri Rep who voted for HR 2454, after I told him the statistics above, and he stated that he supported the bill because he thought it would reduce our dependence on foreign oil.  Unfortunately the way HR 2454 does this is by saddling American families and farmers with so much financial burden and additional energy cost that they will have no choice to reduce consumption.  That doesn’t seem right now does it!  

What does this mean for Young Producers?  On a pure economist view point, arbitrarily increasing the cost of a production for a product (beef for example) negatively shifts the supply curve of domestically produced product.  With no shift in global supply this puts domestic producers at a competitive disadvantage.  In other words, American cattle producers will experience higher cost of production while the rest of the world wont.  This is why some experts call HR 2454 a Cap and Tax legislation.  Through the actions of congress, cost of production will increase just like raising the tax rate.  It has the same consequences. The scary part is that this increased cost occurs regardless if you earn a profit or not which makes it is a lot more detrimental than the federal government raising income taxes (which is based on your taxable net income).  This means, as a Young Producer it will be harder and harder to make an adequate margin on your cattle.  For example, my cost to produce a round bale of hay (fertilizer, fuel, twine, labor etc.) was around $35 in 2009.  With the implementation of HR 2454, it would be more around $55.  That alone takes $100 of margin out of my net income per cow per year.  Honestly, that was about the entire margin that was there in 2009. 

If you noticed, I didn’t disagree on the occurrence of Climate Change.  I believe the jury is still out on the subject.   I just fear we are making sweeping changes to our societal structure based on the opinions of a few, the very opinions that can’t decide if we are getting hotter or colder.  I encourage you as a Young Producer, look behind what is said on the nightly news or banner ads.  The 1427 page bill can be viewed online.  If you can’t read the entire bill, there are paraphrases of the bill that are only 20 to 30 pages long.  If you do that, you will be way ahead of a lot of our representatives.  And remember, what happens in DC will come out of your check book!

What do you think?  Comment below or email me at hardeckecattle@hotmail.com  I enjoy reading everyone’s comments.