April 2009 Issue

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Subscribe FREE now! Monthly issues with new articles and other educational information on meat goat health, nutrition, and management written by Suzanne W. Gasparotto of Onion Creek Ranch and Pat Cotten of Bending Tree Ranch. In all cases, it is your responsibility to obtain veterinary services and advice before using any of the information provided in these articles. Neither Suzanne Gasparotto nor Pat Cotten are veterinarians. None of the contributors to this website will be held responsible for the use of any information contained herein.

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A healthy rumen produces B vitamins. A sick goat's rumen stops B vitamin production. It is always good to give a sick goat supplemental B vitamins, especially B1 (thiamine).

THE ECONOMICS OF RAISING GOATS
An Economic Analysis of Why We're in the Mess We're In

 

For most of us, these are the most perilous economic times in which we've ever lived. This article addresses the economic circumstances surrounding raising goats in the spring of 2009, but the points made are applicable to all livestock and every market cycle.

The economic Law of Supply and Demand states that items in short supply will sell for higher prices. Conversely, too much supply means that items are worth less. This is true of anything, whether it is goats, food, fuel, clothing, or money. For example, too many dollars in circulation relative to the supply of products and services to buy means that the dollar becomes worth less and less. The name for this situation is inflation. This is Basic Economics Course 101, but many people across all walks of life don't seem to understand it. Today many elected officials are behaving as if they can ignore or legislate away the Law of Supply and Demand. Politicians don't have that kind of power, but when they try -- and some of them do try -- they make things worse for all of us. That's what is happening today in Washington DC and it is affecting everyone on this planet -- goat ranchers included.

A brief economic and political history is in order for this all to make sense and explain why we goat ranchers are directly affected and must get involved in the political process.

Until 1973, the United States government tied the value of the American dollar to a specific amount of gold, and enough gold to support the amount of dollars in circulation was stored at Ft. Knox in Kentucky. Americans used to be able to go to the bank and actually exchange dollars for a pre-established fixed amount of gold. While there has been much speculation about why the US dollar was un-tied from gold, the real reason is simple -- Lyndon Johnson's Great Society social welfare programs begun in the 1960's cost more money that America had in gold reserves. Unlinking the US dollar from gold meant that the Treasury could print more paper dollars. The value of today's US dollar is based solely on the "full faith and credit of the United States government." The dollar is worth only as much as people believe it is worth, and when people lose their faith in the American government's ability to re-pay its debts, inflation runs rampant. That's where we are headed today. Right now, the current Administration cannot borrow enough money to meet its needs, so the printing presses are churning out paper money. This leads directly to inflation. Inflation means that your dollars buy *less* tomorrow than they did today.

Business cycles are normal in a capitalistic society. Things that go "up" must at some point come back "down." Contrary to the belief of some people, it is not possible to legislate away the business cycle. A stagnant economy is a dead economy. Producers of all products and services have to take a hard look at their businesses, eliminate waste, re-focus marketing, and make changes that make them more efficient. Marginal producers go out of business, while better-run businesses take the places made by those exiting. This is economically healthy and makes for a stronger economy, better citizens, and a vibrant nation.

You are probably asking yourself at this point, "What does this have to do with raising meat goats?" The answer is, "everything." We are heading into the short supply/high price part of the economic cycle. Commodity prices (food, fuel, and everything else we buy) are high because there is higher demand for them in relation to the amount of supplies available to sell and because people have lost faith in the value of the US dollar. Oil is a unique commodity in terms of pricing because the cost of oil is manipulated by the cartel that produces it. However, those countries' economies are dependent upon selling oil to maintain their citizens' lifestyles and avoid social unrest, so politically speaking these countries must continue to sell oil, even if it means dropping prices. Oil prices in the fall of 2008 dropped in anticipation of the possibility that America might start drilling for its own oil supplies. Once the November 2008 Presidential election passed, prices started rising again because the results of that election sent the message to the Organization of Petroleum Exporting Countries (OPEC) that the new administration in Washington D.C. would not work towards energy independence for America. America would continue to compete on the world market for crude oil, thereby driving prices ever higher.

Higher energy costs equal high prices for everything we buy. Energy is involved in the production and delivery of all that we consume. Goat feed is higher because grain costs are higher. Grain costs are higher because fertilizer costs are up. Fencing materials cost more because metal costs have skyrocketed. And on and on and on.

For the past 25 years, the US economy has grown ever upward, producing an era of continuing prosperity that has lasted much longer than ever before in our history. Recessions usually happen about once every 10 years. If you are age 35 or younger, you have never experienced an economic contraction (recession) and are likely not prepared to handle it. You may ask why downturns cannot be avoided by government policies. Lots of people today think that government can pass a law and magically all is well. Western Europeans and Canadians have lived this lie for the past 60 years. But socialism doesn't work. Socialism's premise is that you take from one person and give to another, making everyone equal and life "fair." Life isn't fair. And government doesn't have the power to control markets long-term -- although some of them think that they do.. Markets are made up of people and their often emotional reactions to important issues. The biggest problem with socialism over the long haul is that you eventually run out of other people's money to confiscate and redistribute-- not to mention the loss of freedom and liberty, the principles upon which the United States of America was founded. Understand this: The only money that "government" lawfully has is what it takes from some citizens and gives to other citizens.

As prices of feed, medicines, and other supplies rise, many people dump their animals on the market. This increases supply and lowers demand which results in lower prices to sellers. Anyone who sells at the low point and buys at the high point will soon be out of business. Yet this is what lots of ranchers do every year Even in good economic times, many ranchers sell their stock as winter approaches so they don't have to buy feed, then re-buy in spring when stock prices are higher. This makes no economic sense. A goat producer who operates in this manner is never able to produce animals of consistently improving quality. Now is the time to BUY from others who cannot or will not hold on through the tough times.

If you plan to stay in the business of producing goats, then you must begin to plan for the coming higher prices and product shortages. We need to produce some food for our own consumption. We need to purchase and store a supply of top-quality hay, protein supplements and minerals for winter, making arrangements to have a continuous supply of fresh water and food and medicines for your animals and your family, and figuring out how to generate your own power when utilities become too expensive or are disrupted. Make some sacrifices. Cut back on luxuries. All of us can cut at least 10% from our spending. Plant a garden and eat at home rather than eating out. If you smoke or drink, this is a good time to stop; you already know that those habits aren't good for your health. These are great opportunities to teach values and skills to your children and to bond better as a family unit. Plan for the very real possibility that you may go into stores and find empty shelves. Understand that the dollar may well buy less next month than it does today. This is how Americans lived from our country's beginning through the 1800's and even into the early 1900's -- before we became an urban society. Americans were self-reliant individuals. There was no "just-in-time" product delivery back then. We need to regain these abilities in order to survive. If you plan for the worse and hope for the best, you will be prepared for most of what life throws at you.

We live in a world in which we are interdependent with other nations. The marketplace is global.If China and India start buying more oil and grain and are willing to pay higher prices, then that is where the products are sold. When supplies dwindle, prices rise even further. But we as a nation cannot isolate ourselves from international trade because there are things that we don't produce that we need to buy. The biggest item right now is oil. The US has billions of barrels of undeveloped oil reserves that people (mostly on the political Left) do not want us to develop. There are many reasons for this, but mainly these folks enjoy having power over the rest of us and the money and prestige that such power brings to them. (Don't shake your head that this is a ridiculous statement. Humans beings have been trying to gain power over other humans for thousands of years. History is full of these stories. Follow the money trail and you will better understand what is happening.) America is the only country on this planet that has refused for 30+ years to develop its own energy resources so it can be energy-independent of political issues that affect the rest of the world. When Israel finally decides that it must attack and destroy Iran's nuclear reactors -- and this is going to happen because Israel cannot allow Iran to have nuclear capability -- then the first thing Iran will do is sink oil tankers in the Persian Gulf. Guess who is going to suffer? We are. Energy prices will skyrocket and so will everything else. And that's just the beginning of what is going to happen if we don't become energy independent soon.

We have no shortage of energy reserves in this country. What we have is a shortage of political courage to develop them. We also have elected officials who don't have the knowledge needed to pass laws that regulate complex businesses that they don't understand. So guess who they rely on? Their staff members and lobbyists from the firms they are writing laws to regulate. You think that is absurd? Think about this: The US Congress just passed and the President just signed a $700 billion so-called "stimulus" bill that not a single one of them had read and they admitted it! How's that for being responsible representatives of the American people?

Fully 50% of the cost of commodities and energy today is fear of shortages. There are oil platforms in place in the shallow waters off California that have been there since prior to the ban on continental-shelf drilling was passed 25 years ago. If Congress does not renew that ban -- and they will, given who is in the White House and in Congress -- then those oil wells can be producing and delivering oil in existing pipelines in less than a year. This country's safety depends upon our being energy independent. The technology exists to do this safely and without environmental damage. There are thousands of oil well platforms in the Gulf of Mexico that weathered Hurricane Katrina without significant oil spills.

Prices of commodities and energy will drop dramatically once we as Americans take the steps to demand of our elected officials to approve drilling . . . in the continental shelf, in ANWR, and elsewhere. Developing nuclear and clean coal energy is vital. So-called alternative fuels like wind power and ethanol won't provide the amounts needed and are too expensive without massive taxpayer subsidies. When alternative forms of energy become cost-effective, people will embrace and use them.

Don't blame the oil companies. They have to buy 94% of all the raw material that they refine from state-owned oil companies owned by nations hostile to the United States. The biggest American oil company is only #14 in size in the world today. We've not built a refinery in this country since 1979. Don't blame "big business." Lobbyists exist solely because government oversteps its Constitutional powers by writing laws to forcibly take money from business in order to give it to the people who vote for them and give them campaign contributions. Businesses have learned how to work the system so that they can survive. I am not saying that this is right. I am saying that this is reality.

And don't blame Wall Street. They did their job by designing complex financial instruments and innovatively packaging them in order to sell the sub-prime mortgages that Government required banks to make, regardless of the qualifications of the buyers. This began back during the Carter Administration but really took off in the mid-1990's when Clinton wanted to insure his re-election. Government-imposed regulations forced housing lenders to put minority buyers into homes that they could never afford. One of the main ways that this was done was to require lenders to accept "stated" loan applications wherein buyers could "state" what they earned and what they owed and lenders had to accept those numbers without verifying them. I know this is true because I've been a real estate broker since the mid-1970's and I've personally encountered it in my real estate business.

Blame Government. Yes, that's right. Blame Government, particularly at the Federal level, for using laws to socially engineer our society along the lines that they choose and to buy votes to get themselves re-elected. Follow the money.

This is a crisis of our own making. We as Americans have not held our US Congressmen and Senators accountable. Many of them think we are morons and treat us as such; maybe some of us are, because enough citizens vote for them that they keep getting elected and are now destroying our country and our economy -- and imperiling our meat-goat industry.

We would not be paying horrendous feed costs and energy prices if we had exercised control at the ballot box and through phone calls, letters, and faxes to the 435 Congressman and 100 Senators at the US Capitol who have caused this economic mess. Every economic downturn in the history of the United States can be traced back to bad decisions made by the 535 people who office on Capitol Hill.

Help your own business and help your country by holding these people's "feet to the fire" of responsibility. Because of their mismanagement and outright stupidity, the rest of us are suffering. We live in the best country to ever occupy this planet. The "American Experiment" has been incredible. This is the only country in the history of the world where power comes from the people to the Government. Most of the six billion plus people on this planet scrap for food to eat and a place to sleep each day. We are blessed in so many ways. We can pull our country out of this morass by understanding what has happened and battening down the hatches until we pull through it.

This is not a Democrat or Republican issue. This is an AMERICAN issue. We are headed for tough times and we all need to recognize that we need to save our American way of life.

Suzanne W. Gasparotto
Editorial Opinion
April 2009

 

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