Is "Cheap Beef" too good to be true?

I was recently at a big retail store when I surveyed the wares they market as beef, pork, and chicken.  I noticed a new entry to the market this week which really got me thinking.  I suspect that it will give you pause to consider the subject as well.  What I noticed was the introduction of certified organic, grass-fed beef - ground and steaks.  And to add to the mystery, I could see that the retailer was true to their word by pricing the product within 10% of the conventionally grown product.

How can this be?  I have a bit more insight into the market than some, certainly there are those with more experience than me.  But, what I can tell you is that at the prices advertised by this retailer, the typical small family farm in America couldn't possibly make ends meet.  How is it then that a giant, national retailer could be selling products like this at the prices that they do?  If it is true, as my opinion informs me, that the small American family farmer couldn't possibly make a living wage at these prices, then I have to ask myself who IS making a living wage at this price?  My mind drifted off to the old Wendy's commercials that asked "Where's the Beef?" in regards to the size of the hamburger in the commercial.  It wasn't any stretch of the imagination to ask the same question of this retailers product!  Where is the Beef... coming from?

Food labeling laws are hotly contested these days.  There are those in positions of power that would have us to believe that it doesn't matter where we get our food so long as it is cheap.  I get it.  I do.  If I spend an extra dollar on my beef, that is a dollar that I can't spend on a sweater, or to mend my pants at the tailor.  At least this is what it used to be, but I'd argue that conditions are no longer what they used to be.

I subscribe to classical Austrian economic theory.  I don't think we need more government intervention, but we need free markets that allow producers and customers to freely exchange money for goods.  Farmers don't need protectionism, so I don't need the federal government restricting imports on my behalf.  Instead, I argue that it is my job to make a quality product at a fair price with a level playing field.  This is where it all begins to fall down, since the small producer cannot compete with the efficiency of scale, market penetration or cut-throat, lead-loss tactics of the 800-lb gorilla retailers. 

When Adam Smith wrote "The Wealth of Nations," I doubt that the corporation existed to the same extent that it does today.  Classical economists argue against any form of intervention by the government, which I wholeheartedly agree with.  It wasn't the government that gave us the corporation - we did.  As a customer, I have a choice as to where I spend my money.  If I chose the cheap, expedient product which results in the destruction of the local means of production, then I shouldn't be surprised when the local linen mill closes its doors and puts 1500 men out of work.  I shouldn't be surprised when those 1500 men don't buy my product either which results in my business failing... and the dominos continue to fall. 

What is the classical Austrian economic minded farmer to do? For one, I make sure that everyone I know understands the impact of local economics.  The vast draining of wealth from the countryside of America into centralized, global corporations is enormous.  But, at the same time I certainly don't ask for interference from the government, but instead I focus on what I know well.  I know what it takes to raise a cow, pig, and chicken.  I know what it means to treat them ethically, with the love and care that they are due as I exercise my role as a God-given steward over them and the environment.

I also turn to you, as the customer, to highlight the key differences between what the small farmer can produce and the inevitable industrial organic corporation provides.  Why would you shun this cheap beef and support a small family farm?  Both of us can provide to you beef which has been fed nothing but grass, and even more, the larger retailer has the manpower to submit to organic certification.  Why would you pay more for my beef when you can get it cheaper from this retailer?  To this, I would like to argue three points - diversity, sustainable practices, and economic stability.

What do I mean by "Diversity"?  What I mean by this is the well distributed ability to produce food within our own community is to be prized.  In the same manner that you don't invest all of your savings in one company, you distribute your investment across a wide range of investments in the hopes of mitigating the risk of financial ruin during a crash. 

Is there a crash coming?  You see it in your town, I see it in mine.  Stores are closing and homes being abandoned.  Jobs have left town and rarely return on their own.  I ask you, what happens to a town when it can no longer feed itself?  How about a county, state, or nation?  We need "food" independence as much as we need oil independence, probably more so.  We need a diverse landscape of farms springing up all over this land to provide a sustainable, secure food source for our towns and cities. 

Large, monoculture industrial food suppliers are highly dependent on the supply chain.  The food must get from here to there or else there will be shortages.  One jump in fuel prices will inevitably lead to a correlating jump in product prices, since scarcity drives up prices.  If you want to ensure food for the future that isn't subject to shortages and the price fluctuations that go with it, then you need to support small family farmers everywhere.

Sustainable practices is a bit of a buzzword these days.  We need to be able to continue to do what we do for the foreseeable future without depleting our resources.  Given the size of the herd necessary to make a living wage at these rock bottom prices, I can assure you that it is not likely that these practices are sustainable.  What I can tell you is that I have 20 acres and less than 15 cows.  Even in the worst of dry weather, there is generally sufficient food available for all of my cows.  I don't crowd them into organic certified feedlots.  I do exactly what my grandfather would have done.

I attended a seminar a while ago put on by Franklin Saunders from  He gave an amazing speech on how we lost our small communities, and by extension our food security and economic stability.  He described what happened to our fathers and grandfathers at the turn of the century over a hundred years ago.  At that point in time, most farms were small, often with a few acres and a single horse, and they did business within the community that they lived in.  The urge to "get big" pushed our forefathers to take on more and more creative, industrial methods at the expense of their financial freedom.  Tractors improved efficiency, but cost our grandfathers their farms.  Silos, mega-barns, and massive cultivation equipment allowed us to do more with less, but in the meantime we mortgage our grandchildren's future for a few moments of temporary peace and affluence.  To break this cycle of debt which is killing our small towns, I would argue that we need to support small family farmers who embrace the old ways.

I have said a lot.  Each paragraph could likely be a newsletter on its own.  I would like to close by summarizing what I see as our options.  We can continue down the path of debt and consolidation which leads to fleeting periods of temporary peace and prosperity for some, but ultimately leads to the murder and destruction of all that has made this country great.  Or, we can turn from the cheap and the expedient and give thought as to how our dollars impact the world around us.  By supporting the small family farmer, you will help to ensure a diverse source of food for years to come.  You'll also support the ethical treatment of animals and the distribution of food producing lands across the nations instead of massive, concentrated pockets which result in pollution and disease.  Finally, you'll ensure that since ample supplies are locally available to everyone that supply and demand remain even resulting in fewer boom-and-bust cycles in agriculture.

If you'd like to learn more about the economics of raising grass-fed beef, I would encourage you to read an article by Forrest Pritchard of the Huffington Post.