Beef Glut

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Recent years have not been kind to cattle ranchers. Partly because of growing health questions about the advisability of eating an abundance of red meat, per capita annual beef consumption fell from 94.4 lbs. in 1976 to 79 lbs. in 1985. As the price that cattlemen received for choice steers dipped, ranchers trimmed the size of their herds, from 50 million head in 1982 to some 45 million now. To help firm up prices, they were planning to cut an additional million head this year.

But now the cattlemen face a new threat: the U.S. Department of Agriculture has launched a program to pay thousands of dairy farmers approximately $1.8 billion to send their herds to the slaughterhouse or the export market and stay out of the business for at least five years. The purpose is to help reduce the huge market surplus of milk.

The problem for the cattle ranchers is that the slaughtering of about 1.6 million dairy cows will provide a large new source of meat to the market and thus further depress beef prices. After the USDA announced March 28 that more than enough dairy farmers had volunteered for the slaughter program, the price of April beef futures on the Chicago Mercantile Exchange dipped from 58.2 cents per lb. to 52.6 cents.

To help cushion the blow to cattle ranchers, the USDA last week began an 18- month program of buying 400 million lbs. of red meat for school lunches, overseas military bases and other uses. But for the next several months, those purchases are not expected to keep pace with the dairy slaughter. Says Rancher Jack Sparrowk, who runs a herd of 25,000 cattle near Sacramento: "The USDA is asleep at the switch."

USDA officials argue that the cattlemen and the futures markets have overreacted to what will be a temporary increase in supplies, but ranchers say that the short-term impact is proving to be severe. Nor are they comforted to know that dairy cattle produce low-quality meat, which cannot compare with tastier ranch beef. "Any extra tonnage is bad," says Paul Hitch, owner of a major feedlot in Guymon, Okla. "If a million cut-rate Chevies come on the market, even Cadillac is going to lose some sales."

The ranchers are hoping for relief through the courts. A U.S. district court in Rochester has issued a temporary restraining order against one aspect of the USDA program: a requirement that dairy cows designated for slaughter be branded on the face so that they cannot be secretly sold to other farmers. The Humane Society had sued, claiming that the branding "constitutes cruelty to animals." Meanwhile, the National Cattlemen's Association has sued the USDA in a Texas federal court, hoping to convince the judge that the whole Government program constitutes cruelty to cattle ranchers.