Meat Uproar, Act II

While consumers reeled from violent run-ups in food prices last year, and at one point even organized a nationwide meat boycott, farmers happily harvested record profits. In 1974, the roles are being reversed: consumers can at last sight some relief from food inflation, and the farmers are talking about--and in some cases organizing--boycotts to keep their incomes from sliding.

Wholesale prices received by farmers for some key products have dropped sharply since last winter (see chart); between February and May, wheat fell from $5.52 a bushel to $3.52, and corn from $2.76 to $2.45. Food processors and retailers have by no means passed the full decline along to consumers as yet. In fact, retail food prices overall rose .9% in May, but meat, poultry and egg prices went down.

Most cheering to consumers--and worrisome for farmers--is the conversion of last year's meat shortage into a glut, as a result of heavy production and a continuing reluctance by budgetconscious housewives to buy meat as freely as they once did. Prices of live hogs have dropped as much as 29% below a year ago, and cattle on the hoof are down 15%. Financially pressed feed-lot operators indeed claim that they are being forced to sell cattle for slaughter for $150 to $200 per animal less than they paid to buy and raise the same steers.

Last week frustrated farmers were doing what they could to get prices moving up again. Farmers throughout the Midwest have been withholding their wheat from the market; they accused the Agriculture Department of depressing prices by issuing harvest forecasts that were too high. George Watts, a poultry industry spokesman, told the House Agriculture Committee that unprofitable prices had forced a large broiler producer to close its Tennessee plant, destroy 800,000 fertilized eggs and smother 300,000 newborn chicks. About 1,000 Western cattlemen threatened to withhold beef from market. The tactics were reminiscent of those that farmers used to protest President Nixon's second price freeze last summer.

Presidential Economics Adviser Kenneth Rush and Agriculture Secretary Earl Butz huddled with cattlemen, meat packers and chain-store operators to explore ways to bring down the retail price of meat and stave off bankruptcies in the cattle industry. They urged the retailers to cut prices further to move meat off the shelves and into shopping baskets. Retailers indicated that they would cooperate, and Butz tried some sales promotion of his own. In a deliberately mixed-up metaphorical exhortation to consumers, he exclaimed: "Now is a whale of a good time to stock your home freezers with beef."

How Serious? So far, so good for the consumer. But while jawboning stores to cut prices temporarily, Butz declared that retail beef prices would have to go up again in coming months to maintain a strong cattle industry--a statement that might make keepers of family food budgets wonder how serious the Government is about fighting inflation. Washington suited a number of actions to Butz's words. The Government announced that it would step up purchase of as much as $100 million worth of pork and beef and store it for use in school lunch programs. Butz himself threatened to recommend "drastic action" against Canada--such as curbing egg imports--unless that nation drops its recent ban on U.S. beef from steers fed a growth hormone that is prohibited there. He also tried to persuade Australia and New Zealand to cut back beef exports to the U.S. That was not enough to please farm belt politicians, who pressed for reimposition of the outright controls on meat imports that the Administration dropped in 1972.

With the Government openly aiming for an eventual reversal of the drop in wholesale meat prices, the consumer's best hope for lower food bills lies in the grain belt, where record winter wheat and corn harvests are shaping up. Drought, plant disease and heavy rains have cut the crops below earlier estimates, but the Agriculture Department still projects the wheat harvest at 1.5 billion bushels, or 21% more than in 1973.

Export demand for wheat should decline because of big harvests in other nations, notably Argentina and Australia. A wheat carryover to 1975 of up to 500 million bushels is expected, v. an estimated 170 million for 1974. Thus the U.S. would seem assured of enough grain to feed its own citizens and supply foreign buyers at prices somewhat lower than now. That prospect does not please farmers in the least: one of the nation's leading agricultural economists, D. Gale Johnson of the University of Chicago, calculates that net farm income will drop 20% this year, to $20 billion.

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