Livestock Market Digest
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N.M. SRM Black Range Summer Tour he New Mexico Section of the Society for Range Management will be holding August 3 a summer range tour featuring 100 years of grazing and forestry practices in the rugged Black Range west of Truth or Consequences, N.M. The tour (qualifies for 5 SRM CEU credits) will leave at 7:30 a.m. from the Black Ranger District parking lot (1804 North Date Street) and head first to Winston to see a custom-made log cabin built from timber harvested off the Black Range before moving on to a grassland research site, a ponderosa pine restoration site with thinning and burning treatments, and a
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long-term riparian grazing research site. Local Black Range permittees will be on hand to discuss challenges and opportunities with grazing on federal lands. Lunch will be provided for this bring-your-own-transport tour, and there will be an open cookout/social the evening prior. The $40 fee (students $20) supports the section’s NMSU range scholarships and youth programs (including support for the New Mexico Ranch Camp). For more details and registration information, please see nmrangelands.org or contact N.M. SRM President Les Owen at lowen@nmda.nmsu.edu
Is it time to stop building convention centers? ver the last 20 years, convention space in the United States has increased by 50 percent; since 2005, 44 new convention spaces have been planned or constructed in this country alone. That boom hasn’t come cheap. In the last 10 years, spending on convention centers has doubled to $2.4 billion annually, much of it from public coffers. The resultant glut of convention centers, has undermined the financial strength of these notable investments. The annual number of conventions is down, as are the number of attendees, and convention centers are struggling to meet projected revenues. ■ The actual number of conventions hosted in the U.S. has fallen over the last decade. ■ Attendance at the 200 largest conventions peaked at about 5 million in the mid-1990s and has fallen steadily since. ■ Christopher Leinberger, president of LOCUS emphasizes that while capturing only one percent of the national mar-
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ket for conventions would likely be profitable, 300 cities bought that same logic. Consequently, numerous cities across the country invest in multimillion-dollar convention halls that fail to pay themselves off. The experience of Washington, D.C.’s Walter E. Washington Convention Center, which opened in 2003, demonstrates this fact. ■ The center has won numerous awards for its outstanding amenities and grand ambition, with 68 public restrooms, 38 escalators and 31 elevators. ■ It also has more than 4 acres of glass walls, 160 types of lights and 30,293 light bulbs. ■ However, the cost of the center was still a staggering $833.9 million. ■ Between 2006 and 2008, it missed its booking goals by 13 percent, 24 percent and 29 percent, respectively, and it runs at a loss of about $22 million a year. Source: Amanda Erickson, “Is It Time to Stop Building Convention Centers?” The Atlantic Cities, June 11, 2012.
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July 15, 2012
We can cut government: Canada did wo decades ago Canada suffered a deep recession and teetered on the brink of a debt crisis caused by rising government spending. Since then, the country has undergone a remarkable recovery, reclaiming financial strength and harnessing a powerful economic boom. The United States would do well to learn what it can from Canada’s experience and adopt its progrowth policies, says Chris Edwards, director of tax policy studies at the Cato Institute. The origins of Canada’s problem lie within an incredible spending binge that began in the late 1960s and lasted for 16 years. ■ The Canadian leader during most of that time, Pierre Trudeau, expanded programs, raised taxes, nationalized businesses and imposed barriers to international investment. ■ Government spending as a portion of gross domestic product (GDP) skyrocketed during this period, as did the federal government’s total debt level. ■ Canada also suffered from high inflation during the 1970s and early 1980s. This growing problem was addressed first by a series of pro-market reforms throughout the 1980s and 1990s, inspired in part by comparable programs instituted by Ronald Reagan and Margaret Thatcher. ■ In the mid-1980s, the Canadian central bank adopted a goal of price stability, which greatly
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reduced inflation and has kept it low and stable ever since. ■ Following U.S. tax reforms in 1986, Canada enacted its own income tax cuts under Progressive Conservative Prime Minister Brian Mulroney. ■ The government privatized Air Canada in 1988, Petro-Canada in 1991 and Canadian National Railways in 1995. ■ Canada privatized about two dozen “crown corporations” in the late 1980s and early 1990s. ■ The other major reform of the late 1980s was the free trade agreement with the United States. The market reforms were accompanied by substantial spending cuts in the late 1990s that finally got Canada’s fiscal house in order. ■ Between 1994 and 1996, the Canadian government cut defense, unemployment insurance, transportation, business subsidies, aid to provincial governments and many other items. ■ As a result, total noninterest spending fell by 10 percent. ■ With this restraint, federal spending as a share of GDP plunged from 22 percent in 1995 to 17 percent by 2000. ■ These spending reforms allowed Canada to balance its budget every year from 1998 to 2008. Source: Chris Edwards, “We Can Cut Government: Canada Did,” Cato Policy Report, May/June 2012.
Unconventional energy meets conventional politics heap natural gas is upending the entire energy outlook. It has scrambled the outlook for coal-fired energy — new gas-fired electricity is now cheaper than coal — more than any prospective cap and trade program or punitive Environmental Protection Agency regulation could ever do. It also renders most renewable sources such as wind and solar even less competitive with fossil fuels, says Steven Hayward, the F.K. Weyerhaeuser Fellow at the American Enterprise Institute. Meanwhile, the price of natural gas has fallen so far that the industry is desperately trying to figure out how fast it can become an export industry to sell it overseas where the market price is higher than here. In short, natural gas has the potential to become a crucial boom industry for the United States. A similar story is starting to unfold with domestic oil. In testimony recently by Anu Mittal, the director of natural resources and environment for the Government Accountability Office, she explained deposits in the western U.S. (chiefly oil shale in the Rockies) have approximately 3 trillion barrels of proven reserves. Public and private analysts estimate that half of this is recoverable. This establishes the starting point of what could be a novel of America’s energy renaissance. However, this outlook should be taken with a grain of salt: government regulation and political buckling to environmental groups can choke this industry and halt the energy revolution before it begins. ■ Most shale oil, unlike shale gas, is located on federal land. ■ This offers the current administration ample leeway in mandating burdensome permitting processes and applications, driving up costs.
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■ Furthermore, these deposits of shale oil are far from the nation’s refiners — pipelines will have to be built that can crisscross the United States to get this resource where it needs to go. ■ This will likely result in a lengthy political battle involving the environmental lobby, not unlike the one that has caused costly delays for the Keystone
XL pipeline. If domestic energy in both gas and oil is to be optimized and our dependence on foreign energy lessened, Washington will have to get out of the way and allow producers to do what they do best. Source: Steven Hayward, “Unconventional Energy Meets Conventional Politics: Which Will Win?” Real Clear Markets, May 16, 2012.
Farm Credit Bank of Texas Reports Solid Earnings & Asset Growth arm Credit Bank of Texas (FCBT), a wholesale funding bank, reported an increase in loan volume during the first quarter of 2012. The bank’s gross loan portfolio totaled $10.6 billion at March 31, 2012, up 3.3 percent since Dec. 31, 2011. This growth was attributed primarily to increases in the bank’s participations loan portfolio, offset by a decrease in the bank’s direct loans to its affiliated lending cooperatives. The quality of the loan portfolio also improved, with 93.8 percent of total loans classified as acceptable or other assets especially mentioned at March 31, 2012, compared with 91.2 percent at Dec. 31, 2011. Nonaccrual loan volume decreased 13.1 percent during the quarter to $89.2 million at March 31, 2012. FCBT net income for the first three months of 2012 was $34.2 million, a decrease of 18.1 percent from the same period of 2011. The decrease was mainly attributable to a decrease in net interest income, due primarily to concession expenses on debt that was called and replaced with lower-cost debt, and to an increase in provision for credit losses. “Farm Credit Bank of Texas is pleased to report solid earnings
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and growth in our loan portfolio during this sluggish period for the financial sector,” said Larry Doyle, FCBT chief executive officer. “Although many farmers and ranchers are still feeling the impact of last year’s drought as well as higher operating costs this year, agriculture remains a bright spot in the nation’s economy,” added FCBT Board Chairman Jimmy Dodson. Shareholders’ equity totaled $1.2 billion at March 31, 2012, an increase of 2.8 percent. Farm Credit Bank of Texas is owned by 17 rural financing cooperatives in Alabama, Louisiana, Mississippi, New Mexico and Texas, which in turn are owned by their customers — farmers, ranchers, agribusinesses, country homeowners and other rural landowners. Together, the Austin-based bank and its affiliated lenders constitute the Texas Farm Credit District, the largest rural lending network in the five-state region. Collectively, the district lenders reported $96.0 million in net income for the first quarter of 2012, a 5.9 percent increase over the same quarter a year ago. District loan volume increased 2.4 percent to $16.0 billion at March 31, 2012, from $15.6 billion at year-end 2011.