In the week before our nation celebrates its Birthday No. 228, the U.S.
Dept. of Agriculture proved once again that open access to public
information is an unalienable right. The world's foremost farm and food
agency proved it by violating it.
Late last Friday, June 25, USDA acknowledged that its expanded rapid
testing program for BSE, or mad cow disease, indicated a "positive" had been
found somewhere in our vast nation. USDA, however, was tight-lipped on the
age, breed or location of the animal.
Understandably, the cattle market bombed big when Chicago Mercantile
Exchange traders took to their work Monday. In three days--while the
nation's ranchers and feeders awaited word from USDA on whether further
testing would conclusively prove the animal's mad status--August fat cattle
futures dropped $5.
On Wednesday, word came forth from on high. USDA said tests at its
state-of-the-art Ames, IA laboratory proved the animal not mad; the highly
sensitive initial screening test had shown a false positive.
By then, however, a second animal with possible BSE had been detected and
the market, rather than breathe a sigh of relief, sucked in air for a second
(merry-go-) round of nervous waiting.
While all of this was going on, USDA released its Quarterly Stocks Report
and its initial 2004 acreage estimate. It was another bomb; more corn and
soybean acres were found than the market sages at the Chicago Board of Trade
thought possible.
So, of course, down went the grain market. August beans futures got drilled
for nearly 60-cents a bushel before the bleeding could be stemmed and
December corn drained lower by 20-or-so cents.
But the two market-impacting items showed a stark difference--or
indifference, depending on your perspective--in USDA's rules for information
management.
First, the highly-detailed acreage and storage estimates were released as a
matter of form. By law, USDA must simultaneously hand all in the marketplace
the most intimate portrait of market-moving information imaginable.
That's a good thing. No, that's a very good thing.
It means that no one--not farmers, ranchers, feed users, Cargill, Bunge,
Russia, China, consumers, processors, you name it--has an information
advantage to profit at the expense of anyone else. Everyone, from the
smallest farmer to the largest multi-national--is equal in the market on
report day.
If you doubt this, consider the market reaction if there were no USDA crop
production estimates: Rumor, private estimates, market bigshots, wild-eyed
speculators and scandal would render the price discovery machinery
completely inoperable and totally untrustworthy. No one could or would be in
the marketplace.
In short, fully and equally informed markets work infinitely better than
rumor-driven, uninformed markets.
As such, goofballs who claim USDA should drop or modify its current and
excruciatingly detailed farm data reporting system are just that, goofballs.
Everyone, including the market, is best off if all play on a level
field--USDA's many reports.
If you still don't believe this to be true, USDA proved it so by keeping
important and relevant information from the public on this week's two mad
cow cases.
By the time the hired hands at the ag department declared the June 25
suspect cow to be BSE-free, a beef industry newsletter, the packer- (and,
therefore, USDA-) friendly Cattle Buyer's Weekly, reported the animal to be
a 16- or 17-month-old dairy animal.
Moreover, when USDA announced late Tuesday that a second suspected BSE
animal had been found, it trailed--by more than eight hours--a Feedstuffs
magazine report of the same information. (Cattle Buyer's Weekly reported
later Tuesday night that the second animal was eight years old.)
The unconfirmed-by-USDA information kept cattle markets boiling: Were US
livestock markets flying blind, fueled by rumor, fact, innuendo, truth? How
did a cattle-selling rancher or feeder know the true worth of his livestock?
Equally important, how did the two publications get sensitive market
information? And from whom? (If USDA leaked the information, heads--from the
smallest to the largest at USDA--should roll and roll immediately.)
No knows because USDA didn't release any relevant background information on
either of the suspected animals. In fact, after declaring the June 25 cow
BSE-free, USDA continued to keep all information about the animal from the
public and its age, breed and location remains known only to USDA.
That's bad for business and bad for you and your customers for several
reasons.
First, the marketplace will not be denied. As information trickles out
about either of the animals--and it will--prices will react, probably badly,
at each new revelation.
Funny thing, market-moving information is like a beating: it's best to get
it over with all at same time. Threatening it or ladling it out over several
days carries for more consequences than benefits.
Second, note how America's export customers and competitors took the news
of two possible BSE animals here. They took it in stride because it proved
to them the US was serious about BSE. That's part of what they asked for.
The other part, complete disclosure, has yet to be delivered. Until it is,
they will remain wary of US beef.
Third, rarely--very, very rarely--should our government keep information
from us. The nation is best served when its servants trust their
bosses--us--with a full accounting of all facts in the timeliest fashion
possible.
Indeed, it is not overstatement to observe that every scandal America has
encountered in its glory-filled 228 years has been the result of
secretiveness and every scandal it has endured over the centuries saw its
beginnings borne by more openness, not less.
Openness means equality; it breeds fairness which results in strength.
Secrets breed contempt and undermine democracy--in the markets as well as in
the nation. We've known that since July 4, 1776 and need to be reminded of
it on July 4, 2004.THE FINAL WORD:
