Industry groups want improved cattle markets but disagree on the best pathway for success
January 13, 2017
Frustration and questions are in strong supply across cattle country.
So when a rising star in the cable news world dedicated her evening news program to the cattle industry's market woes, cattle producers tuned in.
With over 3 million Facebook followers (according to the Dallas News), The Blaze's Tomi Lahren, who lives in Texas, has made a name for herself by taking the side of America's ultra-conservative working class and encouraging America to essentially quit whining and get back to work. The 24-year-old Rapid City, South Dakota native said her uncle is a rancher in her home state.
Two years ago, 600 pound black heifers were worth over $1,500 per head in Fort Pierre Livestock. Black steers of the same weight were worth about the same at the South Dakota barn.
The same class of cattle was reported at about $790-$900 per head last week in Fort Pierre.
America's cattle producers took at least a 50 percent cut in their paycheck in just two years. The 2014-2015 highs were unsustainable for the long term, producers figured, but market analysts predicted the highs would hang on for at least four years. Instead, the market tripped, tumbled, and landed flat on its face. At least producers hope it has landed.
By September of 2015, at Fort Pierre Livestock's anniversary sale, a group of 590-pound calves were worth $1,262 per head. Producers were disappointed in the drop but remained upbeat about selling calves for "the second highest price ever."
But there isn't a spring calf to be found on the 2016 Fort Pierre Livestock anniversary sale report. Even in a drought, which usually inspires early sales, producers adjusted their marketing plans to a "wait and see" or "wait and pray" mode. The market had fallen much further and ranchers were hoping it would strengthen before they hauled their calves to town. It didn't. It fell further, so many threw their hands in the air and sold calves. Finally on Oct. 12, almost a month later than usual, Fort Pierre started to move some calves. Two loads of 595-pound quality black steer calves found a new home at $137 per hundred weight or $815 per head. Heifers brought as much as $20 per hundred weight less at the same weight that day.
After Lahren's 15-minute interview with R-CALF USA's Bill Bullard, Facebook fans commented by the thousands, re-opening discussions about mandatory country of origin labeling and trade issues, and many thanking Lahren for bringing the issue to mainstream media.
"Ranchers are not the ones making the profits. It is the middleman," said Bo Phillips in his Facebook comment.
"Thanks for making Americans aware of this awful injustice to our hard working Ranchers/Cattleman. Bring back what Americans were founded on," commented Heather Costabile.
The cattle industry itself was on fire within hours after Lahren's webcast. Supporters hailed Bullard and Lahren, showing agreement with a number of points, particularly the assertion that the repeal of mandatory Country of Origin Labeling contributed to the market decline. Skeptics poked holes in the conversation points, some posting on social media a report by Food and Agricultural Economist Jayson Lusk, an article and chart detailing his reasoning for the 2015-present market free-fall.
"What started happening at almost the exact same time MCOOL was repealed? Producers started marketing more cattle. Here's the thing: one can't create a fed steer overnight. The production decisions that led to the increase in fed steers around Jan. 1, 2016 would have had to have been made around two years before. Were producers so prescient that they could anticipate the exact time of the repeal of MCOOL two years prior? Or, rather, was this a "natural" part of the cattle cycle?" Lusk said in his November, 2016 article.
"Without COOL…meatpackers can reach out and source live cattle and beef from 20 countries, bring it into the US, sell it to unsusepecting consumers with a US inspection sticker on it, even though it comes from a foreign source and consumers don't know the difference," he said.
Drovers and BEEF Magazine both fired back with online commentaries refuting Bullard's points.
Tri-State Livestock News contacted the National Cattlemen's Beef Association, another national beef organization who is known for it's pro-free trade policies and opposition to market-influencing issues like COOL, restrictions on packer ownership of cattle and reform of the packers and stockyards act — a 1921 law intended to "protect fair trade practices, financial integrity, and competitive markets for livestock, meats, and poultry," according to the oversight agency, the U.S. Department of Agriculture.
NCBA lobbyist Colin Woodall, on behalf of his organization, offered a rebuttal to Bullard's discussion points.
"The biggest point I want to discuss is the way COOL is positioned in that whole discussion. It sounded like COOL was the reason that the market went down and if we had COOL back that the market would recover. That doesn't match the data and facts on the book. COOL wasn't repealed until December 2015 and the market was going down almost a full year before that. Once COOL was repealed, there was a significant recovery. That was the result of meatpackers not having to worry about retaliation from Canada or Mexico," Woodall said.
Bullard said the reason that COOL is important is that the "big four" meatpackers import and sell beef from 20 different countries, with all beef bearing a "USDA" inspection sticker, causing U.S. consumers to mistakenly think the beef is a U.S. product.
Lahren commented on the beef import situation, "Let's talk about this foreign meat — the standards, cleanliness, conditions…"
"The U.S. produces the healthiest, safest and most wholesome beef in the world bar none," responded Bullard, saying the U.S. Department of Agriculture only requires "equivalency," not "equal" processing standards.
Woodall said NCBA wants consumers to know that imported beef is not a safety hazard.
"That is something we also take a lot of effort to work with our federal government to be sure we have a robust safety system, not only for domestic beef but for all beef. Bill Bullard makes it sound like equivalency is sub-par but they have to be audited and verified by USDA, so beef coming into the US has to be the same standard, and that needs to be understood by everyone. The beef here, regardless of origin, meets the same food safety standards."
Usually an outspoken supporter of free trade agreements dealing with beef or cattle, NCBA, along with R-CALF and other livestock organizations including the U.S. Cattlemen's Association, has voiced opposition to USDA's recent approval of Brazilian and Argentinian fresh and frozen beef. But their concern doesn't lie with the country's food safety, Woodall said. "Animal health and food safety are two distinctly different things. Our concern about Brazil was on Foot and Mouth Disease – the concern was more with our country than with Brazil – making sure our government had done everything to make sure Foot and Mouth Disease was contained."
"We are able to verify a proven track record of Brazil's consistently poor performance in USDA FSIS food safety compliance audits from 2003 to 2013, which serves to cast significant doubt for the ability of Brazil to successfully perform the more stringent compliance measures necessary to mitigate the risk of FMD," said then-president of the NCBA Bob McCan in his 2014 comments to USDA about the Brazil beef import proposal
"USDA FSIS audits in 2003 and 2004 identified systemic failures in Brazil's meat inspection system. In 2003, Brazil claimed to be using certain laboratory procedures and methods to test for residues and pathogens, but the United States found that those procedures and methods, in fact, were not being employed," he went on to say.
NCBA's McCan also showed concern over BSE and Brazil's own mitigation processes.
"An animal infected with BSE died in Brazil in December 2010. Initial testing of this same animal in Brazil in early 2011 produced test results suspicious for BSE. It was not until June of 2012, through testing of the brain of this deceased animal at the National Reference Laboratory in Recife, Brazil that a diagnosis of BSE was confirmed and reported to the OIE in July of 2012. The OIE Commission reprimanded Brazil for the considerable 18 month delay in reporting the disease as well as the delay in sending the appropriate samples to the OIE Reference Laboratory for confirmation. Brazil's reasoning given to the OIE Commission for their delay in animal disease reporting was related to laboratory work overload present in Brazil's laboratory system. Does this same problem of laboratory work overload still exist today in Brazil's laboratory system?
Would the identification and reporting of a case of FMD be similarly delayed as a result of problems with excessive laboratory workload in Brazil?" McCan said.
USDA subsequently bucked the concerns of the entire U.S. cattle industry and approved the importation of beef from Brazil and Argentina, with the first containers from the newly approved regions arriving in the U.S. in October 2016.
"I think we also need to make sure that people understand that the proposed GIPSA rule that is being discussed is not going to make the market place more transparent or provide more opportunities to cattle producers," Woodall said.
"The current rule sets up a scenario for litigation which ultimately will take away our opportunity to use value-added programs. Whether marketing with GIPSA or marketing beef with COOL, do we really want the government to tell us how to market cattle?
Packer control over the market has been "studied to death," and is not an issue, said Woodall. "It's an easy old rhetoric. It's the proverbial dead horse that has been kicked to death. In 20 years we've set historic highs. People fail to recognize where the true cycle is. You have to study and understand what happened with our industry (in the last 18 months). Expansion of growth but also how the strong dollar has impacted trade and how other proteins have impacted trade," he said.
Bullard, in his The Blaze interview, said better enforcement of GIPSA would benefit independent feeders who are being exploited by "the big four" packers. "The meatpackers learned they don't want competition to restrict them from doing what they want to do. It allows them to exploit producers on one end and consumers on the other," he said, going on to say that while cattlemen lost 60 percent of their income in 2 years, consumers saw only a 10 percent drop in the price of beef in the supermarket.
"Over the last 30 years, the industry has experienced four collapses in price and as a result, we've lost about 17,000 producers a year every year," Bullard said.
In his closing statement, he urged action to salvage the American cattle industry. "We need to make a radical change if we are going to prevent the cattle industry from going the way of the hog and poultry industry. What that means is…we will have hundreds of thousands of fewer cattle producers providing meat…."
"It's not just the family ranch; it's rural America that's adversely affected by the fact that we're losing competition at the base level," he said. "The U.S. cattle industry is the largest segment in agriculture, representing $75 billion from the sale of cattle and calves
"If you don't want the U.S. cattle producer to go the way of the hog producer, in that case since 1980, nine out of every 10 hog producers in business 30 years ago is gone today," he said. "…If we want to restore competition, we have to allow the consumer to distinguish U.S. beef from the beef from those 20 other countries."
Bullard went on to say the GIPSA updates, also known as the "Farmer Fair Practices Rules," recently implemented by USDA, are essential to give producers the ability to monitor the meatpackers without relying on the government to do it.
In order to help producers and drive cattle prices up, NCBA is looking at improvements to the mandatory price reporting rule and urging involvement in a new Online fat cattle auction called the Fed Cattle Exchange, Woodall said.
"It's about providing marketing opportunities, making sure that there is a robust trade agenda. As we continue to see herd rebuilding we have a place to go where people are willing to pay good money for our product and making sure the government isn't getting in the way of the industry-led opportunities," Woodall said.
"We have a broken market. We have an industry in decline," Bullard said. "We need to make a radical change if we are going to prevent the cattle industry from going the way of the hog and poultry industry… "they'll be sourcing meat from all around the world and that will adversely affect food security."