Importer-Controlled Cattle Exceed Purchases in Domestic Negotiated Cash Market
Billings, Mont. – The U.S. Department of Agriculture (USDA) recently completed its reapportionment of the National Beef Checkoff Program to determine how many cattle are controlled by each of the states, which then determines the number of directors each state has on the Beef Checkoff Program’s Cattlemen’s Beef Board (CBB). It also determines the number of live cattle and cattle equivalents (i.e., beef volume converted to cattle numbers) that importers control.
The USDA counts live cattle imports and then adds another head for each 592 pounds of imported beef to calculate the total number of cattle controlled by importers.
The recent reapportionment reveals that importers control 6.8 million cattle, the largest cattle inventory of any state except the state of Texas.
Concerned that control of such large numbers of imported cattle by beef packers and other importers are contributing to today’s dysfunctional cattle market, R-CALF USA compared the number of importer-controlled cattle to the volume of fed cattle sold in the domestic negotiated cash market last year, when the volumes in that market fell to their second-lowest level since the market crash of 2015.
As depicted in the chart below, in 2020 the beef packers and other importers controlled far more live cattle through imports than the beef packers purchased in the industry’s price discovery market – the domestic negotiated cash market.
R-CALF USA director Brett Kenzy, a central South Dakota cow/calf producer, backgrounder and feeder, explains the significance of this finding for the U.S. cattle market:
“Beef packers are satisfying consumer beef demand using two inputs – cattle they slaughter and beef they import. But the millions of head of cattle imported in the form of beef are not included in the calculation of our shrinking domestic negotiated cash market, even though those imports are being used to satisfy demand that should be driving our domestic cattle prices.”
Kenzy says this new information means the volume reported by the USDA that purport to identify the percentage that the domestic negotiated cash market contributes to the packers’ total inputs is skewed upward because USDA ignores the millions of head of importer-controlled cattle that should be included as packer inputs.
“This shows why the 50% minimum cash purchase requirement contained in the Grassley/Tester bill (S.949) is so important,” Kenzy said adding, “It also shows the importance of restoring mandatory country of origin labeling for beef – so consumers can choose between beef from our domestic cattle or imported beef.”
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