Eaton, others to testify at Senate Livestock and Poultry Hearing
Editor
U.S. Senate Committee on Agriculture, Nutrition, and Forestry Chairman Pat Roberts, R-Kan., and Ranking Member Debbie Stabenow, D-Mich., announced Sept. 19, that their committee will hold a hearing titled, “Perspectives on the Livestock and Poultry Sectors.”
The following individuals are expected to testify Wednesday, Sept. 25, at 10 am at the Dirksen Senate Office Building in Washington, DC.
Who: Mrs. Jennifer Houston, President, National Cattlemen’s Beef Association, and East Tennessee Livestock Center, Sweetwater, Tenn.
Mr. Ron Kardel, Vice Chairman, National Turkey Federation, and West Liberty Foods grower, Walcott, Iowa
“Looking at cattle prices, one can see how the claim that the repeal of MCOOL caused a drop in cattle prices came about, as the repeal came right after the peak of fed steer prices, after which prices began to fall rather dramatically. Jayson Lusk
Dr. Jayson Lusk, Distinguished Professor and Head, Department of Agricultural Economics, Purdue University, West Lafayette, Ind.
Mr. Burton Pfliger, Past President, American Sheep Industry Association, and Roselawn Legacy Hampshires, Bismarck, N.D.
Mr. Trent Thiele, President, Iowa Pork Producers Association, and KMAX Farms, LLC, Elma, Iowa
Mr. Shane Eaton, Member, United States Cattlemen’s Association, and Eaton Charolais, Lindsay, Mont.
Go to: http://www.agriculture.senate.gov for the livestream of the meeting.
Shane Eaton, farmer, rancher, cattle feeder, and seedstock breeder, said that he has seen multiple instances recently of large numbers of lower quality foreign cattle selling below the negotiated cash price, which caused the market for all classes of cattle to fall. He has called for an update to USDA’s Mandatory Price Reporting rules, where fat cattle of foreign origin would be reported in a separate category from fat cattle of domestic origin and they would not be included in USDA weighted average reports which Eaton says would result in higher prices paid for U.S. cattle.
CME specifications require that when cattle are delivered on a live cattle futures contract, the cattle owner must sign an affidavit guaranteeing the cattle are exclusively born and raised in the United States. Also, Eaton says the CME feeder cattle index excludes non US-born cattle when calculating the index.
Therefore, Eaton says because of the contract specifications, all the futures prices for live cattle and feeder cattle are to only reflect the price of U.S. cattle, but no USDA reports offer this information.
Currently, if cattle cross international lines in a sealed truck and are delivered directly to a slaughter plant, they are reported as “imported” cattle, but feeder cattle that are imported into the United States and fed and slaughtered in this country are reported as domestic cattle.
Eaton would like to require packing companies to disclose whether cattle are of “domestic” origin or “foreign” origin, which he believes will help in arriving at a transparent negotiated cash fat cattle trade every week, which will lead to a weighted average price and futures price based solely on the trading of U.S. born and raised cattle.
Eaton expects this change to put $3 to $5 per hundred-weight on the value of fed cattle “tomorrow.”
Currently the following fat cattle market reports are available from USDA weekly:
1. Imported cattle (these cattle are taken directly to slaughter in a sealed truck)
2. Domestic and foreign-born cattle fed to slaughter in the United States (these are combined into one report.)
Eaton would like to see the following reports:
1. Imported cattle
2. Born, raised and fed in the U.S. cattle
3. Foreign-born cattle fed to slaughter in the United States
One recent instance involved a large lot of heifers selling for $2 per hundred weight lower than steers, which is out of the ordinary, he said. “Usually steers and heifers sell for the same price. If there are a bunch of heiferettes in with the heifers, the price might be lower for heifers, but otherwise the price is about the same.”
On a per-head basis, steers tend to bring more dollars because they are heavier than their heifer counterparts, explained Eaton.
“When the heifers sold lower than expected, the feedyard manager called the packer buyer,” said Eaton. The buyer responded that it seemed like an odd situation, and promised to look into it. “He called back and said ‘you aren’t going to like this but someone sold a whole bunch of Mexican heifers in Nebraska at a significant discount.’”
Eaton said the activity dropped the base price about $2 per hundred weight – affecting not only all of the cattle selling on the cash market, but also the formula cattle whose value is based on the cash market.
“The packer buyer said something to the effect of, ‘you know, we need to change this. This is hurting our customers. We need to do something about these Mexican cattle setting the price for all classes of cattle,’” said Eaton.
“You know cattle feeders and ranchers are getting abused when packers start feeling sorry for them. I can’t remember a time when a packer has felt sorry for buying cattle as cheap as they can. It is time for those who are in the cattle business to take some action,” he said, urging those in the cattle industry to get behind his rule change suggestion. Mandatory Price Reporting is slated for re-authorization in 2020, he said.
Eaton plans to address this and other market issues when speaking before the Senate Ag Committee Sept. 23, on behalf of the United States Cattlemen’s Association.
Burton Pfliger, who will represent the American Sheep Industry in the hearing, will address four main points.
1. Approval for expanded use of M44 – a predator control method.
2. Mandatory price reporting. With only 3 packers buying slaughter lambs, if one doesn’t buy a certain week or meet other requirements (doesn’t buy enough lambs, doesn’t buy from enough different individuals), there are essentially no sales reported. The 3-70-20 confidentiality rule that applies to cattle also applies to sheep to protect the confidentiality of the company buying the livestock. In order for a transaction to be reportable, at least 3 packers have to provide data at least 50 percent of the time over the most recent 60 day period, one company can’t submit more than 70 percent of the data for the most recent 60 day period, No single reporting entity may be the sole reporting entity for an individual report more than 20 percent of the time over the most recent 60 day time period.
“If you lose any packing plant, for whatever reason, we essentially will lose all data available. That information is useful to producers as well as packers who need to make informed decisions,” said Pfliger. One suggestion ASI has made is changing the “70 percent” to “80 percent” to reflect the continued consolidation of the packing industry, he said.
3. Trade. ASI supports the passage of the USMCA.
4. The US Sheep Experiment Station. This research station is of critical importance to the sheep industry in providing real-live studying opportunities for interactions with wildlife, health issues and a number of other topics.
Pfliger, a past ASI president, raises sheep near Bismarck, North Dakota.
