China beef deal not as good as it seems
October 4, 2017
September 26, 2017
Call me a "wet blanket" or a "Debby Downer" or whatever you might think is the appropriate simile, but I am not too impressed with the China beef deal. China will not be buying that much beef, for the very simple reason that we do not have it to sell. This country does not raise enough cattle to meet the demands of our own consumers. If we have a "so called" surplus it is because we import it.
Sure, the beef packers can package up some steaks to be sold at a few high-end hotel restaurants and they can freeze up a few container loads of liver, hearts, kidneys, and tongues, but will that be reflected in the price of feeder calves next year? I doubt it, because our cattle/beef market is not competitive. Remember, "we" ranchers don't sell beef – "we" sell cattle. Since 1990 the producer's share of the retail beef dollar has fallen by twenty-five percent. The market relationship between retail prices and live cattle is clearly dysfunctional.
The ban imposed by China and now being lifted was not trade illegal but it was unwarranted. The United States never had a BSE problem except for a few months in 2003 when one infected Canadian cow was on our soil. Our country (our government) subsequently decided to share Canada's pain by allowing cattle imports which when comingled at the packing plant level meant we had no idea if the beef was BSE contaminated or not. Canada, given enough time, was able to eliminate BSE, but China's continued ban beyond that date was unwarranted. That our government chose to not challenge the China ban for these many years is again a problem that can only be blame on our own government's disregard for cattle producers. In this respect, we can credit Senator Daines for his help in lifting the ban.
Those of us who raise and feed cows have been the sacrifice to global trade since we started this so called "free trade" mania. Every trade agreement has promised beef export opportunities, but what we got instead are more imports from – Canada, Mexico, Australia, New Zealand, Central America, Argentina, and Brazil.
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All is not good in cow country. For the second year in a row, feeder calf prices have been under the cost of producing them. America's cattlemen and women are receiving $500 per head less for calves than they were paid in 2014. In Montana's terms that is three-fourths of a billion dollars, $1.5 billion for the two years, that is not being spent to fuel Montana's economy. What is worse is that this $1.5 billion is coming out of equity which means it is coming out of the future. It is money that will not be there to pay for the retirement of this current generation or to pass on to the next generation of ranchers. When you look at the effects on rural communities over the nation as a whole it is like one of those hurricanes that just smashed Texas, Florida, and Puerto Rico.
Cattle producer's main problem is lack of market competition. The retail price of beef, including exported beef, is not transmitted down the market chain to the feeder and original producer. Independent feedlots have been all but eliminated and the packers now source their cattle supply from a handful of very large "vertically integrated" cattle feeding firms – some of which they own outright.
So Senator Daines, I say, if you want to be every cowgirl's sweetheart and make all of us cowboys jealous, this is what you must do:
Most important – Join with Senator Enzi of Wyoming and Senator Tester of Montana in sponsoring the Captive Supply Reform Act. This Act is a simple and commonsense way to restore a competitive market for live cattle. It clarifies the Packers and Stockyards Act (P&SA) by replacing captive supply procurement mechanisms with a publicly open competitive market. Packers will still be able to forward contract cattle shipments, they just will not be able to keep it a secret.
Second most important – Support legislation re-requiring that USDA finalize rules protecting poultry, hog, and cattle contract growers – i.e. the GIPSA Rules. First poultry producers, then hog producers lost the ability to sell in a competitive public market and became a cog in a vertically integrated factory farm system. Cattle feeders are now in the process of being vertically integrated, and coming soon, unless there are some dramatic changes, cow-calf producers will be vertically aligned to one beef packers. What the GIPSA rule would do is give contract growers some basic rights, such as the right to witness their livestock being weighed, and the right to question the quality of the feed supplied by the integrator, and to be able to do so without fear of retaliation. Contract growers need some basic protections in their business dealings with the integrating firm.
Third most important – reenact legislation authorizing Country of Origin Labeling. COOL has become a symbol of everything that has frustrated cattle producers. The fact that the World Trade Organization, the United States Congress, and the Beef Packing Cartel all want to deny consumers the right to choose US produced beef, tells us much of what is wrong in trade agreements like NAFTA. And if I am not mistaken, you, Senator Daines, were one of those who voted to rescind COOL. I ask you, do we have a sovereign right to protect the integrity and safety of our food system or has that right been ceded to trans-national corporations?
While you are at it, there are two other thing that needs doing:
Fourth: We always suspected but now it has been confirmed that the Batista family that owns the JBS beef packing concern are criminals. They are under indictment in Brazil for a number of crimes and we need to determine what crimes they have committed in this country. You should use your office to investigate how the Batistas were allowed to buy packing plants in this country?
Fifth: The Beef Checkoff Tax is clearly being mismanaged by USDA and the National Cattlemen's Beef Association (NCBA). Witness the lack of oversight right here in Montana. Two entire generations of young cattlemen have never had the opportunity to vote on whether they even want this tax. It is time to reform or eliminate the Beef Checkoff Tax.
What I have outlined above are five commonsense reforms needed to insure the future of cattle ranching and the small rural towns in which we live. We are obviously a neglected and forgotten part of America. Perhaps this is because we don't ask for much. All we want is the right to pursue our lives and businesses as independent producers of livestock, responding to the dictates of free and fair market competition.