Guest Op: Cattle market sending signals of need for TPP
September 8, 2016
In a pure and perfect free market, prices for our cattle and calves are determined by the supply of cattle, the value of the beef and byproducts, less the incremental or remaining costs to grow, finish, and transform our cattle into the end products. Prices are also influenced by forward expectations for those values. As cattlemen, we know that these supply- and demand-driven markets can, in the short term, be subject to greed, fear and bargaining position.
Perceptions of shortage or glut are largely formed by consensus expectations of macro-economic factors. Wars, catastrophic weather events, or manmade disasters change the rules of flow of product from producer to consumer. To me, the 800 pound gorilla in the room is the upcoming presidential election. Because the Trans-Pacific Partnership agreement was finalized by the current administration, it has been bashed and slammed by even some of the most obvious trade beneficiaries. A global wave of doubt about concerns such as human migration, sovereign nation currency policy and technology-driven job insecurity are also assumed to be altering voter judgment. But don't throw in the towel just yet.
Right now commodity markets seem to be searching for market clearing levels for beef, pork, other meats and meat byproducts. The greatest opportunity to alleviate the increasing supply situation is Congressional approval of the Trans-Pacific Partnership. TPP will level the playing field and give U.S. cattlemen and women increased access to the lucrative Japanese market. It will immediately kill the Australian tariff rate advantage and help prevent the perception of meat supplies backing up here on U.S. shores. American livestock producers answered the record-high price signals with an increased supply of meat. If we can overcome the hyperbole and access those markets with fewer restrictions than we face today, it will allow the world greater access to the high-quality U.S. meat products it needs and wants.
Election year campaign rhetoric has painted global trade as bad for the U.S. economy. Nothing could be further from the truth. American economic growth requires American producers to receive the greatest possible value for our products. American jobs, American economic growth and American security depend on the American role in global politics. We cannot contribute if we do not participate, and we cannot shape if we do not lead.
TPP is not an Obama trade agreement, it is a trade agreement for future generations of America. It will lay the foundation for American producers, for American jobs and help maintain American values. TPP is not a big business bailout, it's an opportunity for Industry and Main Street to compete in the global market place. We have the beef and the world wants it; cattlemen and women just need TPP to ensure fair access to markets.
During my career as a beef producer I have seen good markets and bad. The only constant is that conventional wisdom is usually wrong. I promise this: NCBA feels the pain of all cattlemen now and we understand the impact that the downward market pressure has on our industry. We are working on many fronts, from securing TPP passage, to addressing market volatility, to a host of other issues every day.
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My personal economic analysis may not change the market chaos tomorrow, but I am certain there is great value in what we do. We convert forage and grain into high quality food. Our cattle turn grass, feed grains and other roughage into the highest quality beef in the world.
Price competition between consumer choices is irrepressible. I believe at current levels we will not only buy back demand, we will kick other proteins' butts down the alley and into the parking lot. Our beef remains the protein of choice for consumers here and around the globe. But, we must level the playing field for our product and ensure a stable market where prices respond appropriately to market signals. When we accomplish those two priorities, I would sure hate to be have my future invested in any other food product. You can keep my dessert, bring me another steak!
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