Ag Policy Blog
Looking for Fair Cattle Markets
Twitter is blowing up with the hashtag #FairCattleMarkets as the U.S. Senate Agriculture Committee prepares to hold a hearing Wednesday on "Perspectives on the Livestock and Poultry Sectors" with representatives from the beef, pork, sheep and turkey industry associations.
The Twitter campaign calls on President Donald Trump to take some form of action that would provide some level of balance in the profitability between meat packers and cattle producers.
The Senate hearing will be worth watching just to see how much talk there is about anger in the countryside following the market reactions to the Tyson plant fire in Holcomb, Kansas, last month.
Last week, Kansas State University released a report showing that Kansas feedyards in August lost $184.99 per head while "packer margins spiked significantly to nearly four times their annual average, or approximately $549." KSU predicted in that same report that cattle feeders will not see a positive net return on steers or heifers until May 2020. https://www.agmanager.info/…
The American Farm Bureau Federation cited similar numbers in its analysis of cattle prices and boxed beef following the Holcomb fire. https://www.fb.org/…
In calling fellow cow-calf producers and feeders to demand action, Joe Goggins called the August spread in profits "criminal." He started the social media campaign -- #FairCattleMarkets -- to get cattle producers tweeting to President Donald Trump.
In an image on Western Ag Reporter, Goggin stated: "President Trump, rural America helped get you elected. We need your help, we need some fairness in our cattle markets. Producers/feeders own our cattle year round and are going broke. The Big 4 packers own our cattle around a week and are getting rich. Does that sound like #FairCattleMarkets to you?" https://westernagreporter.com/…
In a phone interview with DTN, Goggins said cattle feeders have been taking significant losses, especially after the fire, which caused live cattle prices to dive while the boxed beef price rose. When asking what Goggins wanted to see from President Trump, Goggins said he didn't know what the solution should be, but there is a problem in the cattle market.
"The main thing is to start a conversation and let him know there's probably a problem out here," Goggins said. "I'm not saying we need to get rid of the packers. I mean we need them. They are an integral part of the deal. We just need to get some fairness back in this market."
Goggins added, "I'm definitely not against anyone making money, but we need to let him (Trump) know that in rural America, the producers are a very big part of this equation and we're struggling."
Joe Goggins' brother, John Goggins, is owner and publisher of Western Ag Reporter.
As of noon on Tuesday, #FairCattleMarkets had generated just under 3,100 tweets in 24 hours and total impressions of about 1.3 million, according to social media data.
Groups have seized on the trending hashtag. The Organization for Competitive Markets (OCM) is calling for President Trump and Agriculture Secretary Sonny Perdue "to take action to ensure fair prices for cattle farmers and ranchers." OCM and the Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA) are now planning an Oct. 2 rally in Omaha to highlight actions that can be taken to boost the cattle trade. Among their proposals are a return to country-of-origin labeling, and a reduction of imported beef and blocking efforts to reopen the U.S. to Brazilian beef. https://competitivemarkets.com/…
The country-of-origin request can make a disinterested party bury their head in their hands, but a piece of reporting last week by Tri-State Livestock News points out one reason the Big 4 packers did not collude in the pricing case being brought against them is because COOL was repealed. The packers fought COOL when it was the law with great zeal. And as they noted in their motion to dismiss, the packers argued that when COOL was in effect, domestic feedlots could "charge higher prices than foreign feedlots because of the premium paid for domestic beef." After cool was repealed "foreign beef no longer had to be labeled as such, which spurred additional imports and caused domestic cattle prices to fall."
So the packers are saying they didn't collude to drop prices, but they pushed mightily to ensure Congress changed the law. And they reaped the rewards of that action. https://www.tsln.com/…
Looking at some written testimony for Tuesday, the National Cattlemen's Beef Association stated it supports Agriculture Secretary Sonny Perdue's push and the ongoing investigation by USDA regarding market reaction after the Holcomb fire.
"All of these efforts show that Congress and the Administration understand this plant was a vital component of the beef supply chain, and we appreciate your help in securing a quick response and assistance from USDA and the Commodity Credit Futures Commission (CFTC). This situation in Kansas highlights the importance of both interagency coordination and the need for Congress to give agencies the regulatory tools needed to respond to these issues in real-time."
Testimony by the U.S. Cattlemen's Association points to the K-State value spread between feeders and packers. USCA calls for more market reforms, stating the Kansas fire points to problems with the live cattle and feeder cattle futures contracts and calls for an industry working group with the CME to ensure fundamentals are operating in the cattle markets. USCA also wants a field coordinator at CME to work with auction markets, feeders and cattle producers that would "demonstrate CME Group's commitment to addressing the volatility concerns that have historically plagued the cattle market."
MANDATORY PRICE REPORTING
When it comes to reauthorizing the Mandatory Price Reporting law, USCA cited that the current law lumps non-native feeder cattle fed to slaughter weight along with U.S.-born cattle. USCA stated this lack of distinction reduces transparency in pricing because "non-native feeders can sell at a severe discount compared to USA born and raised cattle."
Year to date, USDA shows the U.S. has imported just over 1 million feeder cattle, of which about 85% come from Mexico.
NCBA urged the Senate Agriculture Committee to continue working toward reauthorization of Mandatory Price Reporting reauthorization. NCBA stated the organization is working to update its policy on MPR as it waits for USDA to conclude a study on the 5-area reporting regions. Once that is done, NCBA "will then work on advocating for sound enhancements that are backed by research."
NCBA stated that the reauthorization has been "the most studied MPR reauthorization we have seen, and it shows that we want facts to drive the decision making not emotions." The written testimony also stated, "NCBA's goal is to have Mandatory Price Reporting policy that is driven by verifiable facts and not formed by speculation of possible 'what ifs.'"
Chris Clayton can be reached at Chris.Clayton@dtn.com
Follow him on Twitter @ChrisClaytonDTN
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