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My Motives & Conscience Are Clean

I’m sure most of you haven’t even seen the attack on me by R-CALF last week. However, given the number of emails I received, I know a number of you have.

November 12, 2010

7 Min Read
My Motives & Conscience Are Clean

I’m sure most of you haven’t even seen the attack on me by R-CALF last week. However, given the number of emails I received, I know a number of you have. Some sort of response is probably necessary; certainly, it was the most visceral, vindictive and venomous attack I’ve ever been the target of.

It was so over the top and so blatantly misguided that my initial response was not to respond. I know I’ve been guilty in the past of giving insignificant viewpoints credence by merely talking about them. Yet, in politics they also preach that when someone starts asking how often you beat your wife, it’s not good to just ignore the issue; doing so can give it credence.

Let there be no doubt that I adamantly oppose the views and agenda of those launching these attacks. I won’t go into detail about why I have no respect for the integrity, honesty and authenticity of those who have attacked me, but that doesn’t mean they don’t represent people who are not well-intentioned, intelligent and bear the best interest of the industry at heart. So my response will be directed toward the latter group.

Let me begin by stating that I believe reasonable people can disagree, and there are shades of grey in a black-and-white world. I also understand that we share some similar concerns.

For starters, everyone is concerned by our industry’s continuing shrinkage. And, certainly, some of that attrition in producer numbers is a result of increased production unit sizes driven by efficiencies and economies of scale in a commodity system. Whether it’s manufacturing or agriculture, it takes far less people to generate the same output as it used to; so, in the absence of demand growth, that means fewer workers or producers are needed.

Everyone also understands that improvements in cow efficiency have allowed us to produce the same amount of beef tonnage with significantly fewer cows. Those things can’t be changed; only increased demand will fix these problems.

There are also legitimate concerns about price transparency, price discovery and accurately reflecting value differences. As an industry, we must strive to correct them so we can more efficiently compete in our efforts to meet, even exceed, customer demands.

There are those who believe that returning to a commodity marketing system is the solution; thus, they believe that the proposed GIPSA rules are a positive step. Now, we are getting to where we disagree – the solutions.

They believe that we can’t compete and that government intervention is needed to protect the industry from competitive pressures. I believe that competition, profits and a growing/prosperous industry can coexist – actually must coexist with each other. They believe that the government should determine winners and losers; I believe in the power of free-market competition.

They see the GIPSA rules as a way to return the market to a time and place where they feel they were competitive. I see the proposed GIPSA rules as perhaps slowing down the rate of change in our industry in the short term, and hampering our ability in the long run to be flexible in responding to market demands.

I oppose increasing government mandates and influence in the marketplace; they support it. They believe GIPSA will help small producers; I’m convinced it will actually accelerate consolidation, concentration and declining demand.

These differences aren’t necessarily insurmountable; we aren’t ever going to agree 100%, as part of these differences is based on philosophical differences.

I’m inclined to believe that most problems are created through the marketplace not working efficiently enough; they believe the problems are created by the market working too efficiently and must be stopped.

The data is not disputed. Let’s take a look at whether the marketplace has accurately reflected supply and demand relationships over time. This isn’t difficult to do – we know the prices received, supply and demand figures, and the like. Have these dynamics changed? If they have, then we need to address them. If they haven’t significantly changed, and segmental profitability is relatively constant within the cyclical nature of our business, then we know that is not our marketing structure but rather beef demand that’s caused the problem.

When looking at the data, there’s no disputing the relative impact of demand on prices, vs. marketing structure on prices. As a result, it’s equally obvious which avenue has the opportunity of changing this industry for the better and where our efforts are best spent. It’s equally obvious when one asks the question about which view is more likely to result in the industry responding to consumer demand, improving quality, consistency and uniformity, and creating value and product differentiation. It’s simply impossible to look at the data and conclude anything else.

Once that is done, we can begin to pragmatically address the faults of our marketing system. We can begin to determine how we can continue to change it to ensure equitable access to compete and to better reward product that fits consumer demands, while discounting product that ultimately leads to declining demand.

Our industry has significant issues; both sides are guilty of not being willing to address them. Those who are failing under the current rules want to legislate their viability without addressing the real issues that made them uncompetitive. The side that is succeeding is content to continue along the same path, ignoring the fact that eventually they, too, will be under pressure unless declining demand is reversed.

Finally, I’d like to address these attempts to demonize anyone who holds an opposing view – like the never-ending charge that I somehow support the evil packers over producers and either knowingly or unwittingly am working toward the detriment of producers. Such claims are not only unethical and blatantly false but, more importantly, counterproductive.

Similarly, I recognize that I and others who hold my views are guilty of largely viewing the opposition as naïve, and espousing views that are emotion-based and populist-contrived without substance and understanding.

I’ve come to understand that both sides are in some ways defending the status quo; one side wants to return to the industry of 30 years ago because they were successful back then, the other wants to maintain the status quo because they’re successful now.

Admittedly, a return to the past is only possible with significant and intrusive government intervention that must replace market and economic drivers with government mandates. And equally, today’s marketplace has not facilitated enough change to truly build demand and grow our industry. Perhaps if we all agree that the industry still needs to be more consumer-focused, more open, and more focused on building the top line and value, we can move beyond the currently proposed solutions that will actually exacerbate the problem and work toward growing our industry.

As far as the ferocious attacks on my integrity go, I stand by my position; my motives and conscience are clean. I have no allegiance to the “evil, monopolistic and abusive” packing industry; my goal is to have an industry that provides opportunities for my children and future generations, and allows me to provide for them now – nothing more and nothing less.

At the same time, I do not see packers, feeders, or even retailers as the enemy. I’m actually amazed at how much they do to help us turn our product into something consumers want and can purchase. Yes, I understand they will always try to pay as little for our product as they can, and that we don’t necessarily share the same goals. Still, I know we have a vested interest in creating a stronger industry – neither of us can exist without the other.

I’m truly thankful for what they do; if it makes me anti-producer to believe that working with the other sectors to make a better product and to build win/win relationships, then I guess you can slap the label on me and I will wear it proudly.

In my business, the customer may not always be right, but without them and without them being successful, I’m doomed. I want my customer’s cattle to make money for them, and I want those cattle to make money for the feeder, packer, wholesaler and retailer. And, I want that product to wow the ultimate consumer as well. I don’t see my goal as capturing more of the value, but rather creating more overall value to share throughout the system.

I may be wrong, but however flawed my conclusions and results may be, those whose question my integrity and or sincerity can only be described in one way – flat-out wrong. If you want to debate the message and not the messenger, my response is any time, and any place.
-- Troy Marshall

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