There were two things everyone who attended the USDA/Department of Justice Livestock Workshop last Friday in Fort Collins could agree on – if the government really wants to help farmers and ranchers, it should eliminate the estate tax and allow state-inspected packing plants to sell meat across state lines. Beyond that, it was pretty much a free-for-all as far as the marketplace for ideas and opinions was concerned.
During the marathon session, three different producer panels offered opinions on a wide range of issues affecting livestock marketing and rural America. In addition, several hours of public testimony helped enliven the event. The first producer panel, which looked at the issues facing competition in the marketplace, set the stage for what turned into a long and emotional day. Here are a few thoughts from those first panelists:
According to Robbie LeValley, a cow-calf producer from Hotchkiss, CO, and co-owner, along with five other ranching families, of a direct-to-consumer meat business called Homestead Meats, the issues confronting the beef industry today aren’t new. LeValley, who is also president of the Colorado Cattlemen’s Association, related some information she found while reading the minutes of a local affiliate from 1946. “They were concerned about the average age of the producer. They were concerned about producers getting off-farm income.”
While those concerns are still valid today, LeValley touched on issues of a more immediate nature – the proposed GIPSA rule currently being debated by the industry. She’s concerned with the vagueness of the rule regarding packer-to-packer sales. Because Homestead Meats owns a USDA-inspected packing plant, it is considered a packer. But the six ranching families only sell a third of their calf crop through Homestead, retaining ownership in the other two thirds and selling them as fed cattle from a commercial feedyard.
“We were innovative, took market risk, and now we’ll have some of our alternatives limited. That’s a restriction on trade and that is my concern with the vagueness in the proposed rule change,” she says.
Taylor Haynes, a urologist and grass-fed, organic cow-calf producer from Cheyenne, WY, told the crowd that concentration has reached the organic niche market as well. “We both direct sell and deal with the major wholesale purveyors. And we’ve seen a tremendous contraction when Whole Foods was allowed to buy Wild Oats. And this contraction has given them such power that they will walk on a contract up to the day you deliver cattle.”
Haynes says decentralizing the cattle industry will be advantageous. “We broke up Ma Bell and that took a lot of regulation. If we facilitate competition with the small meat packers and small family feedlots with market access, then I think we break them (major packers) up with competition.”
Alan Sents agrees. Sents, who owns a 10,000-head feedyard in central Kansas, said because he’s located farther away from major packers than other feedyards, he’s often last to know when the fed-cattle trade develops every week. “So already we know we’re behind the rest of the pack in that regard.”
Sents, a strong proponent of selling cattle on a cash basis, said the fed-cattle market has been in an uptrend recently and there’s good interest and participation from packers. “But there will be times, especially when there’s a little pressure on the market, when the numbers swell some, that we get most concerned about having access to the market. So that’s our biggest concern on a weekly basis – will we have access to space the next week to move our cattle?”
Hog producer Chris Petersen from Clear Lake, IA, says the same thing is at play in the hog market, with independent hog producers having to fight for shackle space. He believes banning packers from owning livestock would help solve that problem. He remembers back in the ’70s and ’80s when buyers called on days they needed hogs.
“I remember I was planting corn and by gosh, I don’t really want to sell hogs today. But the packers start calling and (I’m) playing them against each other. And, low and behold, there comes a time when you shut down the planter, make an extra $5 or $10, and load up the hogs,” he says.
Now, however, technology has changed the way hogs are sold, says Alden Zuhlke of Brunswick, NE. While the spot market for hogs has become very thin, he still deals with three different packers to sell his animals. “I use the internet every morning and start looking at the markets. Obviously we trade those markets constantly. When I get up at 5 a.m., I’m starting to gather information already. So it’s constant. I probably spend 2-3 hours a day analyzing the grain market, the flow of hogs and where the demand is.”
According to Harry Livermont, a cow-calf producer from the Pine Ridge reservation in South Dakota, the market for feeder cattle is very robust. However, he’s concerned about sufficient buyers for cull cows.
“There’s not a question in my mind that there’s something going on,” he says. “But I don’t understand the structure good enough to know. I’m pretty busy ranching.”
However, he did opine on the present state of the cow market. “We’ve got several reasons why the cow market should be depressed right now. We’ve got cows coming in from Canada; we’ve got dairy cows being killed. Usually, this time of year, our cow market is mid $40s to mid $50s. Now, there have been cows selling for $70 the last month and they’re still pretty much over $60. Why? I think it’s because somebody out there buying these cows knows we’re having these meetings.”
Haynes says the same thing was at play in the feeder market this spring. “We saw this spring, for no apparent reason except one, a jump in calf and yearling prices.” He says the reason was that USDA and DOJ announced the hearing. “There was nothing in supply, nothing in demand, that generated that price increase. This hearing was the only change and I’m sure that’s why prices went up.”
Editor’s note: For short videos (1-2 minutes) of attendee comments on the GIPSA issue, go to beefmagazine.com/beeftv/attendee-comments-doj.
-- Burt Rutherford