U.S. cattle market report published for Congress, USDA
“It is abundantly apparent the U.S. cattle and beef industry represents one the most complex set of markets in existence today."
October 6, 2021
An extensive report on the U.S. cattle market, including information on supply chain disruptions, has been completed by the Agricultural and Food Policy Center, AFPC.
The 180-plus page book, titled “The U.S. Beef Supply Chain: Issues and Challenges” is the result of proceedings from an AFPC-hosted workshop on cattle markets held in June in Kansas City, Missouri.
The book puts into context a variety of disruptions in the cattle market, including the 2019 fire that took the nation’s second-largest beef packing plant offline for four months, the COVID-19 pandemic’s effect on packing plants, and significant disruption of beef supply chains.
“This is the product of a collaboration between the AFPC and the Office of the Chief Economist at the USDA,” said Bart Fischer, co-director of AFPC and one of the book’s editors. “The work originated from a request by the bipartisan leadership of the Committee on Agriculture in the U.S. House of Representatives during the 116th Congress.”
When preparing this book, the AFPC commissioned papers from noted experts around the country on a variety of topics. Fischer noted that while the book is “admittedly very technical and assumes a working knowledge of the industry,” a definition of technical terms has been provided wherever possible.
About the book
In addressing the overall situation of the U.S. cattle market, the book is presented in 10 chapters to focus on some of its key aspects. The chapters are as follows:
— How We Got Here: A Historical Perspective on Cattle and Beef Markets.
— Price Determination and Price Discovery in the Fed Cattle Market.
— How Market Institutions, Risks and Agent Incentives Affect Price Discovery.
— Enhancing Supply Chain Coordination through Marketing Agreements.
— Another Look at Alternative Marketing Arrangement Use by the Cattle and Beef Industry.
— Market Reporting and Transparency.
— What Can the Cattle Industry Learn from Other Agricultural Markets That Have Limited Negotiated Trade?
— Implications of Fed Cattle Pricing Changes on the Cow-Calf Sector.
— Examining Negotiated Cash Trade Targets.
— Workshop Discussion Summary.
“Although this book is focused primarily on fed cattle pricing, Congress also asked us to weigh in on packing capacity issues,” Fischer said. “In many ways, packing capacity and fed cattle pricing are inextricably linked. As a result, capacity is addressed in a number of places throughout the book.”
The book also notes while economists offer explanations typically tied to supply and demand relationships, others view such events as evidence the system is broken, particularly as it relates to fed cattle pricing, said Joe Outlaw, AFPC co-director and an editor for the book.
Outlaw said systemic issues have led to renewed concerns about packer concentration and lack of transparency in fed cattle pricing and insufficient packing capacity.
“This has also brought about an abundance of legislative proposals from policymakers attempting to address constituent concerns,” he said.
Findings
“In our discussions among cattle industry stakeholders, the viewpoints on solutions to current concerns about cattle markets were highly diverse,” said David Anderson, Texas A&M AgriLife Extension Service agricultural economist, Bryan-College Station, who contributed to and was an editor for the book.
He noted, however, there was general agreement that price discovery is important to the functioning of cattle markets, including fed cattle markets.