Whether or not packer ownership of cattle affects the prices paid for finished cattle may well be debatable. However, history tells us that at one time packer ownership played a part in setting prices paid to producers and feeders.
In 1959 when I went to Chicago to work for a daily market newspaper, fed-cattle prices and futures prices were heavily influenced by the prices paid at the Chicago stockyards. Monday was the big market day when it wasn't uncommon for 30,000 mostly Choice and Prime steers to be sold. Tuesday runs were much smaller, and on Wednesday the numbers sold were about half what the Monday run was.
On Thursday and Friday, buyers for the big packers moved into the country to purchase cattle direct from Midwest cattle feeders, based primarily upon the Wednesday market. With these cattle on hand, they weren't forced to be aggressive buyers on Monday. They could operate for a while with the cattle they had bought in the country. This was routine at all the large terminal stockyards in Omaha, Kansas City, Sioux City, etc.
This system, along with all the stockyards, is gone. Maybe packer-owned cattle don't serve the same function in today's market, but it's hard to believe it doesn't have some influence. Anything that reduces or eliminates competition, or shifts the balance toward the most powerful, is bad for most all beef cattle producers, particularly smaller ones.
In 1968, I attended my first National Cattlemen's Association meeting in Hawaii. After the meeting, I toured a number of cow-calf operations in Hawaii with our American Angus Association regional manager as a guide. There were some outstanding operations there, all the way from people who owned a few head of cows up to a few very large operations.
What they all had in common was a lack of competitive markets. Small operators sold their calves for a fraction of what they were worth in California.
We concluded that producers on the Mainland didn't know how lucky they were when it came to marketing. The writing was on the wall then, even though I didn't see it.
In 1968, the poultry market was fast moving to vertical integration. There were few places for small operators to sell either broilers or eggs, let alone cull hens. Today, there is no open market for poultry.
In 1968, however, there were open markets everywhere for hogs and beef cattle. Even a relatively small producer could sell directly to packers at local buying stations or take them to the stockyards. Today, that's almost a thing of the past. Hog farmers mostly operate at the pleasure of the big packers and contractors.
Whether beef will go the way of hogs and poultry is still an open question, but it has already advanced more than many people ever thought it would.
Farmers can still find markets for their home-raised feeder calves, and even fed cattle. But market options are declining. Based upon what's happening, one can envision the day when small cattle producers will have no more options than did the small producers in Hawaii.
There are those, of course, who think this would be a good thing. They contend the industry doesn't need small independent operators choking up the cattle breeding and marketing systems.
If this is true, then the simple solution is to let unchecked, free-market forces reign, and put our faith in the wisdom of the huge food conglomerates to do what is best for rural America and the beef cattle industry.
To me, that's an extremely unsettling solution.
St. Joseph, MO
Calving Season Textbook
The Pitt Cattlemen's Association will hold a meeting in March to discuss calving seasons and how to transition between them. After reading the Spring Cow-Calf Issue of BEEF (“Seasonal Calving Options: A look at how calving time can affect profit and resource potential”), we think the issue would be a good textbook for the occasion. Would you provide us with 30 copies of that issue to use as a program for that meeting, and for participants to take home with them for further consideration?
Pitt Cattlemen's Association
Editor's Note: You bet, Jerry. By the way, you might also want to check out www.beefcowcalf.com for more information. Just type “calving seasons” into the “Search Titles” box on the opening page.
This Web site, established in January by BEEF magazine offers links to more than 2,000 fact sheets and research reports on cow-calf management topics produced by the top U.S. and Canadian animal science programs. In addition, you'll also find all sorts of other reference links on the site: links to all the top U.S. animal science programs, cattlemen's and horsemen's associations, etc.
Send reader letters, with name and address, to BEEF, 7900 International Dr., Suite 300, Minneapolis, MN 55425; or e-mail to firstname.lastname@example.org. BEEF reserves the right to edit for length.