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Articles from 2020 In September


Trump & Biden clash on ag policy

Official White House Photo by Shealah Craighead/Courtesy of Biden campaign 0907F1-3216A-1540x800 (2).jpg

More than 27 million viewers tuned into the first of three debates between Trump and Biden earlier this week.

The debate was more of a debacle riddled with mistruths, pandering, huffing and puffing and what many were calling an “embarrassment” to the American people.

Now, I could certainly deep-dive into the political points scored on both sides of the aisle. However, there was so much tit-for-tat, name-calling and speaking in circles without saying anything at all that it might take all day to decipher and unpack what was really said. And despite what the mainstream media is rolling with, I don’t think there was a runaway winner in the debate.

I could also comment on moderator Chris Wallace’s complete inability to keep the debate moving forward in a productive manner. From my vantage point, he failed to remain unbiased. He let the politicians run the room. And his questions were craftily written to evoke knee-jerk emotional responses instead of thoughtful discussions on actual policies that shape this country.

As a side note, I saw a suggestion that perhaps in the next debate a work-from-home mom who has been homeschooling all year during the pandemic would be able to handle the task of moderating the next standoff between Biden and Trump. I humbly offer my services as the next moderator. I promise when it comes to childish tantrums, this mama doesn’t take any bull.

All of that aside, as I put on my rancher’s hat, I know I wasn’t the only one wishing we could see a true debate on agricultural issues from these two leading candidates for the presidential seat.

Having covered previous elections during my tenure at BEEF, I’ve got to admit this cycle feels a little bit different. Every topic feels polarizing. Every tweet is overanalyzed. Every truth seems to be distorted to fit a narrative. And we’ve got to wade through a lot of manure to get to the facts.

What will another four years under Trump look like for farmers and ranchers? How will things shift if Biden should take the role? Rhetoric, emotions and knee-jerk reactions aside, we must evaluate the policies, actions and records of these men and vote accordingly.

Let’s take a look at Trump and Biden’s campaign websites for a glimpse at what these candidates have in mind for the future of land ownership, agriculture and food production.

First, let’s check out “The Biden Plan For Rural America.”

Biden promises to “fundamentally revitalize rural economies,” by strengthening the agricultural sector through these actions:

  • Pursuing a trade policy that works for American farmers.
  • Supporting beginning farmers.
  • Fostering the development of regional food systems.
  • Re-investing in land grant universities’ agricultural research so the public, not private companies, owns patents to agricultural advances.
  • Partnering with farmers to make American agriculture first in the world to achieve net-zero emissions, giving farmers new sources of income in the process.
  • Strengthening antitrust enforcement.
  • Expanding bio-based manufacturing to bring cutting edge manufacturing jobs to rural America.
  • Promote ethanol and the next generation of biofuels.
  • Invest in wind and solar energy.
  • Invest $20 billion in rural broadband infrastructure and triple funding to expand broadband access in rural areas.
  • Invest in green infrastructure nationwide.

For more on his ideas for new green infrastructure, check out “The Biden Plan For A Clean Energy Revolution And Environmental Justice.”

According to his campaign website, “Vice President Biden knows there is no greater challenge facing our country and our world. Today, he is outlining a bold plan – a Clean Energy Revolution – to address this grave threat and lead the world in addressing the climate emergency. Biden believes the Green New Deal is a crucial framework for meeting the climate challenges we face.

Next, let’s check out Trump’s record on agriculture from his first term in office. I’m going to share his most recent actions related to agriculture, but you can browse further back into his term by clicking here.

  • The Trump administration announced an additional $1 billion for the Farmers to Families Food Box program to help farmers, distributors, and American families from the impacts from the coronavirus. T
  • The Administration announced that the USDA is investing $46 million to improve critical community facilities to benefit 363,000 rural residents.The Trump administration distributed more than 5 million food boxes in an effort to support American farmers and families who have been affected by the coronavirus.
  • The USDA announced $1 billion in loan guarantees available to rural businesses to meet working capital needs during the coronavirus pandemic.
  • The USDA provided assistance to producers of agriculture commodities who suffered a 5% or greater price decline due to the coronavirus.
  • Sonny Perdue, the Secretary of Agriculture, announced collaboration with businesses in the private sector to deliver nearly 1,000,000 meals a week to kids affected by school closures in rural America.
  • The USDA announced an initiative to use research and innovation in order to increase farm productivity by 40%, in fulfillment of President Trump’s promise to stick up for farmers.
  • The Trump administration authorized a total of $28 billion in aid for farmers who have been subjected to unfair trade practices.
  • The Administration protected farmers from unfair trade practices by authorizing $12 billion in aid to the American agricultural heartland under the Commodity Credit Corporation Charter Act.
  • President Trump authorized the year-round sale of E15 gasoline which provided a boost to America’s corn growing communities.
  • The Administration provided $16 billion in funds to support our farmers against unfair trade retaliation.
  • President Trump signed a bill that creates five national monuments, expands several national parks, adds 1.3 million acres of wilderness, and permanently reauthorizes the Land and Water Conservation Fund.
  • President Trump issued changes to the National Environmental Policy Act to reduce regulation and allow for infrastructure and transportation projects moving forward.

To sort through these talking points and to read more on both Biden’s and Trump’s plans for American agriculture, check out:

The opinions of Amanda Radke are not necessarily those of beefmagazine.com or Farm Progress.

The British are coming! But this time, it’s their beef

Thierry Monasse/Getty Images US UK flags

The United Kingdom’s (UK) beef industry and government excitedly announced that the first shipment of UK beef to the U.S. in more than 20 years was headed across the pond on Sept. 30. Following the longstanding ban on importing UK beef to the U.S. in the wake of the BSE outbreak in 1996, market access for UK beef was granted in March 2020, according to a news release from the British government.

“This is an historic moment for British farming, and one which could bring an estimated £66 million opportunity for those who want to export beef to the U.S.,” according to International Trade Secretary Liz Truss.

Let’s unpack that. I asked the UK consulate in the U.S. for an estimate on what that means in metric tons. They are running that down and say they’ll let me know. In the meantime, 66 million British pounds translates to roughly $85.3 million U.S. dollars.

Related: Exports boost beef's bottom line

Keep in mind the £66 million/$85.3 million is estimated to be the five-year total value. That divides out to be around U.S. $17 million a year.

Wrapping some perspective around that, total U.S. beef exports for July were valued at $647.8 million on a quantity of 107,298 metric tons (mt), according to the U.S. Meat Export Federation (USMEF). That’s just for one month.

Digging a little deeper, USMEF reports beef exports to the entire European Union totaled $16.2 million for July on a quantity of 1,449 mt. Year to date through July, the value of U.S. beef exports to the European Union was $85.7 million on a quantity of 7,705 mt.

Related: Prime beef leads the pack

So the British are estimating that, over five years, they will send us $85.3 million worth of their beef. Five years. That compares with $85.7 million in exports from the U.S. to Europe through July. Seven months.

Bottom line: We don’t need an estimate on the quantity to deduce that the amount of beef we’ll get from the Brits won’t move the needle at all for the U.S. cattle and beef markets. It is simply too insignificant.

What is significant is further cementing the political ties between the two countries. The UK has long stood side by side with the U.S. and having a strong ally on the other side of the pond is a good thing.

Related: Are U.S. beef exports a victim or winner in international politics?

Ambassador Pierce points out that us Yanks already enjoy a range of UK products, including fine cheeses, whiskey, salmon and biscuits. “This could be the tip of the iceberg,” she says. “The free trade deal we are negotiating with the U.S. will create a host of export opportunities for British agriculture. We are seeking an ambitious and high standards agreement that benefits farmers and delivers for consumers.”

It's difficult to directly compare the export-import numbers above. While I’ve never sampled UK beef, my bias is that it’s a different product than grain-fed U.S. beef. So what we send them and what they send us will appeal to different palates, I suspect.

However, according to Ambassador Pierce, “For the first time in over two decades, Americans will have the opportunity to taste the UK’s world-class, delicious beef.”

Allow me to respectfully disagree. I’ll put our beef up against anybody’s, anywhere. If folks want the best beef in the world, we’ve got it.

Bring it on.

 

NCBA stockmanship events go virtual

National Cattlemen 's Beef Association Homepage for Stockmanship and Stewardship
NCBA's Stockmanship and Stewardship clinics have been converted to a single, online event this fall.

The National Cattlemen’s Beef Association is changing its Stockmanship and Stewardship program from a series of live events spread across the country to a single virtual event this fall.

On Nov. 11-12 virtual attendees can view a number of sessions that address current and future issues for the cattle industry. The organizers say both days will allow virtual attendees to still participate in valuable low-stress cattle handling demonstrations.

The first day of the event will include sessions that take an in-depth look at Beef Quality Assurance (BQA) topics. Veterinarian Jason Nickell of Merck Animal Health will present on Individual Management Technologies and Diagnostics. A business track will cover everything from risk management and cattle marketing to how consumers have shifted their buying habits during the COVID-19 pandemic and beyond. NCBA’s policy team will provide an election reaction, discussing what issues the U.S. cattle and beef industry will be tackling in Washington, D.C. The first day of the event will conclude with a keynote presentation from Frank Mitloehner, University of California-Davis on recent industry happenings on the topic of sustainability.

On Nov. 12 the virtual sessions will cover a variety of topics, from the value of training producers and their employees on cattle welfare to panel discussions on genetic value and current traceability efforts. The event will close with a keynote from the experts at CattleFax sharing information on the economic state of the industry, and what it might look like in the days ahead.

Attendees will have the ability to interact with all speakers and clinicians on both days to get their questions answered and discuss how to apply what they have learned to their own operations.

Registration for this virtual event opens on Oct. 1 and is free of charge. The event is supported by Merck Animal Health and the checkoff-funded Beef Quality Assurance program.

The first 200 registrants will receive a complimentary event packet and gift courtesy of Merck Animal Health. Additionally, all participants will be eligible for a discount coupon to attend an in-person Stockmanship and Stewardship Regional Event in 2021 to be held in Ontario, Oregon; Elko, Nevada; Durango, Colorado; Danville, Indiana; and Bowling Green, Kentucky. For more information and to register go to www.StockmanshipandStewardship.org.

Farm Progress America, September 30, 2020

Max Armstrong shares insight on the latest presidential election given his years in the industry. He looks at ways the incumbent administration can work to help key groups. For example, the farm payments released by the government are raising a concern among some groups. Max notes that direct farm aid has climbed each year of the Trump presidency.

Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Max Armstrong, veteran farm broadcaster and host of This Week in Agribusiness.

Photo: halduns/iStock/Getty Images Plus

Updating livestock equipment & facilities with safety in mind

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Earlier this week, I wrote a blog post urging everyone to be alert and be safe during the hustle and bustle of the fall harvest season.

In case you missed it, you can check it out here.

When we think of farm accidents, most of us probably think of accidents related to equipment — PTOs, rollovers, roadside crashes, etc.

However, the reality is that cattle ranchers are ranked second in rates of farm-related accidents and injuries, followed by dairy operations in third.

The average age of the American farmer and rancher today is pushing 60 years old, and while producers may not be getting any younger, the livestock remain unpredictable and dangerous.

I thought it might be prudent to review some basic livestock handling and safety precautions that we can take to ensure both the aging owners and their employees or family members stay safe on the farm.

This is particularly timely as some safety tips require equipment or facility updates and maintenance. For many producers, this is the time of year we are preparing to wean and work calves, pregnancy-check cows and winterize for the cold months ahead.

In anticipation of this to-do list, let’s review what we can do to remain safe on the farm and ranch.

The National Ag Safety Database (NASD) provides us with some critical tips on this topic.

According to a NASD article titled, “Animal handling safety considerations,” “Anyone who works with livestock knows each animal has its own personality. Animals sense their surroundings differently than humans. Their vision is in black and white, not in color. They also have difficulty judging distances. And differences exist between the vision of cattle, swine, and horses. For example, cattle have close to 360-degree panoramic vision. A quick movement behind a cow may ‘spook’ them.”

Follow these general rules for safely working with animals:

  • Most animals will respond to routine; be calm and deliberate.
  • Avoid quick movements or loud noises.
  • Be patient; never prod an animal when it has nowhere to go.
  • Respect livestock — don’t fear it.
  • Move slowly and deliberately around livestock; gently touch animals rather than shoving or bumping them.
  • Always have an escape route when working with an animal in close quarters.

When looking at facilities, NASD recommends that most livestock handling injuries are directly related to equipment or building structural issues.

According to NASD, “Poor facilities and equipment can also cause injuries to animals. This can mean a considerable economic loss at market time. Tripping hazards such as high door sills, cluttered alleyways, and uneven walking surfaces can cause serious injury and a considerable amount of lost work time. Studies have found that falls account for 18% of all animal-related accidents.”

When looking at your facilities, NASD recommends alleys and chutes that are wide enough for animals to move freely, but not wide enough to allow them to turn around. Fencing and gates should be strong enough to contain crowded livestock. High traffic areas, such as alleyways, should be grooved and flooring should allow water to drain easily. Lighting should be even and diffused, and handling equipment should be maintained to avoid breakdowns, which often result in injuries, increased costs and lost time.

Follow this safety list for livestock handling equipment:

  • Good housekeeping is essential, not only for your personal safety but also for the health and wellbeing of your stock.
  • Keep children away from animals, particularly in livestock handling areas.
  • Most male animals are dangerous. Use special facilities for these animals and practice extreme caution when handling them.
  • Be calm and deliberate when working with animals. Always leave yourself an “out” when working in close quarters.
  • Respect all animals. They may not purposely hurt you, but their size and bulk make them potentially dangerous.
  • Most animals tend to be aggressive when protecting their young; be extra careful around newborn animals.
  • Stay clear of animals that are frightened or “spooked.” Be extra careful around strange animals.
  • Monitor entry into your operation; sales and service personnel could bring diseases from other farms.
  • Keep facilities in good repair. Chutes, stalls, fences, and ramps should be maintained regularly.

You can read the entire article by clicking here.

What other safety considerations would you add to this list? Surely, if you’ve been in the cattle business long enough, you’ve experienced your fair share of close calls or dangerous accidents. Let’s continue to be mindful of the risks and handle our livestock with safety and care in mind.

 

Fed Cattle Recap | Cash prices slog higher

Fed Cattle Recap

The cash market for fed cattle continues to fight its way higher. The tension between supply and demand continues but many analysts predict cash prices to continue to improve as we work our way through the fourth quarter. However, a bearish Cattle on Feed report showing higher-than-expected placements in August has many wondering about what will happen in the first and second quarters of 2021. Time will tell.

The Five Area formula sales volume for the week ending Sept. 26 totaled 239,505 head, compared with about 250,000 the previous week. The Five Area total cash steer and heifer volume was 103,174 head, compared with about 89,000 head the previous week and the packers still have big numbers of 15- to 30-day delivery to use again.

Nationally reported forward contract cattle harvest was about 44,000 head for the week. The nationally reported 15- to 30-day delivery was 33,119 head along with 20,914 head the previous week. 

Now looking at prices, the Five Area weekly weighted average cash steer price for the week ending Sept. 26 was $105.05 per cwt, which was $1.51 higher compared with the previous week. Last year the same week it was $104.93, which was about $3 higher than the previous week. The current Five Area weighted average live formula price was $105.24 for the week.

The weighted average cash dressed steer price was $164.89 per cwt, which was $1.64 higher. The Five Area weighted average formula price was $164.88, which was 44 cents lower.

The estimated weekly total federally inspected cattle harvest was reported at 651,000 head, which compares with 650,000 head the same week last year. 

The latest average national steer carcass weight for the week ending Sept. 12 was 920 pounds, which was 2 pounds higher compared than the previous week. Carcass weights came in at 891 pounds the same week last year, which was 2 pounds lower compared with the previous week.  

The Choice-Select spread ended the week at $12.36 on Friday, Sept. 25, compared with $11.70 the previous week and a $22.72 spread last year. 

 

Farm Progress America, September 29, 2020

Max Armstrong talks about how farmers pull together to help when needed. Max gets insight from Zippy Duvall, president of the American Farm Bureau Federation, who notes that whenever something bad happens, he gets a lot of farmers contacting him asking how they can help when trouble hits. From farmers helping a producer with a medical issue get the crop in, to working with farmers after a disaster. People want to help.

Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Max Armstrong, veteran farm broadcaster and host of This Week in Agribusiness.

Photo: Willie Vogt

Beef demand is everything

Beef Checkoff Steak on the grill

Prosperity of all beef industry participants hinges critically upon consumer demand,” says Ted Schroeder, noted agricultural economist and director of the Center for Risk Management at Kansas State University (KSU).

“Every new dollar that enters the industry comes from the consumer. Without the consumer, we are out of business. It’s absolutely critical, as an industry, that we recognize that — and that we realize everyone in the industry plays an important role in demand formation,” Schroeder explains.

It’s too easy to think of beef as a singular commodity, rather than the sprawling array of specific products that comprise the market category. As such, it’s also often tempting to consider beef demand as one thing.

In fact, beef demand varies across the carcass at any given point in time for different primals, subprimals, specific cuts, ground beef and beef variety meats.

For our purposes here, though, let’s focus on aggregate beef demand, depicted by the simple demand curve that is familiar to many.

Demand vs. consumption

First, keep in mind that demand is different than consumption.

Beef consumption — expressed as pounds of beef consumed per capita — is a function of beef production.

Glynn Tonsor, another noted KSU agricultural economist, explains that domestic beef consumption simply reflects beef availability. It is the sum of domestic beef production and imported beef, minus beef exports — for specific periods of time — divided by the U.S. population, with some minor adjustments made for beef in cold storage.

“If you increase population and nothing else, per capita consumption declines,” Tonsor explains. “If you increase supply and nothing else, per capita consumption increases. It says nothing about demand in either case.”

How demand works

Demand, on the other hand, refers to the quantity of beef consumers will buy at various prices. That’s what the demand curve depicts.

All else being equal, as the supply of beef increases, the price consumers will pay declines. As supplies decrease, consumers will typically pay more. Likewise, the basic supply curve suggests that as prices increase, more supply will be made available, and less as prices decrease.

In the parlance of economists, consumer demand for beef is referred to as primary demand.

“When consumer demand increases, consumers are willing to pay more for the same amount supplied, or they will buy more at the prevailing price,” Schroeder explains. There’s more quantity supplied and more beef demanded at higher prices.

Ultimately, variations in aggregate consumer beef demand support or pressure prices producers receive for fed cattle and feeders.

In fact, according to research by Melissa McKendree, Extension economist at Michigan State University, across decades, a 1% increase in beef demand typically yields a 1.52% increase in fed cattle prices and a 2.48% increase in feeder cattle prices. The opposite is true, too.

For illustration, suppose the average negotiated cash fed cattle price at a particular point is $125 per cwt, when the all fresh beef demand index is 89. If the index dropped to 84 a year later — demand declined by 5.6% — then McKendree’s work suggests the cash fed cattle price would be 8.5% less, or $114.38.

“That’s how stark the impact of demand is at the producer level,” Schroeder says.

Why the coronavirus matters

Demand is why the length and depth of the domestic economic recession spawned by COVID-19 matters so much to producer pocketbooks.

On the one hand, previous work done by Tonsor and Schroeder indicates consumers are becoming less price-sensitive when it comes to meat.

In other words, they’re less likely than they used to be to trade away from beef for a competing protein based on fluctuating price differences. At the same time, though, they’re also more sensitive to total food expenditures.

“If beef demand is more sensitive to income and expenditures, that means it’s becoming more sensitive to macroeconomic conditions,” Tonsor explains.

Related but different

Besides primary consumer beef demand, Schroeder explains there is what’s termed derived demand. Actually, there are several different derived demands (Figure 1). For purposes here, we’ll concentrate on beef flowing through the retail channel, but the same applies to beef destined for food service or export.

Beef demand

Understanding shifts in derived beef demand at specific points in time is complex. For instance, even when consumers are willing to pay more for beef, the retailer buying wholesale beef may not be.

Likewise, the packer may not be willing to pay more for fed cattle. The primary reason in the latter two cases has to do with cost.

Snug up the cerebral cinch

Derived demand by grocers reflects the prices they are willing to pay for a given quantity of beef at the wholesale level. There’s a retail beef price and a wholesale beef price.

“The difference in those prices in a competitive market is the cost of getting wholesale beef to the retail meat case for the consumer,” Schroeder explains.

“Costs include transportation, energy to keep the store going, labor, restocking, everything it takes to get beef from the back of the packing plant to the retail counter for consumers.”

Suppose those costs increase. Derived demand by the grocer declines, which equates to a lower wholesale price for the same quantity of beef supplied.

“The primary consumer isn’t changing their demand; it’s the wholesale demand,” Schroeder explains.

“Likewise, if costs decline — if energy costs decline, for instance, or if new technology is adopted that increases shelf life — that would shift derived demand by the grocer upward.”

Schroder explains the difference between derived packer demand and derived grocer demand is the cost the packer incurs to convert cattle into wholesale beef.

“Suppose the packer has a major labor shortage, and their costs for labor go up significantly. Nothing happens to primary consumer demand or derived grocer demand, but derived packer demand shifts down and farm prices for fed cattle decline,” he says.

Reality check

Market reaction in the wake of packer labor challenges spawned by the pandemic serves as a sterling example of how all of this plays out in reality.

Almost overnight, beef packing capacity declined significantly, as plants were forced to close or operate at slower speeds due to added safety precautions.

Sharply increased packer costs shoved derived packer demand lower, meaning lower prices for fed cattle.

At the same time, the quantity of beef supplied declined, pushing wholesale and retail beef prices higher.

“We heard a lot of questions about how it was possible that farm prices could decline while wholesale prices increased, if the market was even halfway functioning,” Schroeder says.

“It’s a market phenomenon. The direction of price change and the magnitude of change is exactly what our demand models suggested. We’re surprised by the veracity of the event every day, but we’re not surprised by what the market responses have been.” 

Note: Schroeder and Tonsor shared these insights during the webinar series Intersection of the Cattle and Beef Industries, hosted by Extension services at North Dakota State University, Texas A&M University and West Virginia University’s Davis College of Agriculture. You can find the series at bit.ly/ndsuleiw.

USDA investigation shows cattle markets work

John Moore/Getty Images Cattle markets
It hasn’t been fun. In fact, it’s been downright stressful. The severe market gyrations following last year’s Tyson beef plant fire and then COVID-19 gave beef producers a serious head slap. Did packers and retailers take advantage of the situation? Not according to a USDA investigation. It found that the markets reacted as expected.

Beef and cattle prices reacted the way they should have in the wake of the Tyson plant fire in Kansas last summer, and following the massive supply and demand shock imposed by the pandemic.

That’s the bottom-line interpretation of the price investigation completed by the USDA Agricultural Marketing Service (AMS).

Sudden and historically wide price spreads between cash fed cattle prices and wholesale beef values after the fire prompted the investigation.

Then came COVID-19 and even wider price spreads, so USDA added that to the original investigation.

Up front, keep in mind that the USDA Boxed Beef and Fed Cattle Price Spread Investigation Report does not examine potential violations of the Packers and Stockyards Act.

“Findings thus far do not preclude the possibility that individual entities or groups of entities violated the Packers and Stockyards Act during the aftermath of the Tyson Holcomb fire and the COVID-19 pandemic,” according to the USDA report, released July 22

“The investigation into potential violations under the Packers and Stockyards Act is continuing.”

Instead, the report provides an overview of market conditions and prices before, during and after both “black swan” events.

Massive price gyrations

First, the price trajectory after the fire.

The weekly average Choice boxed beef cutout value (CBCV) the week of the fire (the fire occurred Aug. 9, 2019) was $216.04 per cwt. The first week after the fire, it increased 6.7% to $230.43.

Ultimately, the CBCV rose to $239.87 the second week after the fire, before beginning to decline to $212.58 the first week of October.

The weekly average fed cattle negotiated cash dressed price during the week leading up to the fire was $180 per cwt. The price declined 6% to $169.81 during the first week after the fire, but increased the second week after the fire to $172.20 (up 2%).

Ultimately, negotiated fed cattle prices declined to a low point of $159.06 per cwt the week ending Sept. 14.

So, the spread between the dressed cattle price and CBCV was $36.03 per cwt in the week leading up to the fire. The spread increased 68% to $60.62 the first week after the fire. It was $67.17 the second week after the fire.

At the time, that was the largest spread since the inception of mandatory price reporting in 2001. After the third postfire week, the spread narrowed to $41.77, a 38% decrease from its postfire high.

In his analysis of the USDA report, David Juday of the Juday Group notes the focus by many was on apparent gross margins for beef packers.

“This spread is a metric of just two factors: live cattle prices and wholesale beef prices. It does not reflect all costs incurred in harvesting and processing cattle into beef. The cattle-to-beef margin excludes other operating costs, such as labor costs,” Juday explains.

More importantly, he says, the cattle-to-beef margin ignores fixed costs.

“Fixed costs constitute the largest percentage of overhead for meat packers. Overall, per-head margins on processing cattle rise dramatically as slaughter throughput is decreased,” Juday says.

“Fixed costs must be spread out across the volume of cattle processed. Reducing the number of cattle processed by up to one-third, or idling a plant for several days, adds significantly to the per-head cost of slaughter and processing.”

Then came COVID-19

Postfire price reactions pale compared to those associated with the pandemic.

First, there was the demand shock as beef demand switched essentially overnight and almost entirely to retail, and away from food service, as consumers sheltered in place.

The CBCV increased about 23% from the middle of March ($207 per cwt) to the beginning of April ($255). During the same period, average dressed fed cattle prices increased from $173 per cwt to $189.

From mid-March to the beginning of April, the spread increased by approximately 94%, from about $34 per cwt to $66. The spread averaged just under $21 per cwt during 2016-18.

Then came disruptions to packing capacity, beginning in late March and peaking at the end of April, as workers were infected and plants slowed or closed altogether, significantly reducing both beef production and packer demand for fed cattle.

At the same time, there was another surge in retail demand by consumers fearful of shortages.

Weekly average CBCV increased about 80%, from about $255 per cwt at the beginning of April to about $459 by the second week of May. From the beginning of April to the start of May, dressed fed cattle prices declined 18% from $189 per cwt to $154.

From the beginning of April to the third week in May, the spread increased from approximately $66 per cwt to just over $279, ballooning 323%.

From the second week of May to the first week of June, Choice boxed beef cutout value decreased from $459 per cwt to $298. Dressed fed cattle prices increased from approximately $154 the last week of April to $179 the first week of June.

During the first week of June, the spread narrowed to about $119, down from $279 the first two weeks of May.

“This is a decrease of approximately 57%, but the spread is still high by historical standards,” AMS analysts say. “It is too early to determine if this trend will continue, as uncertainty persists over the recovery of the supply situation at beef plants and the recovery of food service demand amid continued COVID-19 concerns and any continued effects.”

Economic pain, but no surprises

“Record-high meat prices are not a surprise,” says Stephen Koontz, agricultural economist at Colorado State University, reflecting on COVID-19 impacts specifically, in his analysis titled “Economic Reasons for What Was Observed in Fed Cattle and Beef Markets During the Spring of 2020.”

“The grocery store supply chain was emptied during the closures of local economies and then had difficulty catching up,” Koontz explains.

“Further, prices associated with specific cuts that consumers typically prepare at home were the highest.

“Prices of cuts sold at restaurants initially dropped to record lows and then rallied as consumers made substitutions and began purchasing cuts they did not buy typically. However, all rallied as total beef supplies diminished with closures and partial operations.”

Likewise, Koontz says the precipitous decline in cattle prices was not surprising.

“If packers cannot run, or cannot run at typical throughput levels — especially if animal supplies are abundant — then the marginal value of that last group of animals that is not sold is close to zero. And the last pen or truckload or group of animals is a perfect substitute for the first,” Koontz says.

“It is the marginal value of the last product that sets the market. This point is critical. In fact, that is what is communicated by economists when supply and demand curves are drawn. The equilibrium quantity and price are what is traded at the lowest marginal value to buyers and the highest marginal value to sellers.”

That gets at another point emphasized in the USDA report.

AMS analysts point out the detailed summary of market conditions and price reactions are a single component of the broader industry discussion surrounding beef packing concentration and price discovery.

“At the core of many of these discussions is the desire by many market participants for improved price discovery, reinvigorated competition and a more transparent relationship between the prices for live cattle and the resulting products,” according to the report.

Make this one dietary change to support planetary health

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I was alerted to the fact that Sept. 29 is International Day of Awareness of Food Loss and Waste.

According to the Food and Agriculture Organization of the United Nations, “This year we celebrate the first ever observance of the International Day of Awareness of Food Loss and Waste. It also comes during the global COVID-19 pandemic, that has brought about a global wake-up on the need to transform and rebalance the way our food is produced and consumed.

“Reducing food losses and waste is essential in a world where the number of people affected by hunger has been slowly on the rise since 2014, and tons and tons of edible food are lost and/or wasted every day. Food loss and waste also puts unnecessary pressure on the natural resource base and on the environment, depleting the natural resource base and generating greenhouse gases.

“Globally, around 14% of food produced is lost between harvest and retail. Significant quantities are also wasted in retail and at the consumption level. When food is loss or wasted, all the resources that were used to produce this food — including water, land, energy, labor and capital – go to waste.”

In the mainstream media, we often hear arguments that going meatless on Mondays can help the climate.

This popular rhetoric is riddled with lies and misconceptions, and I appreciate the work done by folks like Frank Mitloehner, UC Davis air quality specialist, to dispel this misinformation.

Having heard Mitloehner speak on several occasions, what always sticks with me from his presentations is when he says that if Meatless Mondays were adopted by all Americans, we would see a reduction of greenhouse gas emissions of just 0.5%. And if every American went meatless, we would only reduce our emissions by 2.6%.

READ: 4 facts on cattle & climate change that can’t be ignored

So when we head to the grocery store and want to make environmentally-positive choices with the foods that we select, what can we do to be more mindful of this issue?

First, let’s reflect on our own use of food in our personal lives. How often has a head of lettuce turned brown and wilted in the back of your refrigerator? What do you do with the moldy raspberries that have sat in their container too long? Do you get tired of leftovers? Ask yourself — how much of your food ends up in the trash can?

Now what about beef? When I think about the fact that we use every animal from nose to tail to not just create burger and steaks, but life-enriching by-products, too, I am just amazed with how much value can be derived from a single beef animal.

On top of that, we typically consume the beef we thaw and prepare. Yes, there may be leftovers, but what ends up in the trash might be a spare T-bone or a soup bone after we have made bone broth for soups. There really isn’t much to waste when eating a meat-centered diet. It’s too good not to eat, and it’s good for us, too.

Of course, I’m showing my bias here, but hey, this is BEEF Magazine after all, and we love beef around here!

But let’s get back to food waste. Whether you eat a plant-based or meat-based diet, I think we can all be more conscious of how much we consume and how much goes to waste. In the United States today, more than one-third of our food ends up in landfills.

So the best thing we can do is simple: Respect the harvest.

We must respect the harvest by consuming what we purchase and voting for policies that help place the abundance of foods in this country in the hands of the food insecure in this country. The sad reality is that smack dab in the center of all this waste, one in four American children goes to bed hungry at night.

And that’s why I applaud the Trump Administration’s Farms to Families Food Box Program. You can read more about it by clicking here.

As we reflect on this topic on International Day of Awareness of Food Loss and Waste, I’ll leave you with this information from Beef It’s What’s for Dinner — “Cattle do their own part to reduce food waste. For every 100 lbs. of crops raised for human consumption, 37 lbs. of leftovers are produced, which are eaten by cattle and up-cycled into high-quality protein.”

Check out the article titled, “Sustainability and your bottom line: How beef plays a role,” and learn how retailers and restaurant owners are getting creative in using every ounce of beef product to create delicious meals for their customers to enjoy.

Without question, beef cattle play a critical role in upcycling feedstuffs that would otherwise end up in landfills. Let’s celebrate this fact and spread it far and wide, and perhaps we can curtail the wildly inaccurate information about Meatless Mondays that seems to dominate conversations surrounding planetary health.

The opinions of Amanda Radke are not necessarily those of beefmagazine.com or Farm Progress.