By Doug Schmitz
CENTENNIAL, Colo. – The National Cattlemen’s Beef Association (NCBA), in a June 1 letter, urged U.S. Senate and House agriculture committee leaders to address critical areas of concern in the cattle and beef industry, such as expanding beef processing capacity, and broadening labor policies to strengthen the beef processing workforce.
“As you are aware, cattle producers are facing significant challenges,” said Jerry Bohn, the association’s president. “Soaring input costs, devastating weather patterns, and beef processing woes have resulted in enormous barriers to producer profitability. Further, supply chain disruptions caused by COVID-19 have exacerbated these existing problems, and severely impacted America’s cattlemen and women.”
As much of the country lifts pandemic restrictions, he said consumer demand for U.S. beef remains strong, with producers also having a high supply of cattle to meet demand.
Despite this, however, U.S. producers in the cow-calf and feeder sectors of the industry are facing significant challenges, Bohn said.
“The profits yielded by high boxed beef prices are not being passed on to the producers supplying live cattle, and the supply chain is being choked by a lack of processing capacity,” he said. “Cattle producers are frustrated, and with good reason.
“In sale barns and state meetings across the country, we’re hearing the same story of sky-high input costs and intense market volatility,” he added. “Across the industry, there’s a consensus that market dynamics, which consistently squash producer profitability, are not sustainable for live cattle or beef producers.”
Signed by 37 state cattle organization affiliates supporting the association, the letter was specifically addressed to committee leaders U.S. Sen. Debbie Stabenow (D-Mich.); Sen. John Boozman (R-Ark.); Rep. David Scott (D-Ga.); and Rep. Glenn Thompson (R-Pa.)
In the letter, the association also urged committee leaders to increase transparency in cattle markets by reauthorizing Livestock Mandatory Reporting; support industry efforts to reform ‘Product of the USA’ generic labeling; and ensure proper oversight of cattle market players by concluding the ongoing U.S. Department of Justice investigation into the meatpacking sector.
“As members of Congress create policy that directly impacts business conditions for our producers, it is critical that they consider the grassroots input and firsthand experiences of folks on the ground,” Bohn said.
The letter is the latest move in the association’s longstanding efforts to secure greater processing capacity, increase transparency, fight the future viability of family farms and ranches, and increase opportunities for producer profitability.
Bohn said market transparency is an area of high concern for cattle producers. “The marketing of cattle at all stages of the animal’s life cycle is highly complex,” he said.
In an effort to aid U.S. producers in marketing their livestock, and to provide consistent real-time information, Congress enacted the Livestock Mandatory Reporting Act in 1999. Under the program, major meatpackers are required to regularly report market information to the USDA’s Agricultural Marketing Service.
“The USDA then uses this information to report cattle prices, trade volumes and other market information to the public,” Bohn said. “Livestock Mandatory Reporting must be reauthorized by Congress every five years. The most recent reauthorization occurred in 2015, though a temporary extension was granted via the Consolidated Appropriations Act of 2021. The current authority expires on Sept. 30, 2021.”
Bohn and the state cattle organization affiliates are urging Congress not to allow the Livestock Mandatory Reporting program to lose its congressional authority.
“The result would be a catastrophic and instant loss of market transparency, price discovery, and information designed to improve cattle producers’ negotiating leverage,” he said. “Timely reauthorization of Livestock Mandatory Reporting is imperative.”
Bohn said another major challenge currently facing U.S. cattle producers is a lack of sufficient beef processing capacity, sometimes referred to as ‘shackle space.’
“Cattle and beef are closely related, yet entirely different, commodities with independent factors of supply and demand,” he said. “Currently, cattle inventories are cyclically high and U.S. beef demand, at home and abroad, is at near-record highs.”
Unfortunately, Bohn said, while meatpackers realize massive profit margins, U.S. cattle producers are not seeing those earnings passed on to them. He said fed cattle prices have yet to meet or surpass pre-COVID-19 levels, adding that the cause of the imbalance can largely be attributed to this insufficient beef processing capacity, nationwide.
“As the domestic cattle herd enters another year of cyclical contraction, worsened by the drought, more processing capacity will strengthen producers’ leverage position, increase the value of live cattle and result in firmer prices,” he said.
Moreover, he said, “The association believes the government-issued generically approved ‘Product of USA’ label found on many beef items – which can currently be applied to any beef product that has passed through a USDA-inspected facility – does not adequately inform consumers, deliver additional value for our producers, or provide true product differentiation in the marketplace.
“That is why the NCBA is advocating for the expanded use of voluntary origin and value-added marketing opportunities that deliver value back to the producer segment, and curtail non-verified blanket origin claims that fail to adequately inform consumers,” he said. “The NCBA is working with the USDA, and the entire value chain to ensure that accurate and voluntary origin labels are in place to benefit cattle producers and consumers.”
Bohn said the association and the state cattle organization affiliates are also calling on committee leaders to ensure proper oversight of cattle market participants.
“Of course, cattle producers can only be successful in a market where all participants play by the rules,” he said. “That is why the NCBA was the first to request a federal investigation to examine the conduct of the largest U.S. meatpackers in the aftermath of two significant market-disrupting events: the fire at Tyson’s Finney County plant, and COVID-19.
“In June of 2020, the U.S. Department of Justice’s Antitrust Division launched a probe to determine if any anti-competitive or illicit activity occurred following these black swan events,” he added. “It is our understanding that this investigation remains ongoing, and no details or progress reports have been provided to us in the meantime.”
He said, “Cattle producers have been bombarded with adverse market conditions for many years, and they deserve to know whether packer activity worsened those hardships. We urge Congress to continue its vigilance and oversight in this important undertaking.”
George Quackenbush, Michigan Cattlemen’s Association (MCA) executive director, said, “This is timely as expanding processing capacity, labor and ensuring cattle producers receive a fair price for their high-quality product is at the forefront of cattle producers’ minds – including the over 12,000 Michigan producers. It’s critically important for lawmakers in D.C. to understand the importance of these issues, and to know where our producers stand.
“We, at MCA, look forward to working with the NCBA and members of Congress to find solutions that ensure a viable business climate for cattle producers in Michigan, and across the country.”