More farmers declare bankruptcy despite record levels of federal aid
- The U.S. is seeing more farmers file for bankruptcy even though federal payments are projected to reach record levels this year to counteract the slump in the agricultural economy caused by the coronavirus pandemic.
- Approximately 580 farmers filed for chapter 12-bankruptcy protection in the 12-month period ending June 30th, according to federal data.
- This number is 8% more than year-ago levels.
- The Trump administration is expected to pay out a record $33 billion in payments to farmers this year, according to the University of Missouri’s Food and Agricultural Policy Research Institute.
- These government payments will make up 36% of farm income this year, the highest share in almost two decades.
- Paul Swanson, an Oshkosh, WS based attorney has 40 open farm-bankruptcy cases, about a third more than last year. He has clients that received federal coronavirus aid but still wound up in bankruptcy.
- He feels that agricultural markets were poor before the pandemic, and the pandemic just intensified the situation.
- According to the National Pork Producers Council, hog farmers have lost nearly $5 billion in actual and potential profits for 2020.
- S. farm debt has grown steadily since 2006 when a commodity boom encouraged farmers to borrow heavily. According to the USDA, farm debt is up to $425 billion this year. The largest sum since the farm crisis of the 1980s.
- Agricultural economists say more farms could end up in bankruptcy next year without additional aid. If more aid isn’t extended, farm income is slated to fall 12% in 2021.
Conversion of Greeley lamb plant paused for 30 days
- According to Cameron Bruett, Head of Corporate Affairs for JBS and Pilgrim’s Pride, JBS officially acquired the Mountain States Rosen lamb processing plant last week.
- Due to interest in the transaction, JBS has agreed to not make any material changes to the facility for 30 days as a sign of good faith. During that time the DOJ will have the chance to look into any concerns that have been raised. JBS welcomes their review.
- Bruett also added that last week JBS offered to lease back the facility to the former owners for 90 days to ensure stability for local producers. The company was informed that such actions weren’t necessary, as a new lamb processing facility will be opening in the region this fall.
Boxed beef prices
- Choice boxed beef: $204.66 (+1.09)
- Select boxed beef: $192.01 (+1.19)
Profit tracker: triple digit feeding losses continue
- According to the Sterling Beef Profit Tracker, cattle feeding losses were estimated at $157/hd. the week ending July 31st.
- Negotiated cash trade for the week averaged $99.33/cwt., about $1 higher than the previous week.
- Packer margins were estimated at $286/hd. This was about $9 less than the previous week.
- Choice beef cutout price averaged $200/cwt., about even with the previous week.
- A year ago, cattle feeders were turning a profit of $61/hd. on closeouts the last week of July. That same week, packers were seeing a profit of $153/hd.
Bulgaria to cull almost 200 rare pigs in African swine fever outbreak
- On Wednesday, Bulgarian veterinary authorities reported that they plan to cull almost 200 pigs from a rare local breed after detecting an outbreak of African swine fever.
- The outbreak was detected after 15 of the 212 pigs died on the small farm located in the eastern side of Bulgaria.
- Bulgaria has been forced to cull more than 170,000 pigs since 2019.
DOJ intervenes in JBS acquisition of MSR lamb plant
- JBS closed on its acquisition of the Mountain States-Rosen (MSR) lamb processing plant in Greeley, CO on July 31st. The company acquired the processing plant after submitting the winning bid during a bankruptcy auction.
- JBS had plans to shut down all lamb processing at the plant and instead process beef. This change has the potential to impact sheep growers in at least 15 western states.
- “Inside sources” have confirmed that the DOJ has issued a 30-day standstill order halting JBS from making any changes to the plant.
- Frank Moore, Wyoming sheep rancher and MSR Vice Chairman said the sheep industry will be devastated if JBS does go through with this acquisition and discontinues lamb processing in Greeley. Without MSR, the sheep industry will not have enough processing or fabrication capacity.
Boxed beef prices
Choice boxed beef: $203.66 (-0.58)
Select boxed beef: $191.01 (+0.56)
USDA responds to petition calling for checkoff vote
- A group of ranchers, cattlemen’s organizations, and 25 livestock auction markets are currently working to collect signatures for a formal petition requesting a referendum on the Beef Checkoff Program.
- USDA recently posted a letter to petitioners on their website which included a guidance document and cautioned petitioners about using questionable means to collect signatures.
- According to Deputy Administrator Jennifer Porter, Agricultural Marketing Service (AMS) has provided evidence that indicated producers will be entered into a drawing to win $100 in exchange for sharing a post that encourages signing the petition.
- Porter explained that these actions call into question the validity and integrity of the signature collection process and because of this, the USDA will apply additional scrutiny during the verification and validation process.
- The success of the petition not only lies in gathering the required number of signatures, but also maintaining the integrity of the process, said Porter.
- NCBA president Marty Smith, a Florida cattle producer, said that NCBA fully supports the producers’ right to have a voice regarding the future of the checkoff.
- However, Smith feels that the signature gathering process needs to be transparent and conducted with integrity.
- If enough producers sign the petition, then an up or down vote on the program needs to occur. He has confidence that enough producers will vote in favor of the checkoff and the industry can finally put this issue in the rear view mirror.
A few farmers get huge USDA relief payments while many struggle for pennies
- In its first round of Covid-19 relief funding, Congress allocated funding for agriculture through the Coronavirus Food Assistance Program (CFAP.)
- This program was set to pay out $16 billion in direct payments to farmers and livestock producers who suffered income losses due to Covid-19. After this basic detail, Congress left the rest of the program design up to the USDA.
- As of last week, $6.5 billion had been distributed to ag producers.
- The largest portion of these funds went to cattle, milk, corn, and hog producers.
- According to Eric Deebly, policy director for the National Sustainable Agriculture Coalition, Congress disbursed the CFAP funds with minimal strings attached.
- Payments are capped at $250,000 per individual, or $750,000 for farms owned by corporations.
- The Counter performed an analysis of payments from late May to late June and found that at least five farms collected single payments of more than $750,000. The highest payment of $1.4 million went to Titan Swine. The company also received two additional CFAP checks totaling an added $1.1 million on the same day.
- It was also found that multiple entities registered to the same business address received payments totaling more than $1 million.
- Many of these entities were also receiving loans from the Payroll Protection Program (PPP.)
- Five dairies registered to the same P.O. box in Georgia received direct payments totaling $1.57 million from CFAP, and on top of that they were also receiving PPP loans.
- These situations have shown that Covid-19 relief doesn’t always go to those in need; instead it lands in the hands of businesses with savvy accountants.
- A handful of farmers received hundreds of thousands of dollars, while more than 300 received less than $10 and some did not benefit at all from the program.
- Many of these entities were also receiving loans from the Payroll Protection Program (PPP.)
Boxed beef prices
Choice boxed beef: $204.24 (-0.42)
Select boxed beef: $190.45 (+0.05)
Company to open beef processing facility in south-central Idaho
- Agri Beef announced on Friday that it will be opening a new processing plant in Jerome, Idaho. The plant will operate as True West Beef.
- This plant will employ 400 workers.
- The plant will be able to process 500 cattle per day.
- This new processing plant will work directly with livestock producers who will have an equity ownership in the facility.
- Agri Beef already owns a mid-sized processing plant in Washington and has operated feedlots throughout Idaho since 1968.
- The company feels that Jerome, ID is just the right location with plentiful agricultural resources, motivated workforce, and a vibrant community with a “can-do spirit.”
NCBA: Unanimous policy allows for voluntary negotiated trade before seeking regulatory action
- Six hours of discussion at NCBA’s summer business meeting, with months of Zoom meetings held prior to that, ended with the industry group supporting a voluntary policy approach that increases frequent and transparent negotiated trade to regionally sufficient levels, to achieve robust price discovery determined by NCBA funded and directed research. The policy also includes triggers to be determined by a working group of NCBA producer leaders by October 1st, 2020.
- If this proposed voluntary approach does not achieve robust price discovery and meet the established triggers that increase frequent and transparent negotiated trade to a regionally sufficient level, NCBA will pursue a legislative or regulatory solution.
- Ethan Lane, NCBA Vice President of Government Affairs, said that NCBA is unanimously passing policy that says if it doesn’t work, they’re going to the Hill. The organization plans to seek another solution if it comes down to it.
- NCBA’s research and data has shown that a certain level of mandated negotiated cash trade won’t work across the nation; regional differences must be respected.
- Lane feels that every viewpoint was represented at the meeting. He stated that NCBA has policy opposing the restriction of producers to market their cattle as they see fit. One proposed solution goes further than many producers seem to be comfortable with, but doing nothing is something all producers are against.
Boxed beef prices
Choice boxed beef: $204.66 (+1.40)
Select boxed beef: $190.40 (+0.51)
Groups want FTC investigation of Tyson
- Two non-profit groups, Food and Water Watch and workers’ rights group Venceremos, are asking the Federal Trade commission to investigate Tyson Foods’ public representations about its labor practices.
- The two groups claim that Tyson has made “false and misleading” depictions on its website, social media and company reports.
- The groups have asked the FTC to require Tyson to remove misleading claims.
- According to the complaint, one of the misleading claims states that the company provides safe workplaces and sources chicken from independent family farms.
- Consumers are becoming more aware of how their food is produced and the ethical treatment of workers within food production, and companies like Tyson have taken note, said the complaint.
- Tyson is now working to capitalize on consumer values by making deceptive claims about the treatment of their workers and the fair treatment of their contract poultry growers.
- Tyson advertises that it provides a safe workplace for workers and sources chicken from independent family farms. Both of which are misleading to consumers, said the complaint.
38,000 pounds of ground beef has been recalled over lack of inspection in the U.S.
- JBS Food Canada has recalled approximately 38,406 lbs. of beef products because they were not presented for import re-inspection into the U.S.
- According to the USDA’s Food Safety and Inspection Service (FSIS), these products arrived as boneless beef head meat and were imported on July 13th.
- Another company then further processed this beef into ground beef products.
- So far, there has been no reported illnesses or adverse effects in connection with this recall; nonetheless, FSIS has designated these items as having a high health risk.
- This recall comes on the heels of a similar recall by Jamaican Tastee Patties, LLC that recalled 60,000 lbs. of meat and poultry patty products.
- These products were repackaged, relabeled and redistributed without being federally inspected. A mark of inspection by another federal establishment was added to these products without proper approval.
United Nations deletes ‘disgraceful’ meat tweet, and should now explain why, says Cattle Council of Australia;
- Last week, the United Nations tweeted to its 12.7 million followers to “act now” and “eat less meat” because it claimed, “the meat industry is responsible for more greenhouse gas emissions than the world’s biggest oil companies.”
- Cattle industry groups responded with outrage and Australia’s Federal Agriculture Minister labeled the tweet as disgraceful.
- Not long after the tweet was posted, the UN removed the content.
- Travis Tobin, CEO of Cattle Council of Australia, feels that the UN needs to take it upon themselves and explain why the tweet was inaccurate.
Boxed beef prices; www.nationalbeefwire.com
- Choice boxed beef: $203.26 (+1.46)
- Select boxed beef: $189.89 (-1.61)
NCBA passes policy to increase cash trade levels
- According to Matt Deppe, CEO of the Iowa Cattlemen’s Association, NCBA and its members unanimously passed policy that supports voluntary efforts to improve cash fed cattle trade.
- The policy isn’t exactly what Iowa Cattlemen was looking for, but Deppe says it puts a tangible plan in place.
- NCBA’s policy will pursue a voluntary path to achieve a robust market, however if that fails, a regularity and/or legislative solution will be explored.
Nebraska Cattlemen’s president is satisfied with compromise on cash trade issues
- Nebraska Cattlemen’s president Ken Herz says that he is satisfied with the compromise that was reached at NCBA’s summer meeting concerning cash trade.
- Herz thinks that the policy creates a process to determine if the industry can achieve robust price discovery on a voluntary basis.
- Nebraska Cattlemen has members on both sides of this issue, however Herz feels that this policy should appease NC’s membership.
R-CALF USA supports request for immediate moratorium on JBS acquisition of lamb processing facility
- Fifteen U.S. senators have signed on to a letter requesting an investigation by the Department of Justice into the acquisition of Mountain States Rosen (MSR) lamb processing facility by JBS. R-CALF fully supports this request.
- The letter notes that the MSR facility processes approximately 350,000 lambs annually, over 6,000 per week, with an annual capacity of nearly 800,000. JBS’ acquisition of this independent processing facility would risk economic ruin for many domestic producers and would enable JBS to congest the processing pipeline.
- If this acquisition goes through it will further intensify the national food security problem that Covid-19 has exposed. Significant control of U.S. lamb processing capacity would be given to a foreign company whose interests are served by imports of foreign protein into the U.S.
Boxed beef prices
- Choice boxed beef: $201.80 (+0.69)
- Select boxed beef: $191.50 (+2.01)
JBS acquires Mountain States Rosen lamb plant: Ranchers seek anti-trust intervention
- Sheep producers nationwide are wondering whether they will get their lambs sold this fall due to an impending purchase of Mountain States Rosen lamb processing facility. JBS recently acquired the plant through a bankruptcy auction.
- The meat giant plans to halt lamb processing and instead use the plant to grind hamburger and cut steaks.
- This will cause the lamb industry to have a surplus of about 350,000 more lambs than available processing capacity.
- Carson Jorgensen raises sheep in central Utah with his family. He believes this situation that lamb producers are facing is dire enough to call for President Trumps attention.
- “Without immediate action, lamb production in the Western U.S. will be destroyed,” said Jorgensen.
- Jorgensen believes JBS is violating anti-trust laws by purchasing the plant and halting a significant amount of lamb processing. He feels that JBS is coming after the lamb market and has made this acquisition to take the market share and fill it with imports.
- Brad Boner, Glenrock, WY sheep rancher, thinks JBS only wants to manipulate the lamb market. The meat giant is the largest lamb importer in the U.S., and this acquisition will give them even more market share to use for imported product.
- Jorgensen is pleading with agricultural producers across the U.S. to join him in asking the DOJ to look into anti-trust violations.
- The meat giant plans to halt lamb processing and instead use the plant to grind hamburger and cut steaks.
Fed cattle exchange acquired by Central Stockyards, LLC
- The only weekly fed cattle online auction for the cattle industry, The Fed Cattle Exchange, has been acquired by Central Stockyards, LLC from 5150 Productions Company, LLC.
- Since 2016, the Fed Cattle exchange provided the industry with a platform for price discovery through competitive bidding. These prices benefitted the entire cattle industry and livestock futures markets by providing a transparent baseline price for weekly negotiated live cattle futures.
- Forrest Roberts, President and CEO of Central Stockyards, stated that his company’s plan is to use technical innovations to adapt to immediate industry needs, thus improving the Fed Cattle Exchange.
- Director of Operations for Central Stockyards, Surcy Peoples, said that the company will be bringing new marketing methods to the cattle industry that support the benefits of negotiated trade and reward value creation.
Boxed beef prices
- Choice boxed beef: $201.11 (-1.85)
- Select boxed beef: $189.49 (-1.17)
Utah rancher asks Mike Pence to prevent a crisis for lamb producers in the west
- Carson Jorgensen, a sixth-generation sheep rancher located in Mt. Pleasant, UT, is seeking intervention from the Trump administration and help from the Utah congressional delegation to stop the pending closure of Mountain States-Rosen lamb processing plant located in Greeley, CO.
- This plant processes more than 300,000 lambs from 15 western states.
- According to Jorgensen, his family and fellow ranch families will be forced out of business and their herds will not be replaced if intervention doesn’t occur. The U.S. lamb market will be forced to exclusively rely on more and more foreign products, foreign imports and foreign supply chains.
- Jorgensen’s letter was prompted by the bankruptcy acquisition of Mountain States-Rosen by JBS.
- JBS says it will no longer process lambs at the Mountain States plant, and will instead only process beef.
- Switching from lamb to beef would leave tens of thousands of lambs that are ready for slaughter stranded in feedlots, and hundreds of thousands of lambs that will be coming off summer ranges.
- The few lamb plants that are left in the U.S. are currently running at capacity and small, local plants won’t ever be able to handle the volume.
- A large part of the U.S. meat industry is controlled by a handful of companies, and the lamb industry is no exception. Their foreign competitors repeatedly undercut lamb producers.
- Jorgensen feels that this latest acquisition by JBS needs to be investigated to see if it is a predatory effort to disrupt U.S. food production.
- Switching from lamb to beef would leave tens of thousands of lambs that are ready for slaughter stranded in feedlots, and hundreds of thousands of lambs that will be coming off summer ranges.
Where are the cattle?
- The cattle on feed report released last Friday was fairly neutral, however, producers are still wondering where are all the cattle.
- Earlier this spring, cattle placements were scarce, the lowest the industry has seen since 1996 when the series first began.
- March’s placements were down 23 percent.
- April’s placements were down 22 percent.
- May’s placements were up 1 percent.
- June’s placements were up 2 percent.
- It’s obvious that deficits of 23 and 22 percent can’t be offset by minimal one and two percent increases.
- These numbers make it clear that there are still a significant amount of cattle out in the countryside yet to be placed.
- This situation has shifted how cattle are marketed and the cattle marketing calendar that we are accustomed to will look a bit different for the second half of 2020.
Boxed beef prices
- Choice boxed beef: $202.96 (+0.41)
- Select boxed beef: $188.32 (-1.81)
JBS acquires assets, facilities from closure of Greeley Mountain States Rosen plant
- Mountain States Rosen, a Wyoming-based cooperative of lamb producers in the U.S., will be closing its Greeley plant by the end of July.
- All 212 employees will be laid off and all operations will cease by the end of July, according to Cindy Hasbrouck, Mountain States Rosen Vice President Human Resources.
- The company controls a fifth of the U.S. lamb market.
- The company’s facilities and certain assets were acquired by JBS USA whose Greeley beef processing plant sits just across the street from the Mountain States plant.
- Mountain States Rosen sent a letter to the Colorado Department of Labor and Employment in June explaining that the sale of the building was the result of Chapter 11 bankruptcy. JBS successfully bid for the facility during a bankruptcy auction on July 16th.
- According to Cameron Bruett, head of corporate affairs for JBS USA and Pilgrim’s Pride, JBS plans to invest in the facility and reopen as a value-added beef operation that will create new jobs in Greeley. He feels that the acquisition presents an exciting opportunity to provide value-added and premium, retail ready beef products to consumers in Colorado and across the U.S.
Walmart, Kroger bottle their own milk and shake up American dairy industry
- When buying milk, Americans often reach for the lowest-priced option, store brand milk. Kroger, Walmart, and Albertsons will be expanding those offerings with their new milk-bottling plants.
- The $40 billion U.S. milk industry has been dealing with pressure by consumers choosing dairy alternatives or other beverage options, such as bottle water and juice. With grocers’ now moving into the bottling business, the industry will face even more profit reduction.
- Just in 2019, approximately 3,300 dairy-cow herds disappeared. These disappearances came along with low milk prices, tensions with export customers and processing plant closures across the country.
- Dairy demand for products such as yogurt, butter and chesse, continues to grow. However the annual per capita U.S. milk consumption has dropped about 40% in the past four decades.
- Dean Foods was one of Wal-Mart’s biggest milk suppliers for decades.
- Its Louisville plant was processing as much as 1.2 million gallons of milk a week, 70 percent of that going to 130 Wal-Mart stores in four states.
- Whether it be a snowstorm or some other issue, they always made sure to supply Wal-Mart before other customers.
- In 2016, Walmart announced that they would build a milk-processing plant of its own in Fort Wayne, Indiana.
- Dean executives projected the move would siphon away about 100 million of the 2.6 billion gallons a year it sold.
- One year after Walmart finished the plant, Dean’s volume of its DairyPure milk sold down by an estimated 7.5 percent.
- This situation caused Dean to terminate contracts with dairy farmers due to the decline in sales.
- Joe Kelsay, a sixth generation Indiana farmer was one of those farms that had their contract terminated. He searched for somewhere else to send his milk, but had no luck. By the spring of 2019, Mr. Kelsay had sold his herd and the last of their milking equipment.
- My Kelsay said he lost part of his identity when his herd was loaded onto trucks. “We cried as we watched the cows,” he said. “It was like a death in the family. You had to choose to stop life support.”
Boxed beef prices
- Choice boxed beef: $202.55 (+0.78)
- Select boxed beef: $190.13 (-0.50)
JBS Australia accused of asking Covid-19 positive staff to return to work
- JBS Australia has been accused of allegedly asking staff that tested positive for Covid-19 to return to work at a plant in Brooklyn, Melbourne.
- The meat processor has also been accused of breaching other virus restrictions.
- The United Workers Union has serious concerns over the company’s handling of safety during the pandemic.
- Reports of overcrowding in the locker rooms.
- Little regard for social distancing.
- The use of faulty electronic thermometers.
- JBS Australia has tested workers onsite in Brooklyn, however UWU has concerns regarding the management’s commitment to safety.
- UWU has criticized JBS for not supporting their affected workers with paid pandemic leave, leaving those employees in a tough financial situation.
KFC to test 3D-printed chicken nuggets this fall
- Last year, KFC introduced plant-based chicken nuggets. They have stepped up their food innovation by launching the development of innovative 3D Bioprinting Solutions research labs based in Moscow, Russia.
- The goal with this research lab is to create the world’s first laboratory-produced chicken nuggets using chicken cells and plant material.
- KFC stated that this product is being created because of a growing popularity of a healthy lifestyle and nutrition. They feel the need to develop more environmentally friendly methods of food production.
- KFC plans to have a final product ready for testing this fall in Moscow. It will first be available to people in Russia, and one day the company hopes to serve it around the world.
Cattle on feed report
- Placements: 1.8 million hd., up 2 percent from 2019.
- Marketings: 1.97 million hd., up 1 percent from 2019
- Cattle on feed as of July 1st: 11.4 million hd., down 42,000 hd. compared to 2019.
- This is the second highest July 1st inventory since the series began in 1996.
Boxed beef prices and estimated weekly meat production
- Choice boxed beef: $201.77 (-0.49)
- Select boxed beef: $190.63 (-0.16)
- Weekly beef production: 537.3 million pounds, down 0.2 percent from last week, up 2.2 percent from last year.
- Weekly cattle slaughter: 646,000 hd., down 0.6 percent from last week, down 0.9 percent from last year.
- Weekly red meat production: 1.09 billion pounds, up 1.1 percent from last week, up 6.8 percent from last year.
- Live cattle weights: 1,369 lbs., up 3 lbs. from last week, up 40 lbs. from last year.
Burger King wins dismissal of vegans’ lawsuit over Impossible Whopper
- On Monday, a federal judge in Florida dismissed a lawsuit against Burger King accusing the fast food chain of deceiving vegan, vegetarian, and other customers into thinking it cooked Impossible Whopper patties on a different grill than the one used to cook beef and chicken.
- S. District Judge Raag Singhal said the seven plaintiffs did not show that reasonable consumers were deceived into paying higher prices because of Burger King’s actual cooking methods.
- He said that the plaintiffs did not ask about Burger King’s cooking methods or request that their food be cooked an alternative way to satisfy their diet restrictions.
- He went on to say that the company’s advertising never promised the Impossible Whopper would be cooked on a different surface from beef and chicken.
Burger King ditches TV ad, asks leading extension scientist for help
- Last week, Burger King debuted it’s latest commercial touting the use of lemongrass in cows’ diets to reduce methane emissions by “up to 33 percent.”
- Frank Mitloehner, University of California-Davis air quality Extension specialist, department of animal science, said it is good that Burger King wants to reduce methane and their environmental impact. Nonetheless, much of the information included in the commercial was false.
- Mitloehner set the record straight on AgritTalk with Chip Flory reminding folks that U.S. beef production contributes 3 percent of all greenhouse gases, while fossil fuel use and production contribute 80 percent of greenhouse gas to the environment. He also sent out a tweet that included facts.
- He said that Burger King’s messaging was premature as there have only been two cited studies regarding lemongrass.
- One study by UC Davis was inconclusive.
- Another was conducted at the Autonomous University of Mexico, and has yet to be published.
- After seeing Mitloehner’s response to their commercial, Burger King reached out to him.
- Mitloehner educated Burger King on the facts and they took content out of their commercial that was demeaning to farmers. They also pulled the content from all TV stations.
- Burger King will be working with Mitloehner in the future to infuse science-based research and to make sure their facts are correct before their ads are released.
Boxed beef prices
- Choice boxed beef: $202.26 (+1.11)
- Select boxed beef: $190.79 (+1.51)
USDA publishes cattle and beef pricing report
- Yesterday, July 22nd, the U.S. Department of Agriculture released their report on cattle and beef pricing resulting from the Tyson plant fire in Holcomb, KS back in August of 2019 and the 2020 Covid-19 pandemic.
- The 21-page report essentially shares the prices of boxed beef and fed cattle throughout the two events. The report specifically states that findings so far do not prelude the possibility that individual or groups of entities violated the Packers and Stockyards Act.
- The North American Meat Institute responded to the news by saying, “The report, which identifies no wrong-doing, affirms that two extreme and unforeseen events affected the beef markets.”
- NAMI also included a link to Stephen Koontz’s report regarding the situation. Koontz’s report explained that record-low livestock prices came as no surprise with packers cutting back their kill levels and an abundant supply of cattle.
- NCBA’s Vice President of Government Affairs Ethan Lane reported that the NCBA was pleased that the USDA produced a report into the market dynamics impacting cattle producers.
- Lane said that the issue of packer wrong-doing has been a central topic of conversation for NCBA since they initially requested the investigation.
- Senator Chuck Grassley feels that the industry must continue to investigate anticompetitive actions by corporate packers who value profits over the economic livelihoods of farmers, ranchers and rural America.
Unpublished USDA Report: 40% cash volume depressed cattle prices more than $33 per head
- An unpublished 2014 report by the Packers and Stockyards Division of the U.S. Department of Agriculture has shown that when the volume in the fed cattle cash market was nearly 40 percent, that alternative marketing agreements depressed the prices paid for cattle on the cash market in 2009.
- The report estimates that nationwide domestic cattle prices in the cash market were reduced by as much as $33.28 per head (based on a 1,300 lb. steer.)
- Every one percent increase in captive supply cattle depressed negotiated cash prices $0.54 per head for a 1,300 lb. steer on average.
- R-CALF CEO Bill Bullard said that this report firmly supports the need for Senator Grassley and Senator Tester’s Senate Bill, along with Cindy Axne’s House Bill 7501 that would require packers to participate in the negotiated cash market at least at the 50 percent level.
- Bullard feels that the key takeaway for policy makers is that producers who market in the negotiated cash market are being harmed and the majority of those producers are the small to mid-sized cattle feeders that support America’s rural economy.
Boxed beef prices
- Choice boxed beef: $201.15 (+0.27)
- Select boxed beef: $189.28 (-2.02)
China reports skin disease outbreaks in cattle due to virus
- China is facing outbreaks of a debilitating virus in cattle that causes a condition called ‘lumpy skin disease.’
- According to the Ministry of Agriculture and Rural Affairs, five cases were found during June in the southern provinces of Guangdong and Fujian and the eastern provinces of Jiangxi and Anhui.
- “The local area has effectively dealt with this epidemic,” reported the ministry. Two cattle have died from the disease since its discovery.
- Lumpy skin disease does not affect people. Flies or mosquitoes, causing nodules to form on the skin, spread it. Symptoms include lower milk production and it is rarely fatal.
- Taiwan has also reported its first case of the disease this month.
World’s biggest meatpacker JBS bought illegally grazed Amazon cattle
- According to a new report published by Amnesty International, Brazil’s JBS contributed to human rights and environmental abuses in the country’s Amazon region last year by buying cattle that were illegally grazed on an indigenous reserve, as well as in two other protected rainforest areas.
- The report states that JBS bought cattle illegally reared on the Uru-Eu-Wau-Wau Indigenous Reserve and the Rio Jacy-Parana and Rio Ouro Preto extractive reserves.
- These areas were the epicenter of last year’s Amazon fires and a hotbed of Brazilian Amazon deforestation.
- Satellite images gathered in the first five months of 2020 have shown that in cleared areas there have been cattle present.
- The report is accusing JBS of cattle laundering on newly deforested conserved lands, and then later transferring those cattle to legal ranches before selling those cattle to slaughterhouses.
- Richard Pearshouse, the report’s author, feels that the findings are “the tip of the iceberg.” He feels that the Brazilian government needs to do its part by establishing strong monitoring and enforcement of laws.
- JBS responded to the report by saying that they do not purchase cattle from any farm involved in illegal grazing within protected areas.
Boxed beef prices
- Choice boxed beef: $200.88 (-0.86)
- Select boxed beef: $191.30 (-0.29)
Ethiopian farmers slaughter thousands of chicks as Covid hits demand
- Hundreds of thousands of chicks have been destroyed by Ethiopian farmers as the poultry sector deals with a collapse in the hotel industry due to the Covid-19 pandemic.
- Covid-19 has caused hotels in Addis Ababa to reduce their operations or even close. These hotels are a major source of demand for poultry products.
- One of the biggest suppliers of poultry products in Addis Ababa, EthioChicken, reported that it has killed nearly 650,000 chicks in five weeks over May and June and estimates millions more have been destroyed country-wide.
- The company also stated that they have pulled some eggs from their hatchery to destroy instead of chicks.
- The social consequences of the poultry industry disruption is far reaching.
- Mena Gabriel Estifanos, a veterinarian, said the industry employs a vast group of society in different regions of the country. Since thousands upon thousands of chicks have been destroyed, those working in the industry have found themselves with no work to do.
USDA announces improvements to the Livestock Gross Margin Insurance program for cattle and swine
- USDA’s Risk Management Agency (RMA) announced yesterday that changes to the Livestock Gross Margin (LGM) insurance program for cattle and swine will begin in the 2021 crop year.
- These changes include adding premium subsidies to assist producers and moving premium due dates to the end of the endorsement period for cattle.
- RMA administrator Marin Barbre, said that these changes build upon RMA’s continued effort to make livestock policies more affordable and accessible to livestock producers.
- Prior to these changes, LGM-Cattle and Swine did not have premium subsidies.
- LGM-Cattle will now have a subsidy that ranges from 18 percent with 0 deductible up to 50 percent with a deductible of $70 or greater.
- LGM-Swine will now have a subsidy that ranges from 18 percent with 0 deductible up to 50 percent with a deductible of $12 or greater.
Boxed beef prices
- Choice boxed beef: $201.74 (+1.27)
- Select boxed beef: $191.59 (+1.28)
Large backlog of cattle remain
- According to Len Steiner with Steiner Consulting Group, the number of cattle on feed 150-days or more on July 1st will be about 950,000 head.
- If this number is accurate, that means the industry has only reduced the 150-day cattle by 30,000 head from June 1st.
- The Cattle on Feed report comes out this Friday, and if Steiner’s 950,000 head estimate is correct, it would be a 40% increase over the same month a year ago.
- Last month’s Cattle on Feed report put the number of cattle with 150-days or more on feed at 971,000 head, a number that was 42% higher than the same month in 2019.
- Steiner estimates June slaughter to be up 0.8 percent but July slaughter will be down 0.5 percent due to one fewer slaughter days.
- Earlier this month, the USDA reported the average carcass weight 35 lbs. heavier than a year ago. This is equivalent to 21,000 more fed cattle coming to market this year compared to last.
- The average retail beef price in June was estimated at $7.56/lb., slightly less than May but still 23% higher than year ago prices.
Meat-eating boosts muscle health better than plant-based diet as we age, new study suggests
- A new study coming out of the United Kingdom has show that plant-based proteins will not boost muscle health as much as eating meat as we get older.
- The number of vegans in the UK has tripled since 2006. Many have went vegan for health purposes, animal welfare or environmental reasons.
- The study found that transitioning from an animal-based protein diet to a plant-based diet is likely to be detrimental to muscle health as we age.
- Muscles must be kept strong by amino acids that can be found in animal proteins.
Boxed beef prices and market update
- Choice boxed beef: $ 200.47 (-0.33)
- Select boxed beef: $190.31 (-0.99)
- For the first time this year, over 50 percent of the country is in some kind of drought designation. This hasn’t occurred since the week ending September 18th, 2018 when the country was coming off a historical drought.
- Weekly cattle slaughter was reported at 650,000 hd., down 1.1 percent from the previous week and down 0.8 percent from last year.
- Weekly live cattle weights were reported at 1,366 lbs., up 36 lbs. from last year.
Is the future of meat in America at stake?
- Earlier this week, ABC’s Matt Gutman reported on ranchers struggling to make a living as they work to compete with cheap imported beef and alternative meat products.
- According to ABC, changing consumer’s tastes and concerns regarding their carbon footprint is threatening the cattle industry.
- During this feature, Gutman toured an Impossible Foods factory in Oakland, CA where soybeans are transformed into a fake meat alternative that he claimed tastes “identical to beef.”
- The rise of alternative meat demand is partially because of the coronavirus pandemic and also the increased scrutiny of conditions inside slaughterhouses for workers and the animals, according to Pat Brown with Impossible Foods.
- Meat alternative demand increased 248% in the first twelve weeks of this year.
- According to Brown, if you replace one pound of cow beef with one pound of impossible beef, you reduce your greenhouse gas footprint by the equivalent of the average daily commute, 36 miles in a typical American car, or 92 miles flying in a passenger jet.
- Some researchers are worried about how incredibly processed alternative meats are. Typically, ultra processed foods are worse for a person’s diet, versus whole foods such as beef.
- Impossible Foods boasts that its carbon footprint is 89% less than that of a real beef burger.
- According to Bill Bullard, ranchers have been stewards of the land and have cared for their land, air, and water for centuries.
- Pat brown stated that he’s not after the ranchers, but instead the beef industrial complex. He wants to kill the meat industry the old fashioned way through fair competition in the free market.
Beyond Meat’s international push continues in Brazil
- Beyond Meat has expanded its international presence as it has broken into the Brazilian marketplace, the largest economy in South America.
- Beyond Burgers, Beyond Sausage, and Beyond Beef is now available in Sao Paulo at a grocery chain called St. Marche.
- Marche is a relatively small grocery chain with only 19 locations, however it is still a new market for the product.
- Brazil is the third largest consumer of beef in the world and is the largest exporter of beef.
- Beyond Meats CEO, Ethan Brown, claims the company is looking to pursue numerous activities internationally this year.
- Earlier in 2020, Beyond Meat entered China via a partnership with Starbucks. The company was also able to expand into grocery stores and got on the menu at restaurants owned by Yum China Holdings.
Boxed beef prices
- Choice boxed beef: $200.80 (+0.04)
- Select boxed beef: $191.30 (-0.07)
Worker advocates: JBS trying to force union’s hand with long-term contract offer
- Worker advocates are reporting that JBS is trying to work around the union that represents about 3,000 of its Greeley beef plant workers by lobbying employees directly on a long-term contract.
- According to Kim Cordova, if workers are persuaded to push the union to vote on the near-term pay raise, it would mean a five-year contract that would cost employees more in the long term.
- Essentially, JBS is attempting to con workers directly into a bad salary deal at a particularly vulnerable time.
- Latino Coalition of Weld County vice president Rhonda Solis, said a concerning element that came out of discussions with JBS on Monday was the company’s plans to provide an onside medical clinic for employees.
- Solis stated that when the coronavirus outbreak hit back in late March and early April, the union and herself were only made aware of the high number of cases coming out of the processing facility because the hospital made calls and voiced their concerns.
- If JBS has a clinic within the facility, they will have the ability to keep even more information hushed about the wellbeing of their employees when it comes to coronavirus infections.
- Whether JBS meant to conceal the extent and speed of the spread of the virus in late March and early April from its employees and the outside world isn’t clear. Either way, it did take county and state involvement to require a temporary closure.
- During the meeting with JBS on Monday, union members told horrific stories about the current conditions at the plant with included a continuation of the ‘work while sick culture’, workers being forced to drink water from unsanitary sources, a female worker being physically assaulted by a supervior, just to name a few, according to Cordova.
- “Nothing is holding JBS back from paying their workers more right now,” said Solis. She went on to say they were doing it with hazard pay originally, but they took that away. JBS is presenting the situation as the union standing in the way of workers receiving an increase in wages.
USDA revives RFID initiative
- USDA’s Animal and Plant Health Inspection Service (APHIS) announced earlier this week that is seeking public comment on a proposal to approve only Radio Frequency Identification (RFID) tags for cattle moving interstate.
- Last November, APHIS released a statement saying that they believe RFID devices will provide the cattle industry with the best protection against the rapid spread of animal diseases. The tags will also meet the expectations of foreign and domestic buyers.
- APHIS is seeking comment on a proposed timeline for implementation, which would require producers to use the tags by January 1st, 2023.
- Animals with metal tags in place before that date would be grandfathered into the regulations and would not require RFID tags.
- USDA’s announcement came with opposition by R-CALF. RCALF’s Animal Identification Committee Chair Kenny Fox said that this is not the time for the USDA to be imposing significant added production costs on the U.S. cattle industry while the entire domestic cattle and beef supply chains are reeling from the effects of the pandemic.
Boxed Beef Prices
- Choice boxed beef: $200.76 (-0.16)
- Select boxed beef: $191.37 (+0.52)
Union president says JBS workers are scared to go to work amid outbreak at meatpacking plants
- Three months after the JBS plant in Greeley was forced to shut down due to a coronavirus outbreak and less than a week after an unscheduled employee walkout, talks between the workers union and management broke down on Monday.
- Kim Cordova, president of UFCW7, the union that represents JBS employees, said that JBS will not listen to workers safety concerns even though workers at the JBS Greeley plant work in some of the most dangerous conditions in the entire country.
- According to Sylvia Martinez, a spokesperson for a group that also represents JBS employees, a miscommunication between JBS and the supervisors within the plant is occurring. Workers are told to stay home if they are sick, but within the plant, if a worker calls in sick, they are being threatened that they better report to work or they will lose their job.
- Cordova said that eight hours of talks with JBS management ended with no significant progress. She went on to say that she is furious with the company not showing workers the respect they deserve and she isn’t sure where the situation goes from here.
- After the talks on Monday, JBS released a statement saying they have offered their workers a competitive base wage rate of $18.00/hr. with a top wage rate of nearly $25.00/hr. The local union has refused to present this offer to JBS Greeley employees, costing them thousands of dollars in lost wages.
Burger King’s climate solution is a limited supply whopper
- Burger King is planning to sell Whoppers sourced from cows that belch out less methane as the fast-food industry grapples with a questionable sustainability record.
- Burger King plans to debut a limited-time sandwich on Tuesday made from cattle raised on a diet supplemented with lemongrass. This supplementation is expected to cut greenhouse gas emissions from cattle by about a third.
- This burger will be available on menus at select stores in Miami, New York, Austin, Portland, and Los Angeles while supplies last.
- The actual sale of low-methane beef across a fast-food empire will require suppliers and retailers to pay a significantly higher price for the product.
Boxed beef prices
- Choice boxed beef: $200.92 (-2.34)
- Select boxed beef: $190.85 (-1.03)
JBS workers in Greeley walk out of work amid pay dispute
- The JBS plant in Greeley, CO has confirmed 287 coronavirus cases and has had six employees die from Covid-19 since April, making it the deadliest work site in Colorado.
- On Friday, workers walked out of the processing facility due to a pay dispute.
- JBS corporate released a statement saying that workers at other facilities across the country have received an increase in base pay to $18/hr, with top rates of $25/hr. However, the local union that represents Greeley employees has not presented this pay increase to its members.
- According to Kim Cordova, the president of the UFCW Local 7 union, JBS confiscated employee badges from hundreds of workers and sent them home, even those that did not participate in the walkout on Friday. Cordova stated that this action appears to be an attempt by JBS to strong-arm its employees into accepting a less competitive wage increase that would lock them into a five-year agreement, with little to no chance for any further wage increases.
Worker advocates file meat plants discrimination complaint
- Numerous worker advocacy organizations have filed a civil rights complaint with the USDA alleging that Tyson and JBS have engaged in racial discrimination throughout the pandemic.
- The complaint claims that the meat processing companies adopted policies that violate a section of the Civil Rights Act of 1964, which protects individuals from racial discrimination by recipients of federal financial assistance.
- Tyson has received more than $109 million from USDA programs this year and JBS has received $45 million. Since they receive these taxpayer dollars, they are required to comply with federal laws.
- Since the onset of coronavirus back in March, 291 processing plants have seen 32,151 confirmed Covid-19 cases and 122 workers have died, stated the complaint.
- Tyson spokesman, Worth Sparkman said in an email that the company’s top priority is the health and safety of all workers, their families and the communities where plants are located.
- JBS spokesman, Cameron Bruett claims the company has followed, and often exceeded, CDC guidance.
- Secretary of Agriculture Sonny Perdue will be the deciding factor on how this complaint will be resolved.
Boxed beef prices
- Choice boxed beef: $203.26 (-1.24)
- Select boxed beef: $191.88 (-2.41)
Tyson turns to robot butchers, spurred by coronavirus outbreaks
- Tyson Foods relies on about 122,000 employees to churn out about 1 in every 5 pounds of chicken, beef and pork produced in the U.S.
- Tyson’s Manufacturing Automation Center was opened in August of 2019 and is working to move from human meat cutters to robotic butchers.
- Over the past three years, Tyson has invested about $500 million in technology and automation.
- An issue with robotic meat cutters is that they aren’t able to match humans’ ability to disassemble animal carcasses that subtly differ in size and shape.
- Processing plant executives say that the biggest push to increase automation within packing plants stems from the decreased availability of labor in the U.S.
- Meatpacking companies have tested automated cutting systems in recent years, with mixed results. Some of these projects were abandoned because of too much high-value meat being wasted.
- According to union official Mark Lauritsen, boosting automation at U.S. meatpacking plants needs to be done thoughtfully so job losses won’t devastate the communities they sustain.
Bill would increase processor capacity
- Small meat processors that have been impacted by the pandemic will be receiving more help through Requiring Assistance to Meat Processors for Upgrading Plants Act, also known as the RAMP-UP Act.
- This bill will help meat processors make facility upgrades and move to federal inspection to sell across state lines.
- As it stands today, state inspected and custom exempt processors are not able to sell meat across state lines and the process to become federally inspected can be quite costly.
- The RAMP-UP Act would allow the secretary of agriculture to make grants to meat and poultry processing facilities for improvements to help become a federally inspected establishment.
- Under this bill, grants could not exceed $100,000 and recipients must repay the amount in full if they do not become a federally inspected plant within 36 months.
- The RAMP-UP Act would provide $80 million in direct funding to remain available until expended through fiscal year 2023. The bill will also authorize $20 million in discretionary funding should more funds be needed.
Boxed beef prices and red meat production
- Choice boxed beef: $204.50 (+0.91)
- Select boxed beef: $194.29 (-0.54)
Polis appoints activist to vet board, signs egg bill
- Colorado Governor Jared Polis has appointed Ellen Kessler to the public at large position on the State Board of Veterinary Medicine.
- Kessler is a self-proclaimed animal rights activist. Her commentary on social media includes claims that she is “Vegan AF” and “Extreme. Annoying. Vegan.”
- Kessler recently posted support of the signed HB 10-1343 Egg-laying Hen Confinement Standards. She feels this house bill is a baby step “to get to the true goal of animal lovers and that is to not keep chickens for eggs nor food.”
- HB 10-1343 requires all eggs sold in the state of Colorado to come from a cage free environment.
- Senator Jerry Sonnenberg is concerned with the bill restricting the sale of eggs from other states that do not meet the same standards, creating an interstate commerce violation. He worries that this bill may set up producers of all livestock for the same restrictions.
- The cost for egg producers to make the shift to cage-free systems will be about $30 per hen. Colorado has a statewide flock numbering about 5.5 million.
Representatives Axne, Finkenauer, Loebsack introduce legislation to improve price transparency in cattle markets
- Yesterday, Iowa Representatives Cindy Axne, Abby Finkenauer, and Dave Loebsack introduced legislation in the U.S. House of Representatives to increase transparency in U.S. cattle markets and spur added price discovery and competition for Iowa producers using cash markets.
- This bill would require packers to purchase a minimum of 50% of their weekly slaughter from cash market sales. Increased cash market sales will give independent cattle producers a level playing field with formula-contracted cattle purchases.
- Iowa Cattlemen’s Association President Richard Godrey feels that this proposal will help return some much-needed leverage to independent cattle producers across America.
- This House bill is a companion to Senator Grassley’s 50/14 legislation he introduced earlier this year.
Boxed beef prices
- Choice boxed beef: $203.59 (-0.24)
- Select boxed beef: $194.83 (-0.69)
Cattle industry launches petition calling for beef checkoff referendum
- On July 2nd, several individual ranchers, farm and ranch groups, including R-CALF USA, formally launched a national petition requesting a nationwide referendum on the termination of the Beef Promotion and Research Order, also known as the Beef Checkoff Program.
- The petition calls for the Secretary of Agriculture to conduct a referendum for an up or down vote on the termination of the Beef Checkoff Program.
- The petition states that at least 88,269 eligible U.S. cattle producers are needed to sign the petition. Eligible producers can sign the petition from now until July 1st, 2021.
- “This is the first step in reclaiming cattle producers’ independence from the government mandated beef checkoff program that has been taxing our industry to fund the government’s speech for over 30 years,” said R-CALF USA Checkoff Committee Chair Vaughn Meyer.
JBS USA to invest $4 million in Nebraska communities
- JBS is investing $4 million in Nebraska to support local communities as part of its new “Hometown Strong” initiative.
- This investment is part of a $120 million global social commitment, $50 million of which is dedicated to the United States.
- Omaha and Grand Island will be receiving the investment as they both have JBS beef packing facilities.
- The goal is to improve local infrastructure, alleviate food insecurity, and support coronavirus emergency response efforts among other projects.
- JBS employs more than 4,300 people in Nebraska with an annual payroll of over $190 million.
Boxed beef prices
- Choice boxed beef: $ 203.83 (-1.47)
- Select boxed beef: $ 195.52 (-1.32)
Imports of feeder cattle: Mexican up, Canadian down
- Through the first half of 2020, Mexican feeder cattle imports have increased 3 percent compared to 2019.
- Canadian feeder cattle imports have decreased 50 percent through the first half of this year compared to 2019.
- Mexican imports have been greatly impacted by drought as 32 percent of Mexico is dealing with severe drought conditions.
- Imported feeder steer volumes are up 3.9 percent, while heifer imports are about even with year ago levels.
Slaughter cow prices bright spot for cattle industry
- Covid-19 has brought uncertainty and trying times to all segments of the cattle industry, however the dynamics for the slaughter cow market have been a little different from the live cattle markets, according to Josh Maples, agricultural economist at Mississippi State University.
- Slaughter cow prices have actually been one of the few bright spots through the pandemic.
- Over the past six weeks, slaughter cow prices in the southern plains averaged $57.84/cwt, an increase of 19.5 percent compared to the same period in 2019.
- Cull cow markets are directly related to ground beef demand and since the onset of Covid-19, retail sales of ground beef have increased significantly.
- Beef cow slaughter year to date is up 2 percent, while dairy cow slaughter is down 2 percent.
- Maples said that lower calf prices this fall could lead to increased beef cow culling. Rebounding milk prices will most likely prevent significant dairy cow culling through the remaining months of 2020.
- “While the supply picture is becoming a little clearer, ground beef demand will continue to be key for support of beef cow cull prices,” said Maples.
Boxed beef prices
- Choice boxed beef: $205.30 (-0.16)
- Select boxed beef: $196.84 (-0.13)
U.S. trade groups urge China to increase purchases of U.S. goods, services
- The U.S. Chamber of Commerce and over 40 trade associations have urged top American and Chinese officials to redouble efforts to implement a Phase 1 trade agreement.
- The Phase 1 trade agreement called for China to purchase $200 billion in additional U.S. goods and services over the next two years. The agreement was signed in January.
- Tensions between China and the U.S. spiked in recent months over the origin of the coronavirus outbreak and the passage of a new national security law that limits Hong Kong’s autonomy.
- President Trump recently stated that “decoupling” the two economies remains an option.
- Accelerated implementation of the trade deal would help both countries and it would also pave the way for Phase 2 talks.
Production disruptions slow May exports of beef, pork
- During the month of May, coronavirus caused meatpacking facilities to slow production, and in turn exports of beef and pork were negatively impacted.
- Beef exports fell 33% during the month of May compared to 2019, recording the lowest monthly volume in 10 years, according to the USDA and U.S. Meat Export Federation. The value of beef exports fell 34 percent.
- Pork exports were actually 12 percent higher in the month of May compared to year ago levels, but down 13 percent compared to the monthly average for the first quarter of 2020.
- Despite a challenging global economic outlook, USMEF President and CEO, Dan Halstrom thinks export volumes will recover quickly in most markets, as U.S. red meat remains an important staple for both domestic and international consumers.
Boxed beef prices
- Choice boxed beef: $205.46 (+0.02)
- Select boxed beef: $196.97 (-1.79)
China halts imports from two more Brazil meat plants amid Covid-19 concerns
- China has suspended imports from two Brazilian pork plants owned by JBS and BRF. This suspension comes at a time when the country continues to have concerns of the coronavirus being transmitted through food.
- Both processing plants are located in Brazil’s southern Rio Grande do Sul state.
- Brazil is currently dealing with the second worst Covid-19 outbreak in the world, right behind the U.S.
- China is the largest buyer of Brazilian pork, beef and chicken. The country has requested that all meat exporters globally certify their products are coronavirus free.
- A total of six Brazilian meat-processing plants have now been blocked from exporting to China due to the rising concerns of Covid-19.
Peterson praises USMCA, but emphasizes problems with Canadian trade
- Last week, House Agriculture Committee Chairman Collin Peterson, said the implementation of USMCA is a positive for the U.S., however there are already problems because Canada is refusing to allow his constituents to drive through Canadian territory to get to a tiny piece of Minnesota that lies north of the 49th
- On a Zoom event to celebrate the implementation of USMCA, Peterson said the U.S. must to be vigilant because there are signs out there of Mexico and Canada using Covid-19 to avoid some of its rules.
- Representative Ron Kind of Wisconsin feels that USMCA “is not a cure-all” for U.S. trade problems. He thinks it would be best for the U.S. to find a way to get back into the Trans Pacific Partnership because so much of the growth in the world is in the Pacific.
- Senator Joni Ernst of Iowa stated that Canada and Mexico are the two top agricultural trading partners for the U.S. There is more trade with Canada and Mexico than with the next 27 trading partners.
U.S. cattle futures rise as corn prices ease
- On Thursday, cattle futures saw some significant gains with feeder cattle leading the way.
- According to traders, Thursday’s feeder cattle rally was due in part to a slump in corn futures.
- Corn futures have declined due to the USDA cutting U.S. corn acres earlier this week, forecasts of timely rainfall across parts of the U.S. Midwest, and news that federal proposals about biofuel requirements are being put on hold.
- The CME August live cattle contract rallied as we continue to see packinghouses slowly work through the industry’s backlog of cattle, and futures rose into a positive basis over recent cash market prices.
- CME August live cattle settled at $99.40, up $2.10. August feeder cattle ended the day at $134.87, up $1.80.
Deepening the cash pool for fed cattle
- Cash trade in the fed cattle markets is essential for price discovery as it is typically the basis of alternative marketing arrangements, also known as formulas. Besides that, cash prices undoubtedly influence a wide array of beef and cattle markets.
- Some within the industry are hoping to increase negotiated cash trade through a federal government mandate, specifically the 30-14 campaign that would make the packers compete for cattle.
- According to Stephen Koontz of Colorado State University, this proposal would cost the cattle and beef industry millions and possibly billions of dollars per year. Koontz made that statement in an open letter to the NCBA after some of his research was being used in support of the 30-14 campaign.
- Koontz says his research shows that cow-calf producers and the U.S. consumers are the main beneficiaries of formula contracts.
- Most folks within the cattle industry agree that our industry needs more cash fed cattle trade to enhance price discovery. Koontz, along with NCBA and many of their state affiliates do not support a mandate of a given percentage of cash trade to increase competition within our cattle markets.
Boxed beef prices
- Choice boxed beef: $205.44 (+0.06)
- Select boxed beef: $198.76 (+0.33)
USCA, NFU, and others request hearing on livestock reporting rule
- On Wednesday, the U.S. Cattlemen’s Association, National Farmers Union (NFU), and eleven other organizations sent a letter to the Senate Agriculture Committee requesting a hearing on livestock mandatory price reporting reauthorization.
- The Livestock Mandatory Reporting rule mandates price reporting for cattle, boxed beef, swine, and lamb. It is reauthorized every five years. The current program will be expiring on September 20th of this year, so the door is open for meaningful change to be made.
- USCA and others feel that time is running out for an acceptable reauthorization of the program. The groups have urged the Senate Agriculture Committee to examine all possible solutions to the current market factors depressing livestock prices and increasing consolidation within the U.S. cattle industry.
China’s pork prices are on the rise again
- In China, Pork prices have hit their highest level in about two months due to deadly outbreaks of African swine fever and concerns over pork imports amid Covid-19.
- Just last week, pork prices saw their biggest gain in eight months when they jumped 5.1 percent. Pork is currently trading at $6.14/kg, the highest since April.
- China has been buying record amounts of pork to fill its supply gap, but these imports may be slowed due to China’s customs department halting purchases from several overseas suppliers that are dealing with coronavirus outbreaks in their slaughterhouses.
MCOOL rally—Keystone, SD on July 3rd
- A group of Mandatory Country of Origin Labeling supporters have decided to host a “Demand USA Beef” rally in Keystone, SD to bring attention to consumers and President Trump who will be attending the fireworks at Mt. Rushmore.
- From cattle producers to consumers, all are welcome to attend to help spread the message of where Americans’ food comes from. Cowboys for Trump will also be in attendance at the event.
Boxed beef prices
- Choice boxed beef: $206.97 (-1.39)
- Select boxed beef: $199.46 (-0.44)
African swine fever spreads
- Authorities in India have officially reported African swine fever to the World Organization for Animal Health after tests confirmed pigs on several farms in the far northeastern states of Assam and Arunachal Pradesh.
- The World Organization for Animal Health reported 10,920 pigs have been infected in both states with a mortality rate of 34 percent and a fatality rate of 88 percent.
- Poland has also reported new cases of African swine fever. As of June 15th, 23 pigs and one sow on a backyard farm were confirmed with the disease.
- In recent years, Vietnam has worked diligently to curb African swine fever, however a recent report indicated 4,000 pigs have been culled this year in Vietnam due to the disease.
USMCA goes into effect
- As of this morning, the U.S.-Mexico-Canada Agreement goes into effect. It has taken three years of negotiations and tariff disputes for USMCA to come about.
- USMCA could increase U.S. agricultural exports by about $2 billion. The trade deal is forecasted to increase gross domestic product overall by about $65 billion.
- S. agricultural exports to Canada amounted to $20.9 billion in 2019 and $19.2 billion to Mexico, ranking them No. 1 and 2 in sales.
- USMCA allows zero-tariff access to both Canada and Mexico for most major ag products, such as corn, pork, and beef.
Boxed beef prices
- Choice boxed beef: $206.97 (-1.39)
- Select boxed beef: $199.90 (-0.81)
Meat market tenderized by China tops a big week for global food
- From the beginning of the Covid-19 outbreak, experts have said there are no transmission concerns linking virus infections to food. These facts haven’t stopped China from taking some unparalleled and unexpected steps to stir confusion and controversy linking coronavirus outbreaks to food.
- China’s customs officials are asking global food exporters to sign a document that assures they’re meeting Covid-19 safety requirements to prevent transmission of the virus.
- Last Tuesday, Australia’s government issued a statement that cited the World Health Organization, saying “transmission through food is highly unlikely.” One day later, the U.S. took a similar stance.
- The big question through all of this is how will the U.S.-China trade deal be affected.
- Beijing has pledged to buy more than $30 billion worth of American agricultural goods this year. The Asian country is way behind the expected purchasing pace and traders fear this will only worsen with China’s current irrational claims.
Task force to address problems within beef industry
- Oklahoma’s State Representative Justin Humphrey, and State Senator David Bullard have organized a beef task force designed to analyze problems in marketing.
- Independent ranchers, meat buyers, meat processors, livestock auction owners and meat inspectors have been invited to participate and identify financial obstacles and possible solutions that will provide relief to Oklahoma farmers and ranchers.
- Humphrey and Bullard realize Oklahoma ranchers are struggling financially as costs continue to climb along with farm debt. Chapter 12 bankruptcies are up 24 percent over last year, and the beef supply chain has been challenged nationwide because of the closure of 75 percent of American feedlots and 48 packing plants, they stated.
Boxed beef prices
- Choice boxed beef: $207.17 (-1.09)
- Select boxed beef: $198.85 (-1.08)
McDonald’s ends Beyond Meat burger trial in Canada with no set plans for a plant-based option
- Between September 30th, 2019 and April 6th, 2020, Mcdonald’s’ in Canada ran a trial run of a plant-based burger created by Beyond Meat.
- The sandwich was dubbed the P.L.T. (plant, lettuce, tomato) and it was available at dozens of McDonald’s in southwestern Ontario.
- Since the trial has ended, the plant-based burger has been removed from all menus and McDonald’s has made no public announcements regarding the sandwich. With that being said, McDonald’s did reply to a tweet asking where the P.L.T. went, and they responded saying they have no plans to bring it back to the menu at this time.
- McDonald’s previously introduced a meatless burger, the McVeggie Deluxe, in 2002 in Canada. This sandwich was pulled three years later due to weak sales.
Meat giant JBS debuts its line of plant-based meat products
- JBS has debuted “Ozo,” its plant-based meat products via Colorado-based subsidiary, Planterra Foods.
- Planterra’s products are made up of a mix of pea and rice proteins. The most novel ingredient in this new product line is dried shiitake mushrooms.
- The plant-based meat industry is exceedingly lucrative, with sales that have grown 27 percent faster in 2020 over 2019.
Boxed beef prices
- Choice boxed beef: $208.26 (-1.43)
- Select boxed beef: $199.93 (-1.76)
Impossible Foods CEO says the meat industry will be obsolete in 15 years
- On Tuesday, Impossible Foods founder and CEO Patrick Brown was featured on CNBC’s Mad Money segment with Jim Cramer.
- Brown explained that the meat industry is in the midst of a reckoning. He feels that his company’s products easily match the protein quality and content of animal protein products. On top of that, Brown said that the plant-based products are the clear winner when it comes to health and nutrition.
- The company’s mission is to replace animal-based products in the food world within the next 15 years.
- Earlier this week, Impossible Foods announced a partnership deal with Starbucks who will now carry the Impossible Breakfast Sandwich in most of their stores.
- The Impossible Breakfast Sandwich is an attempt by Starbucks to offer more sustainable food options.
Warren and Booker press meatpackers on exports to China
- Senators Elizabeth Warren of Massachusetts and Cory Booker of New Jersey have sent a letter to the chief executives of Smithfield, Tyson, Cargill, and JBS.
- The two senators want to know why the companies were exporting record levels of meat to China while they were also lobbying the Trump administration to keep their plants open during the pandemic to feed the American public.
- Also during the pandemic, Tyson published an ad in the New York Times warning the American consumer of a meat shortage coming down the line.
- Booker and Warren claim that the packing companies put their workers’ lives in danger while also gouging the American consumer at the meat counter.
- An article in the New York Times prompted this letter last week that reported pork exports to China totaled a record 129,000 tons in April.
- The meatpacking companies say that the majority of the exported meat had been produced weeks before it was shipped to China and before packing plants became hot spots for the virus.
- Data shows that meat exports surged in May.
- Poultry increased 28 percent from a year before.
- Pork exports to China rose 590 percent from a year earlier, reaching their highest level since 2009.
- “These actions raise questions about the circumstances of the president’s executive order, your honesty with the American public about the reasons for higher food prices, and your commitment to providing a safe, affordable, and abundant food supply for the nation,” stated Booker and Warren in the letter.
Boxed beef beef prices
- Choice boxed beef: $209.69 (-2.12)
- Select boxed beef: $201.69 (-1.88)
OCM calls for a moratorium on beef imports
- The Organization for Competitive Markets (OCM) has sent a letter to U.S. Secretary of Agriculture Sonny Perdue, asking him to follow through with President Trump’s suggestion to terminate importation of cattle into the U.S.
- Ben Gotschall, OCM Interim Executive Director, stated that beef imports must also be banned, especially from Brazil.
- In 2017, JBS was caught bribing meat inspectors and exporting adulterated rotten meat worldwide. The U.S. then halted Brazilian beef imports the following two years, before reopening our borders to their beef products in February of 2020.
- With the U.S. no longer requiring MCOOL on beef, and the USDA allowing imported meat to be falsely labeled “Product of U.S.A.,” consumers are not able to distinguish between U.S. beef and foreign beef.
- OCM’s letter also stated that the group is working proactively with its members and stakeholders to develop policy recommendations for a transition to a more decentralized food system and expressed the need to breakup the “Big Four” meatpacking companies.
Lower beef prices at the grocery stores ahead
- Wholesale beef prices are edging closer to last year’s lows, according to Texas A&M AgriLife Extension economist David Anderson.
- Last week, choice boxed beef settled at $2.41/lb., which is relatively close to June 2019, when it was at $2.22/lb.
- Anderson added that day-to-day beef production has surpassed 2019 numbers, however, processing capacity remains below 100%.
- Beef production is larger than year-ago levels because feeder cattle weights are up.
- Retail prices should start to reflect the drop in wholesale prices as we move into July. “It will be interesting to see where wholesale prices end up and whether the prices at grocers will be as dramatic as what we’ve seen with wholesale,” said Anderson.
- The U.S. economy will play a large role in beef prices as America is experiencing a recession, 40 million people are unemployed, incomes are falling, and restaurants are at partial capacity.
Grassley calls for hearing on cattle pricing issues
- Iowa Senator Chuck Grassley is asking the Senate Agriculture committee to hold a hearing on concerns about beef packers and cattle pricing.
- Senator Grassley understands the hardships that farmers and ranchers are currently experiencing, and realizes the marketplace is not working like it should.
- Grassley is also trying to gather support for his 50/14 bill that would mandate 50% of fed cattle purchases be done through negotiated cash trade.
- One key member of the committee is in opposition of the bill, Chairman Pat Roberts of Kansas.
- “And I don’t understand—they’ve got to have a big cattle operation in Kansas—I don’t know why he would be against 50% of a daily kill to be negotiated as opposed to about 20%.
Boxed beef prices increase marginally
- Choice boxed beef: $211.81 (-2.25)
- Select boxed beef: $203.57 (-0.73)
China suspends poultry imports from Tyson plant where workers tested positive
- The Chinese customs agency has suspended poultry imports from a Tyson processing plant in Springdale, AR after coronavirus cases were confirmed among its employees.
- The announcement gave no details of the quantity of meat affected.
- Tyson spokesperson, Gary Mickelson, noted that all global and U.S. health organizations, in addition to the U.S. Food and Drug Administration, agree that there is no evidence to support transmission of Covid-19 associated with food.
- On Friday, Tyson Foods reported coronavirus testing results from Benton and Washington Counties, Arkansas, and said that approximately 95% of employees who tested positive for the virus did not show any symptoms.
- Of the 3,748 employees tested, 481 tested positive for Covid-19, and 455 were asymptomatic.
U.S. Customs and Border Protection seize nearly 20,000 lbs. of illegal meat
- S. Customs and Border Protection seized nearly 20,000 pounds of prohibited pork, chicken, beef, and duck products from China between the dates of April 6th and June 6th at the Los Angeles/Long Beach Seaport.
- Most of the products were mixed in boxes of electronics in an attempt to smuggle the illegal goods.
- The U.S. pork industry has been sure to keep pork products from African swine fever-infected countries out of the U.S.
- China is currently fighting African swine fever, along with Classical swine fever, Newcastle Disease, Foot and Mouth Disease, highly pathogenic avian influenza, and Swine Vesicular Disease.
- S. Customs and Border Protection reported that during the first five months of fiscal year 2020, the interception of illegal meats from China at the Long Beach Seaport has increased 70% compared to year-ago levels.
Boxed beef prices update
- Choice boxed beef: $214.06 (+0.34)
- Select boxed beef: $204.30 (+0.39)
Beyond meat to sell value pack at Wal-Mart, Target with lowest-ever price point
- Beyond Meat is looking to capture a bigger slice of the summer grill-out market with a new value pack being sold at Wal-Mart and Target across the U.S.
- The “cookout classic” box will include 10 faux-meat patties with a suggested retail price of $15.99, which equates to approximately $1.60/patty.
- This is the lowest price point Beyond Meat patties have ever hit, on top of that, the price is competitive with some meat burger patties.
- The company has stated that it would like to price its products comparably to their meat equivalents by 2024.
- Beyond Meat’s burgers are made from plant-based ingredients and contain no soy or gluten.
- Beyond meat has a goal of making their products more accessible and plan to launch a new direct-to-consumer website later this summer.
Former Bumble Bee CEO sentenced to prison for fixing prices of canned tuna
- Christopher Lischewski, former chief executive officer and president of Bumble Bee Foods LLC, has been sentenced to serve 40 months in jail and pay a $100,000 criminal fine for his leadership role in a three-year antitrust conspiracy to fix prices of canned tuna, according to the DOJ.
- The court found that Lischewski was a leader of conspiracy and that his actions affected over $600 million dollars of canned tuna sales.
- Assistant Attorney General, Makan Delrahim, of the DOJ’s Antitrust Division had the following statement regarding the conviction, “”Executives who cheat American consumers out of the benefits of competition will be brought to justice, particularly when their antitrust crimes affect the most basic necessity, food.
Boxed beef prices decrease
- Choice boxed beef: $217.93 (-9.96)
- Select boxed beef: $208.08 (-5.09)
Cargill launches $15 million Cargill Cares Employee Disaster Relief Fund
- Cargill is launching the Cargill Cares Employee Disaster Relief Fund to support employees around the world during times of catastrophic or personal disaster.
- The company is contributing $15 million as an initial start to the fund.
- This fund was initially set up to establish support for the immediate needs of Cargill employees during Covid-19, but it will also serve as a long-term resource for future events.
Saturday harvest key to erasing backlogs
- Beef and pork packers have almost recovered from slow-downs and closures caused by the coronavirus.
- Last week’s estimated cattle slaughter was at 658,000 hd., just 11,000 hd. below the same week one year ago. Hog slaughter was estimated at 2.457 million hd., 18,000 more than the same week one year ago.
- An increased slaughter level is good news, however the backlogs of both cattle and hogs remain a burden to producers.
- A key to working through these backlogs will be increased Saturday operation and possibly Sunday kill.
- Packers are experiencing significant profit margins, which may be just enough incentive, along with wage incentives for workers, to make Sunday slaughter a reality.
Smithfield Foods and Tyson Foods sign on to thank President Trump
- Tyson Foods and Smithfield Foods have signed on to a letter to President Trump thanking him for advocating on behalf of the U.S. farmers, ranchers, food industry workers, and the entire U.S. food and agriculture manufacturing and marketing sector.
- The letter commends President Trump for his negotiation and timely implementation of the U.S.-China Phase One Trade Agreement.
- Key statements included in the letter:
- S. net farm cash income in 2020 is projected to decline 9% or $11 billion from a year ago.
- The agriculture industry is the backbone of rural America as it supports 22 million jobs and accounts for 20% of the U.S. economy.
- S. agricultural exports to China in 2019 surpassed $13.8 billion, supporting more than 2.3 million jobs in the U.S. agricultural sector.
McDonald’s U.S. sales stabilize after lockdown caused plunge
- McDonald’s U.S. sales declined 19% in April, but recovered most of those losses in May, as consumers got tired of home cooking.
- Due to coronavirus, analysts are forecasting McDonald’s revenue will fall 36% in the months of April, May, and June. Despite this, McDonald’s Chief Executive Officer Chris Kempczinski sees the chain emerging “in a position of competitive strength.”
- Almost all of McDonald’s U.S. restaurants are now operational via drive thru and delivery.
Boxed beef declines
- Choice boxed beef; $227.89 (-0.72)
- Select boxed beef; $213.17 (-1.18)
Meatpacking workers often absent after Trump order to reopen
- Smithfield Foods Inc. in Sioux Falls, SD is still missing about a third of its employees because they are quarantined or afraid to return to work due to the coronavirus.
- According to Mark Lauritsen, vice president at the United Food and Commercial Workers International Union, 30%-50% of meatpacking workers were absent last week.
- Meatpacking workers lost confidence in management during the height of the coronavirus outbreaks in April and May. At the same time, Tyson and Smithfield say they have taken extensive safety measures, at great cost, to protect workers.
- Physical barriers have been erected, workers’ temperatures are taken, protective gear has been provided and break times have been staggered.
Lawsuit number 3: Grocers allege meatpackers are price fixing
- Central Grocers filed a class action lawsuit alleging the big four packers have violated the Sherman Act by conspiring to constrain beef supplies in the U.S.
- April 2020 USDA data revealed that 14% more beef is in “cold storage” than at this time a year ago, and more than any April in the past 5 years. Some believe that the meatpackers are withholding this beef from the market to push prices even higher.
- “If we had more players in this packing industry, they wouldn’t be attempting to put stuff in the freezer, they would figure out a price to sell it because they wouldn’t be able to jack the price of their other items up so much,” said Greg Gunthorp of Gunthorp Farms.
- Gunthorp isn’t sure if the meat market will ever return to “normal.” He would like to see more small and medium sized packers, however he fears that they will be undercut by the big four packers.
- There needs to be reform for new packing plants to stand a chance. The big packers have shown over and over again that they will run a new packing plant into the ground, stated Gunthorp.
Boxed beef continues to fall
- Choice boxed beef: $228.61 (-2.03)
- Select boxed beef: $214.35 (-4.92)
U.S. live cattle futures touch one-month low
- S. live cattle futures dropped to their lowest price in more than a month on Friday hinging on expectations of increased meat production.
- Beef processing plants are almost back to normal slaughter levels. On Friday, USDA estimated that meat processors slaughtered 582,000 cattle, up from 573,000 cattle over the same period the week before. A year ago, slaughter levels were at 606,000.
- On Friday, August live cattle dropped to $95.325, its lowest price since May 6th.
Cows being use to produce COVID vaccine
- The U.S. continues to struggle with the spread of Covid-19 and scientists continue to search for a cure.
- A biotechnology company in South Dakota is using cows to produce human antibodies to fight SARS-CoV-2. Clinical trials using the antibodies will begin this summer.
- SAb Biotherapeutics developed the approach to produce antibodies 20 years ago.
- The company alters dairy cows so that certain immune cells carry the DNA that allows people to make antibodies. This change allows animals to manufacture large quantities of human antibodies against a pathogen protein injected into them.
- Since cows have a significant amount of blood, they are a good choice for producing antibodies. Their blood can also contain twice as many antibodies per milliliter as human blood, said Eddie Sullivan, SAb Biotherapeutic’s president and CEO.
Boxed beef prices
- Choice boxed beef: $230.64 (-4.92)
- Select boxed beef: $219.27 (-0.61)
Tyson Foods says cooperating with DOJ in chicken price-fixing probe
- On Wednesday, Tyson Foods Inc. reported that the company is cooperating with the U.S. Department of Justice on a price-fixing investigation in the poultry industry, under a program that could protect the meat processor from criminal prosecution.
- The formal grant under the DOJ’s corporate leniency program would mean neither the company nor its employees will face criminal fines, jail time or prosecution.
- Tyson was served a subpoena back in April and the news comes just one week after the chief executive of poultry company Pilgrim’s Pride was indicted along with three other current and former industry executives on charges of seeking to fix chicken prices in the U.S.
- Grocer, retailers and consumers have accused Pilgrim’s Pride, Tyson Foods and other poultry processors of conspiring since 2008 to inflate prices for broiler chickens.
Class action lawsuit filed against beef packers
- Tyson, Cargill, JBS USA, and National Beef have yet another lawsuit brought against them, this time for potential cattle market manipulation as a class action lawsuit has been filed in the U.S. District Court of Minnesota by Central Grocers.
- This comes at a time when all four packers are currently under investigation by the DOJ.
- The class action lawsuit alleges that the companies conspired to constrain beef supplies since at least the start of 2015.
- A confidential witness has come forward to confirm the conspiracy among the packers.
- This witness, who was previously employed by one of the packers, reported that the four packers agreed to reduce their cattle purchases and slaughter volumes with the purpose and effect of increasing their profit margins. Collusion was also occurring.
- These actions created a surplus of cattle and a shortage of beef.
- Daniel Karon, legal counsel in the class action lawsuit said, “Price fixing destroys the integrity of the marketplace. It results in buyers overpaying for products. The marketplace needs to be fair for buyers and sellers who want fair treatment. The antirust laws exist to encourage fairness over greed.”
Boxed beef prices
- Choice boxed beef; 235.56 (-.50)
- Select boxed beef; $219.88 (-2.96)
Grassley calls for release of Packers and Stockyards finds on Tyson fire
- Senator Chuck Grassley of Iowa has sent a letter to the U.S. Department of Agriculture Secretary Sonny Perdue requesting that the Packers and Stockyards Division publicly release findings from it’s investigation into beef pricing margins following the fire at Tyson’s processing plant in Holcomb, KS.
- Senator Grassley explains in the letter that it has almost been a year since USDA’s Packers and Stockyards Division launched an investigation into beef pricing margins following the plant fire, and cattle producers are still waiting for results from this investigation.
- If no report is issued by August 9th, 2020, a year after the fire, Senator Grassley will be asking the Government Accountability Office (GAO) to conduct an investigation into the reporting processes of the Packers and Stockyards Division to see if additional authority or resources are needed to properly conduct oversight of processing facilities.
USCA sends letter to congressional leaders on Covid-19 relief
- On Wednesday, June 10th, 2020, the United States Cattlemen’s Association (USCA) sent a letter to Congressional leaders expressing their concerns with the current framework of the Coronavirus Food Assistance Program (CFAP).
- The letter also requested additional funding for U.S. cattle producers in the next coronavirus relief package.
- USCA recommended the following changes:
- Extend the current timeframe for payment eligibility to include all sales of eligible livestock between January 15th, 2020, to May 15th, 2020. This change would include April and May when producers saw the markets drop to their lowest.
- As written, CFAP covers only 25% of the drop in the cattle inventory. Instead, the program should cover actual losses, or a percentage high enough to capture the average drop in cattle inventory due to Covid-19.
- The $250,000 payment limits put in place stifle the program’s ability to address actual losses, especially for small and mid-sized producers.
Beef packers ask court to throw out antitrust lawsuit
- On Monday, lawyers representing the four largest U.S. beef packers told a federal court that the Justice Department’s probe into the beef market doesn’t justify civil antitrust lawsuits filed by cattle ranchers, who are accusing meatpackers of price fixing to lower cattle prices.
- The meatpackers are asking the district judge in Minnesota to throw out the cases, which they say are based on “speculation and gossip.”
- R-Calf and others filed suit last year, alleging antitrust violations and seeking damages for ranchers.
- According to the claims, the four beef packers started coordinating in 2015 to reduce the number of cattle they slaughtered and the animals they bought directly from ranchers in the cash market, which resulted in depressed cattle prices.
Boxed beef prices
- Choice boxed beef: $236.06 (-10.94)
- Select boxed beef: $222.84 (-5.11)
Thune, Baldwin introduce bill to improve paycheck protection program for agricultural producers
- Senator John Thune of South Dakota and Tammy Baldwin of Wisconsin introduced legislation on Tuesday that would revise the way producers calculate their Paycheck Protection Program (PPP) loan award.
- The PPP program was created in the CARES Act to help small businesses retain their employees and cover other qualifying business expenses.
- South Dakota’s agricultural producers are the heartbeat of the state’s economy; we need to ensure that our agriculture community can weather this pandemic, said Thune.
- “The Paycheck Protection for Producers Act will provide welcome relief for farmers rendered ineligible for PPP under the CARES Act as a result of financial losses caused by 2019 weather conditions,” said Jeff Thompson, president of the South Dakota Soybean Association.
Processing sector recovering quicker than expected
- University of Missouri’s Scott Brown feels that the recovery to the processing sector following Covid-19 has been impressive.
- Brown said a month ago no expected cattle slaughter to be near year-ago levels and hog slaughter to be above year-ago levels.
- A negative side affect to these increased slaughter levels has been the sharp decline of boxed beef prices and the pork cutout values.
- Brown feels a strong economic recovery coupled with strong domestic demand will be a vital component needed for the livestock sector to bounce back from the impact of the coronavirus pandemic.
Boxed beef prices continue to tumble
- Choice boxed beef: $247.00 (-7.58)
- Select boxed beef: $227.95 (-3.17)
Slaughter rates higher, wholesale prices lower
- Wholesale beef and pork price have nosedived in the past two weeks.
- Friday’s choice boxed beef cutout closed at $261.48/cw., a 28% decline for the week and 45% lower than the high we set on May 12th.
- The pork cutout closed Friday at $72.78/cw., down 17.5% from a week ago and 40% lower than the peak on May 11th.
- These numbers suggest that the majority of our meat processing plants finally getting back to normal levels of slaughter.
- According to Steiner Consulting, last week’s cattle slaughter was estimated at 636,000 hd., the highest since the last week of March and only 4.3% lower than a year ago.
- The weight of steers and heifers being slaughtered is approximately 4-5% higher, so net fed beef supplies for last week were similar to a year ago.
- Hog slaughter last week was 2.452 million head, the highest since the first week of April and 1.7% higher than a year ago. Heavier hog carcass weights have increased pork production by 4.2% compared to a year ago.
Three poultry execs plead not guilty to price-fixing
- Three of four poultry executives who are accused of conspiring to fix chicken prices and rig bids for broilers have entered pleads of not guilty. The fourth executive requested a continuance in order to hire new counsel.
- All four executives were released on their own recognizance.
- If convicted, the executives face a statutory maximum penalty of 10 years in prison and a $1 million fine.
Boxed beef prices
- Choice boxed beef: 254.58 (-6.90)
- Select boxed beef: $231.12 (-15.30)
Meat-Pricing Probe Expands to Beef, Pork
Wall Street Journal, Saturday edition
- The Justice Department is deepening its probe into federal antitrust scrutiny of the $213 billion U.S. meat industry.
- The DOJ has issued subpoenas to the four biggest beef processors; JBS USA Holdings Inc., Tyson Foods Inc., Cargill Inc., and National Beef Packing Co.
- Besides having their beef processing investigated, JBS and Tyson are also having their pork processing activities looked into.
- Last Thursday, a call was held with DOJ officials and several state attorneys general to discuss their shared concerns about competition in the meat processing industry.
- Cattle producers made their concerns heard regarding price fixing after the Tyson plant fire last fall. This event caused a sharp drop in cattle prices while wholesale beef prices for meatpackers increased. USDA claimed to have launched an investigation into this price disparity, however nothing has come from that investigation.
- When Covid-19 began to spread across America in March, consumers stocked up on beef, packing plants were forced to shut down due to coronavirus outbreaks among workers, and cattle prices tumbled while prices for processed beef sky rocketed.
- From March to the end of May, the value of processed beef carcasses jumped 76% according to the USDA.
- In response to these allegations, meat processors claim economic forces are driving beef prices higher and cattle futures lower.
Department of Justice issues subpoenas to big four meatpackers
- Hermosa, SD rancher Rick Fox is cautiously optimistic that this DOJ investigation will produce something worthwhile.
- “We get our hopes up so many times. I really hope something happens this time,” said Fox.
- He went on to explain that ranchers and feeders may be losing their trust in government agencies after the investigation into the Holcomb, KS Tyson plant fire back in August of 2019 didn’t yield any results.
- The anti-trust activity among the four big packers that control about 80% of the processing in the beef industry is blatant, according to Fox. The packers need to be broken up so as to limit their influence over the market.
- Boxed beef prices have more than doubled in the past two months, while live cattle prices dropped by 20% or more. Even worse, many feeders weren’t able to obtain bids on their cattle, forcing them to feed cattle past their optimum point. Due to this, cattle have lost value while feeders’ costs have increased.
- While the cattle industry awaits more news about the DOJ investigation, the R-Calf lawsuit alleging packer anti-trust behavior will have a hearing today, June 8th. The purpose of this hearing is for the judge to meet with both the defendants and the plaintiffs to determine whether or not to grant the packers their “motion to dismiss.”
Nebraska has funds for livestock producers
- On May 27th, Nebraska Governor Pete Ricketts declared that small grants would be available for livestock producers through the CARES act passed by Congress earlier this year.
- These funds will be available for beef, pork, poultry, dairy and sheep/goat producers with between one and ten employees “that have closed or sustained a loss of revenue or employment since March 13, 2020.
- Each producer is eligible for $12,000.
- The grant, which will not be required to be repaid, can be used as working capital to pay for operating expenses, with the goal of helping producers through the rough economic times.
- Signup for the grant begins on June 15th.
Boxed beef continues to fall
- Choice boxed beef: $261.48 (-10.78)
- Select boxed beef: $246.42 (-13.39)
JBS sued over alleged violation of Brazil indigenous rights during pandemic
- JBS is being sued for alleged violation of indigenous workers’ rights after firing 40 members of the Kaingang tribe from it’s Seara chicken-slaughtering plant in southern Brazil, according to a court document.
- The suit claims that JBS discriminated against these workers as the coronavirus pandemic spread through Brazil.
- Prosecutors hope the suit will force JBS to re-hire the indigenous workers. If the prosecutors win the suit, they are also seeking $1.9 million in fines and damages against JBS.
- The dismissed employees traveled from the Serrinha indigenous land by bus to the JBS plant for work. According to JBS, the 40 employees were dismissed after the company discontinued the bus service that brought the workers to the plant every day. JBS gave no reason for discontinuing the bus service and denied any discrimination.
Brazil labor prosecutors seek closure of JBS plant due to Covid-19
- Brazilian labor prosecutors filed a petition on Wednesday with a local court demanding closure of a JBS pork plant in the southern state of Rio Grande do Sul due to an outbreak of coronavirus.
- JBS has been dealing with the spread of Covid-19 throughout their plants since late April and into mid-May. The outbreaks led authorities to request the temporary suspension of activities of JBS slaughterhouses in Santa Catarina, Rio Grade do Sul and Rondonia states.
Boxed beef prices continue to decline
- Choice boxed beef: $272.26 (-23.64)
- Select boxed beef: $260.41 (-16.37)
Plant-based foods outpacing total food sales during Covid-19
- Last week the San Francisco-based Plant Based Foods Association (PBFA) and SPINS, a provider of wellness-focused data and market analytics, reported that U.S. retail sales of plant-based foods have considerably outpaced total food sales during the coronavirus pandemic.
- Plant-based meat sales are also showing strong growth while animal meat sales are declining.
- Julie Emmett, senior director of retail partnerships at the Plant Based Foods Association, said that it is clear that this industry has staying power, as growth remains strong even through the highest panic-buying period.
- “Since the beginning of the pandemic, there has been a continued shift in consumer purchasing toward natural and organic products that enhance health and immunity,” said Tony Olson, owner and CEO of SPINS.
- Olson also stated that plant-based meat continues to gain traction as animal-based meat deals with increased shortages.
Pilgrim’s Pride CEO and other chicken industry executives indicted for price fixing;
- Four current and former chicken industry executives, including Pilgrim’s Pride CEO Jayson Penn, have been indicted for price fixing.
- Shares of Pilgrim’s Pride plunged as much as 13% during yesterday’s afternoon trading.
- Even though Tyson Foods was not named in the indictment, their shares also fell when the news broke.
- Other executives allegedly involved in the scheme include former Pilgrim’s Pride vice president, Roger Austin, Claxton Poultry Farm’s President Mikell Fries and Scott Brady, a former Pilgrim’s Pride executive who joined Claxton in 2012.
- Pilgrim’s Pride supplies chicken for Costco and Yum Brands’ KFC. Claxton is a supplier for Chick-fil-A.
- The four chicken industry executives were indicted with one count of conspiring to fix prices for broiler chickens from at least 2012 through 2017.
- The indictment says that executives from both Pilgrim’s Pride and Claxton communicated behind closed doors about negotiations with fast-food chains and grocery stores. They then submitted similar bids.
Boxed beef continues to plunge
- Choice boxed beef: $295.90 (-22.83)
- Select boxed beef: $276.78 (-13.80)
The fake cash market may be over
- Last week, Cargill was the only packer to continue to purchase cattle at $120.
- National Beef announced that all grid cattle harvested this week will have discounts applied and will be priced off the average instead of a set price.
- Tyson is accepting grid and cash cattle.
- Last week, Tyson turned down some cattle they thought are now too big. This is a major concern that other feeders may encounter in the near future.
- As boxed beef prices continue to decline, it is likely that packers will have less need to support the market and the cattle markets will follow boxed beef prices.
Brazil’s Marfrig, prosecutors agree to more protection for workers amid pandemic;
- Marfrig Global Foods has signed a settlement with labor prosecutors in Brazil to improve protections for workers amid outbreaks of Covid-19 cases in their meat processing plants.
- This settlement includes routine testing of workers for novel coronavirus and imposes a mandatory 5 ft. in physical distance between workers at the company’s 12 plants in Brazil.
- Marfrig, who is also the majority owner of National Beef Co. LLC in the U.S., said on Monday that it would also test all 18,000 workers starting on June 2nd.
- The meat packing company must also remove all “symptomatic workers” from their plants until testing is conducted, for a minimum of 14 days.
NCBA president: We support more cash trade
- NCBA’s president, Marty Smith, reported last week that NCBA does support greater numbers in cash trade, along with in depth price discovery.
- NCBA has put together “a lot of cattle feeders” and “a lot of state executives” to look into possible solutions to fix our cattle markets.
- Smith stated that a problem existed prior to the pandemic. “We saw that last summer with the Holcomb fire. We saw that our system has real weaknesses and at times it is just absolutely broken.”
- NCBA does not support Senator Chuck Grassley’s legislation to mandate that the bigger meatpackers purchase at least 50% of their weekly kill on the cash market, and that cattle be delivered to the packing plant within 14 days of purchase.
- According to USDA, currently, 20-25 percent of fed cattle are sold on the cash market; formula and grid agreements are being based on that relatively small amount of negotiated cash trade.
- NCBA believes in a free market system, and they aren’t going to dictate and don’t want to government dictating specifics about cattle being bought or sold, explained Smith. NCBA has detailed policies that have been set regarding issues such as this one. These policies can be changed, and with their summer conference coming up the organization will be assessing their stance.
- When asked about the many legislative proposals being talked about among other cattle groups, Smith said, “ we look at those proposals, they are nothing that really works to enhance the cattle industry, and we’re not going to jump out and try to change something because someone said that is the quick fix.
Slaughter totals increasing, but challenges are far from over
- Daily slaughter levels for cattle and hogs are continuing to improve as both industries work towards pre-Covid-19 levels.
- University of Missouri livestock economist Scott Brown stated that the hog industry’s processing sector is breaking even at best with their daily slaughter levels. With that being said, there is still right around 2 million hogs backed up at the producer level that need to be worked through. Brown feels that this crisis is far from over and it’s going to take the hog industry awhile to return to normalcy.
- Scott feels the cattle industry is in the same boat. There might not be a bunch of heavyweight cattle left, but a significant amount of cattle have been slowed in getting to the feedyard. The industry will be paying the price for these cattle through the end of this year.
U.S. ground beef sales up $1 billion in 2020
- Through May 17th, U.S. ground beef sales increased more than $1 billion compared to the same period last year.
- Anne-Marie Roerink, president of 210 Analytics, says this year-over-year gain is due to increased consumer spending.
- According to IRI, a data analytics and research company, millennial households were behind the biggest increases in meat spending since the onset of coronavirus.
- Ground proteins have seen the most purchase limitations. These products are popular due to their versatility and ease of preparation.
- Looking at the four weeks leading up to April 19th, keep in mind this time period had two weeks of panic buying, the average household spent $5 more on ground beef than in the prior year, an increase of 30% said Roerink.
Boxed beef continues to decline
- Choice boxed beef: 341.15 (-$22.19)
- Select boxed beef: 316.83 (-$23.24)
Trump announces new sanctions on Chinese officials, but won’t scrap phase one trade deal
- On Friday, President Trump announced new sanctions against Chinese officials. He directed his administration to revoke special trade exemptions for Hong Kong. However, he did say that he would keep a phase one trade deal with China intact.
- Sanctions and visa restrictions will be put into place on Chinese officials who played a role in “smothering” Honk Kong’s freedom.
- He also directed his administration to end Hong Kong’s preferential treatment in customs, trade and travel.
- Along with these restrictions/sanctions, the U.S. will also terminate its relationship with the World Health Organization. Trump feels that China has “total control” over the WHO.
- Trump stated that he believes China has engaged in a cover up of the “Wuhan virus.”
Iowa pork plant to close temporarily because of Covid-19
- Tyson Foods has temporarily closed its Storm Lake, IA pork plant due to 550 workers at the plant testing positive for coronavirus. The plant employs 2,500 individuals.
- The plant is scheduled to resume operations later this week after additional cleaning and sanitizing.
- The Storm Lake plant has a slaughter capacity of 17,000 hogs per day.
Ibach calls for a higher percentage of negotiated cash trade, says there is “some merit”
- USDA Under Secretary Greg Ibach stated last week that there is “some merit” to calls for a higher percentage of negotiated cash trade in the cattle industry.
- Ibach, a cattle rancher from Nebraska, told Brownfield that he is also concerned about price discovery in the industry.
- Ibach touched on the fact that often times, we are not able to report prices on what the actual negotiated price for animals really is.
- Ibach expects it to be an issues as Congress discusses reauthorization of mandatory price reporting later this year.
Boxed beef prices
- Choice boxed beef: $363.34 (-$6.22)
- Select boxed beef: $340.07 (-$4.02)
Marfrig and ADM unveil PlantPlus Foods, a joint venture offering fake meat plant-based products
- Marfrig and ADM has announced that they have reached an agreement to create PlantPlus Foods, a joint venture for the sale of plant-based food products across South American and North American markets.
- Marfrig and ADM have a history working together developing plant-based foods in South America.
- “PlantPlus Foods will be ready from day one to meet customer needs in this fast-growing market,” said Marcos Molina, founder and chairman.
- The company feels that consumers are thinking of foods in new ways. They feel that people realize delicious hamburgers don’t necessarily have to come from an animal source; they can come from a variety of sources, one of those being plants.
- Initially, Marfrig will own 70% of the company and ADM will own 30%.
- Molina explained that the demand for proteins, both plant and animal, is growing across the globe, and Marfrig and ADM are ready to help meet those needs.
- The new company will launch operations as soon as required regulatory approvals have been received.
First closure in Brazil, world’s top exporter, specter of more disruptions
- While the U.S. has begun to see some normalcy return in our meat-processing sector, Brazil is currently dealing with the rapid spread of the virus. This situation is threatening production in Brazil, the world’s top beef and chicken exporter.
- JBS was ordered to shutter operations at a beef plant in the state of Rondonia after a judicial ruling. This is the first closure for beef in the country since the virus first hit.
- The closure of more Brazilian meat processing facilities could have major global ripple effects on meat supplies.
- Brazil has only seen a handful of plants close so far, much better than the U.S. who cut output by about 40% from normal levels during the worst part of the crisis.
- JBS has introduced a new set of safety standards to protect supplies and workers in hopes of avoiding additional shutdowns.
- Brazil has become a hot spot for the virus, with cases spiking to the second highest in the world.
- Europe is also seeing the effects of coronavirus on its meat processing plants as more than 1,000 workers have contracted the disease.
Boxed beef prices
- Choice boxed beef: $369.56 (-$8.21)
- Select boxed beef: $344.09 (-$6.11)
U.S., China trade tensions could bubble over
- There is legitimate concern the phase one deal could unravel as tensions increase between the U.S. and China.
- On Tuesday, President Trump said he is ready to take action against China over its effort to impose national security laws on Hong Kong.
- DTN lead analyst, Todd Hultman, says a trade dispute with China is the number one problem for commodity prices the White House could actually do something about.
- Hultman realizes that the solution to this problem won’t be easy, but our decisions here in the U.S. are making it extremely difficult to get trade going again with China.
- The relationship we have with China when it comes to trade can make a real difference for our American farmers and ranchers.
Justice Department investigates high meat prices amid coronavirus crisis
- Consumers across our nation are facing significant prices at the meat counter, some are even finding empty shelves in their grocery stores.
- While consumers are facing increased prices at the grocery store, meat processors are paying farmers less and less for beef.
- According to the Bureau of Labor Statistics, the average price of ground beef is $6.22/lb. This price increased $.26 from March to April.
- Officials in the DOJ investigation are currently probing irregularities in pricing within our four big packers; JBS, Cargill, National Beef, and Tyson.
- Senator Chuck Grassley of Iowa has been at the forefront fighting for cattle producers over the past few months.
- Besides pushing for the DOJ to look into corruption and collusion within our processing sector, he has also brought forward a bill to increase negotiated cash trade
Boxed beef prices
- Choice boxed beef: $377.77 (-$7.72)
- Select boxed beef: $350.20 (-$9.82)
Sale barns talk checkoff referendum
- The South Dakota Livestock Auction Markets Assoc. is hoping to facilitate a vote on the national beef checkoff.
- According to Bryan Hanson of Ft. Pierre Livestock, SDLAMA’s president, the organization recently approved policy that seeks an “up or down vote” on the national $1 beef checkoff.
- SDLAMA’s board of directors voted unanimously to work towards gathering enough petition signatures to allow producers the opportunity to vote for the checkoff.
- Chelsea Good, the Livestock Marketing Association vice president of government and industry affairs, said that the issue will be discussed at the next LMA government and industry affairs committee virtual meeting. If the committee feels the concept has merit, they will recommend that the LMA board take it up and decide whether a membership vote is necessary.
- According to Bryan Hanson, about 73,900 signatures will be needed, 10% of cattle producers, according to the USDA. However, he feels that more signatures are needed in case some are considered unacceptable.
- In 2000, the LMA helped gather signatures for a beef checkoff referendum. 107,833 signatures were required at that time and 127,926 signatures were submitted. However, an accounting firm estimated that only 83,464 were valid.
The meat industry is trying to get back to normal. But workers are still getting sick—and shortages may get worse;
- Tyson Foods has transformed its facilities across America in hopes of warding off Covid-19 amongst its employees. Despite their efforts, in less than a month, confirmed coronavirus cases have jumped from 1,600 cases to 7,000, according to a Washington Post analysis of news reports and public records.
- With this surge in cases, many workers are scared to go to work. Workers may have concerns with working conditions, however they are scared to come forward fearing retaliation that may cost them their job.
- In the past month, the number of confirmed Covid-19 cases tied to three of the country’s biggest meat processors—Tyson Foods, Smithfield Foods, and JBS—has gone from 3,000 to more than 11,000, according to the Post analysis.
- CoBank reported in May that meat supplies in grocery stores could shrink as much as 35% due to processing plant issues.
Boxed beef prices
- Choice boxed beef: $385.49 (-$11.35)
- Select boxed beef: $360.02(-$14.16)
Iowa meat lockers now eligible to sell into other states
- Last week, the Iowa Department of Agriculture reached an agreement with the USDA that will allow eligible state-inspected butcher shops and meat lockers to sell their product across state lines.
- This agreement bypasses the rule that said only federally inspected facilities could sell into other states.
- Iowa’s Agriculture Secretary, Mike Naig, said that Covid-19 has made it clear the vital role that local community lockers play in our food supply chain.
- This agreement will allow local lockers to grow their business, move more products and access new markets. Consumers in other states will also be able to experience high quality, Iowa-raised meat.
- Iowa is the seventh state to enter into a Cooperative Interstate Shipment (CIS) agreement with USDA. Other states include; Maine, Indiana, Missouri, North Dakota, Ohio, and Wisconsin.
Boxed beef prices & cattle on feed report
- Cattle on feed: 11.2 million head as of May 1, 2020. Inventory down 5% below May 1, 2019.
- Placements for the month of April: 1.43 million head, a decrease of 22% from 2019. Placements were recorded as the second lowest for April since the series began in 1996.
- Marketings for the month of April: 1.46 million head, a decrease of 24% from 2019. April’s marketings were the lowest since the series began in 1996.
- Last week was the first week since the beginning of January that finished cattle prices exceeded year ago prices from the same week.
- Choice boxed beef: $396.74 (-$5.07)
- Select boxed beef: $374.18 (-$8.35)
South Dakota ranchers unhappy with Rounds’ MCOOL resolution
- American cattle producers have been asking for “Mandatory Country of Origin Labeling (MCOOL)” on beef products for quite some time now.
- The nation’s four major meatpackers have been mixing foreign beef with American beef, and cattle producers feel that the two products need to be differentiated.
- Senator Tester of Montana and Senator Rounds of South Dakota recently proposed a resolution to support MCOOL, but many American cattle producers feel this resolution is helpful.
- A resolution is not a bill, so legally this doesn’t require the packers to change anything with their beef labeling. Packers are still able to import foreign beef at a cheaper price, mix it with domestic product, and gouge consumers with record prices.
- Liz May, a cattle producer who also runs a grocery store, says imports need to be shut down. It doesn’t make sense to continue to import beef when we have an abundant domestic supply of cattle.
Beef in cold storage surges
- USDA has reported that the amount of beef in cold storage at the end of April was up sharply compared to the same period in 2019.
- Beef cold storage is reported at 489.999 million pounds, up 14% on the year. This increase comes even with a month-to-month decline in supplies due to processing plant issues.
- Pork was reported at 614.8 million pounds, 1% lower than a year ago.
- Total red meat storage was reported at 1.148 billion pounds, 5% higher than last year at this time.
Cattle slaughter 1 million head short in six weeks
- America’s beef packers are slowing improving weekly harvest rates.
- Last week USDA reported slaughter at 499,000 head, up 14% higher than two weeks ago. This week is projected to hover around 530,000 head.
- Last week’s slaughter was still 25% lower than the same week a year ago.
- Slaughter since the second week of April is 1 million head lower (27%) than the same period a year ago. A backlog of 1 million head of cattle in the feedyards means the urgency to get packers running at full capacity is of great importance.
- It is expected that processing plants should have kill capacity back up to 90% by the fourth quarter.
- Another great concern is the increased slaughter weights. Cattle being backed up in the feedyards will result in increased weights. There is a good chance we will see this increase in weights through the end of the year and into 2021.
- Weights are record high for both steers and heifers.
- Steer carcasses for the last week of April: 41 lbs. heavier than the previous year.
- Heifer carcasses for the last week of April: 31 lbs. heaver than the previous year.
Boxed beef prices
- Choice boxed beef: $401.81 (-$2.23)
- Select boxed beef: $382.53 (-$8.65)
NCBA supports a voluntary labeling program
- A major push for MCOOL to be reinstated has resurfaced over the past couple months, but NCBA’s Ceo, Colin Woodall, says the labeling will do more harm than good.
- Woodall stated that the World Trade Organization (WTO) ruled against MCOOL back in 2015 and there is no mandatory program that will satisfy them. If a mandatory Country of Origin Labeling program were put in place, the U.S. would automatically be dealt $1 billion in retaliatory tariffs by Canada and Mexico.
- NCBA does support a voluntary labeling program. “We believe the best way to do this is to focus all labeling programs on the USDA system that is currently in place,” said Woodall.
- A petition was recently launched by R-Calf USA and it’s rancher members urging President Trump and Congress to reinstate MCOOL for beef, pork, and dairy products. This petition has gained over 250,000 signatures.
- Senator Jon Tester of Montana and Senator Mike Rounds of South Dakota introduced a resolution last week requiring the U.S. Trade Representatives to enter into trade negotiations needed to implement country-of-origin labeling for beef.
Covid-19 could create long-term changes in the pork industry
- According to Christine McCracken, RaboResearch senior animal protein analyst, pork processors have the labor to harvest, but they don’t have the people to harvest and debone and trim and work the Cryovac and get everything in a box and out to the retailer in the form they want.
- McCracken says slaughter levels are beginning to normalize, however, the pork industry is still facing about 2 million hogs backed up at the producer level. The pork industry has also started to see some liquidation.
- Through all of this, the pork industry will likely see an increase in efficiency by taking out the least productive animals and farms with ongoing disease issues.
- Pork processing has been running about 75% of daily capacity.
Boxed beef prices update
- Choice boxed beef: $404.04 (-$5.43)
- Select boxed beef: $391.18 (+2.31)
Trump floats halt to U.S. cattle imports as pandemic hurts ranchers
- On Tuesday, President Donald Trump said that the U.S. should consider terminating cattle import trade deals to help America’s ranchers who have suffered due to the pandemic.
- “I read yesterday where we take some cattle in from other countries. We have trade deals. I think you should look at terminating those deals,” Trump said. “We have a lot of cattle in this country.” President Trump did not specify which trade deals or countries he was referring to.
- The U.S. imports cattle from Mexico and Canada to supplement domestic supplies at lower prices. If these bans are put into place, trade disputes could reignite.
- Under the newly negotiated North American trade pact, both Canada and Mexico are allowed to import live cattle to the U.S.
- “It was something I wish the president hadn’t said,” said Marty Smith, NCBA president. Mr. Smith attended and spoke at the event. He added that he hoped the comment by President Trump was a misunderstanding.
President Donald Trump addresses beef imports during NCBA White House visit
- NCBA’s CEO Colin Woodall feels that President Trump’s statement regarding the termination of cattle imports shows the complexity of the U.S. beef business.
- Woodall feels that if President Trump is serious about reconsidering import decisions, NCBA and it’s members would like him to take another look at his decision to allow fresh beef imports from nations like Brazil where foot and mouth disease is a serious concern.
- Woodall went on to explain that international beef trade is essential to our industry. Undervalued cuts such as hearts, tongues, and livers are exported. Lean trim is imported for ground beef production.
- Woodall closed in saying that it is more important for President Trump to re-examine the decision to import beef from Brazil, Namibia, and other nations where food safety and/or animal health concerns could directly impact American consumers and/or cattle producers.
U.S. Cattlemen’s Association respond to coronavirus food assistance program
- USCA’s President Brooke Miller said on Tuesday that the organization welcomes the relief provided through the Coronavirus Food Assistance Program as many farmers and ranchers are struggling with the economic pressure.
- Miller went on to say that USCA greatly appreciates President Trump’s comments on the need to halt the influx of imported cattle into the U.S.
- “Our nation’s strength lies in our ability to produce a safe, abundant, and affordable food supply. We need to preserve this food security by creating opportunities for U.S. agricultural producers to thrive,” said Miller.
Boxed beef prices continue to correct
- Choice boxed beef: $409.47 (-$5.48)
- Select boxed beef: $388.87 (-$6.00)
Brazil’s JBS to take legal action to reopen poultry plant in Santa Catarina
- JBS plans to seek legal solutions after a local labor authority ordered the company to close a poultry plant in southern Brazil to curb the spread of coronavirus.
- The plant is located in the town of Ipumirim in Santa Catarina state. It employs 1,500 people and processes 135,000 chickens/day.
- The plant was closed after an inspection by labor authorities under the Economy Ministry. The inspection “found serious irregularities, mainly related to the absence of safe distancing between workers on the production line and the lack of oversight measures to control the spread of the virus,” reported the prosecutor’s statement.
- JBS responded saying that the closure was unjustified.
- Eighty-six Covid-19 cases have been confirmed at the JBS plant. This adds up to almost 5% of the estimated 1,500 workers there.
Boxed beef prices update
- Going forward through 2020, Covid-19 challenges are expected to restrict slaughter levels for the rest of the year. However, slaughter capacity is expected to recover in 2021. Beef production is also projected to be record high next year.
- Beef imports were strong in the first quarter of 2020, but the forecast for the rest of the year has been revised lower on tighter expected beef supplies from Oceania.
- Imports are expected to recover in the second half of 2021.
- Beef exports reached record levels in the first quarter of 2020, but tighter expected domestic supplies and global economic uncertainty reduced the forecast for the rest of the year.
- Exports are expected to rebound as much as 9% higher in 2021.
- Choice boxed beef: $414.95 (-$19.37)
- Select boxed beef: $394.87 (-$24.19)
R-Calf urges opening of CRP lands to slow cattle supply chain
- Last week, R-Calf sent a letter to Agriculture Sonny Perdue asking Mr. Perdue to consider opening 24 million acres of land enrolled in the Conservation Reserve Program (CRP.)
- R-Calf feels that opening these acres up would help alleviate the backlog in live cattle supply that has been caused by Covid-19 reducing slaughter.
- The group estimates that our cattle industry currently has upwards of 500,000 fed cattle backed up in feedlots.
- This proposal would allow producers to use their CRP ground for emergency grazing in hopes of potentially slowing down the live cattle supply chain long enough for the bottleneck between feedlots and packers to be eased.
Grocery store prices reach 50-year high amid coronavirus
- Many consumers have been noticing increased prices at their grocery store, and they aren’t wrong.
- Food prices saw their largest monthly increase in 46 years, according to the Bureau of Labor Statistics.
- April Consumer Price Index:
- Food prices away from home jumped 3.5% over the past year.
- Between March and April, all categories of food have increased 1.5%.
- We haven’t seen an increase like this since February 1974.
- When it comes to meat products, consumers saw an increase of 4.5% in April
Beef market update
- Last week beef production was estimated at 405.2 million lbs., according to the USDA. This is up 10.2% compared the previous week and 23% lower than a year ago.
- Choice boxed beef: $434.32 (-$16.60)
- Select boxed beef: $419.06 (-$18.34)
Cattle marketing options; Market to Market
- Colin Woodall stated that more price discovery is needed in our cattle markets, and one component of that is for more cash trade.
- NCBA disagrees with the 50% negotiated cash trade bill that Senators Tester and Grassley brought forward this week because they don’t believe that needs to be mandated by our federal government.
- Woodall feels that this bill would put more of a burden on the cow calf producers rather than providing more opportunities
Tyson Foods to cut retail beef prices
- Tyson reported earlier this week that some beef items sold in grocery stores, restaurants, and to other customers could be discounted by 20%-30% through Saturday.
- The meat processing company feels this discount is needed in order to keep beef on family tables across our nation while our processing plants are facing reduced levels of production.
- The price of beef increased by 2.6% in April. We haven’t seen that big of an increase from one month to the next since 1974, according to the Bureau of Labor Statistics.
- The discounts will be on chuck and round roasts, as well as some other ground beef products.
Boxed beef prices decline
- Choice boxed beef: $450.92 (-$15.07)
- Select boxed beef: 437.40 (+$.016)
NCBA opposes government mandate restricting cattle marketing options
- NCBA released a statement yesterday in response to the bill introduced by Senator Chuck Grassley and Senator Jon Tester that would require a minimum of 50% of a meat packer’s volume of beef slaughter to be purchased on the cash market.
- NCBA feels that government mandates, like the one proposed, would arbitrarily force many cattle producers to change the way they do business.
- The cattlemens organization feels that the bill being proposed would restrict a producer’s freedom to pursue various marketing avenues.
More Mexican beef headed to U.S. dinner tables as American supply crunch bites
- To compensate for the beef shortage we are seeing here in America, Mexican steaks and other beef cuts are headed north. These shipments will hopefully offset the widespread shortages that grocery stores and restaurants are now facing, but American cattle producers are less than thrilled with this news.
- These shipments were made possible by new safety measures being adopted in Mexican processing plants. Smaller scale plants have also kept up with processing demands and have been able to keep infections away.
- Even before Covid-19, imports of Mexican beef were strong. Imports are now expected to see double-digit growth in 2020, according to Juan Ley, president of Mexico’s main cattle growers association.
- In 2019, Mexico was the third largest foreign beef supplier to the U.S., with exports reaching 232,000 tonnes. The U.S. accounted for approximately 86% of total Mexican beef exports, worth $1.3 billion.
- As we all know, here in America we have the four major beef packing companies- Cargill, Tyson, JBS, and National Beef Packing. In comparison, Mexico has 30 federally regulated processing plants of varying sizes.
Senators reintroduce COOL resolution
- Senators Jon Tester of Montana and Senator Mike Rounds of South Dakota have come forward with a resolution to support Mandatory Country of Origin Labeling (MCOOL) for U.S. beef products. Senator Steve Daines of Montana, John Thune of South Dakota, and Cory Booker of New Jersey also joined with Tester and Rounds on this supportive resolution.
- According to Senator Tester, MCOOL is needed for consumers to distinguish between high quality American beef, and lesser quality imported beef. He feels that MCOOL would give American cattle producers the upper hand by allowing them to showcase their quality product that was raised here within our borders.
- Covid-19 has shown the importance of food security, transparency for consumers and food supply chain issues. Senator Rounds feels these reasons are enough to reinstate MCOOL. “This is not only misleading to consumers when they purchase meat at the grocery store, it puts our producers at a competitive disadvantage when marketing their products. This is a win-win for producers and consumers,” said Rounds.
R-Calf disappointed with resolution
- R-Calf released a statement on Wednesday regarding the resolution proposal by Senator Tester and Rounds saying that they were disappointed with the proposal.
- Currently, over 375,000 signatures have been retrieved for the petition urging Congress and President Trump to pass new MCOOL legislation.
- Bill Bullard said this resolution wouldn’t provide U.S. cattle producers any relief from imported cattle and beef arriving from approximately 20 foreign countries.
Boxed beef declines for the first time in weeks
- Choice boxed beef: $465.99 (-$9.40)
- Select boxed beef: $437.24 (-13.73)
Senators introduce spot market bill
- On Tuesday, U.S. Senators Chuck Grassley of Iowa and Senator Jon Tester of Montana introduced a bill to require each U.S. meat processing facility that slaughters over 125,000 head of cattle each year to purchase 50% of their weekly volume of beef slaughter on the open market.
- A lack of cash negotiated trade in recent years has destroyed price discovery within our cattle markets. The fundamentals of the CME cattle futures contracts have also been negatively impacted.
- If this bill is passed, the Livestock Mandatory Reporting system will be better utilized as a mechanism for accurate and transparent reporting.
- Co-sponsors of this bill:
- Senator Joni Ernst of Iowa
- Steve Daines of Montana
- Mike Rounds of South Dakota
- Tina Smith of Minnesota
- Cindy Hyde-Smith of Mississippi
- “We would like to thank the nearly 4,400 individual producers and state and local organizations for undertaking this truly grassroots effort in support of #faircattlemarkets. USCA will be calling on these advocates in the near future to continue pushing forth a workable solution,” said U.S. Cattlemen’s President, Brooke Miller.
Farm bankruptcies are up
- Year-to-year farm bankruptcies are up 23%.
- There have been more than 600 chapter 12 farm bankruptcies over the last 12 months. “That’s the third highest number we’ve seen in the last 20 years and while it’s still well below what we saw in the 80s, it’s still a very concerning trend,” said John Newton, American Farm Bureau Chief Economist.
- Wisconsin has been hit the hardest with nearly 80 bankruptcies in a 12-month period. This is largely due to the struggles the dairy industry has faced over the last several years.
- Following Wisconsin is Nebraska with 41 chapter 12 bankruptcies, and then Iowa with 37 filings.
- These bankruptcies come as no surprise with farmers and ranchers dealing with depressed markets for the past couple of years. Now that coronavirus has wreaked havoc within our industry, we will start to see even more producers face this harsh reality.
Boxed Beef Update
- Choice boxed beef: $475.39 (+6.81)
- Select boxed beef: $450.97 (-$2.00)
As U.S. meat workers fall sick and supplies dwindle, exports to China soar
- President Donald Trump recently ordered meat processing plants to stay open to protect our nation’s food supply while plant workers were increasingly testing positive for Covid-19 and some were even dying. At the same time, exports to China have significantly increased, while U.S. consumers are facing protein shortages.
- President Trump is now receiving criticism for putting plant workers at risk ensuring China’s meat supply is fulfilled.
- China’s need for protein imports increased after African swine fever led to the death of half the country’s hog herd over the past two years.
- “We know that over time exports are critically important. I think we need to focus on meeting domestic demand at this point,” said Mike Naig, Iowa’s Agriculture Secretary.
- Daily slaughter of pigs has decreased by 40% since mid-March. All the while, American pork exports to China have quadrupled over the same period, according to the USDA.
- China owned, Smithfield (the world’s largest pork processor), was the biggest U.S. pork exporter to China from January to March.
- JBS has reported that the company has reduced exports to focus on meeting U.S. demand during the pandemic.
- S. farmers have struggled financially over the past few years as they felt the affects of a trade war with Beijing. At that time there was an oversupply of hogs. Hog producers are now facing the reality of record high exports, pork shortages at the retail level, and a glut of hogs that can’t be slaughtered due to processing plant closures, which has led to euthanize of thousands of hogs.
Restaurant executives, meat wholesalers say shortages and price increases could continue throughout the summer
- Meat distributors, grocery store owners, and restaurateurs expect to be dealing with limited beef, pork, and chicken supply through the 4th of July.
- There is also an increased uncertainty in demand as restaurant owners are unsure if people will return to eating out as often as they did before the pandemic.
- 1 in 5 Wendy’s across our nation has removed various items from their menu due to the meat shortage.
- In Canada, McDonald’s is known for buying domestic beef, however they are now using imported beef to fill the shortage.
- Analysts are expecting beef prices to continue to climb as restaurants begin to open their doors.
Senator Grassley: It’s time to analyze aid packages
- On Monday, Senator Chuck Grassley of Iowa was featured on Agritalk, hosted by Chip Flory.
- Senator Grassley discussed how the government should analyze how relief aid packages are being used throughout our country.
- Senator Grassley, along with 13 other senators recently sent a letter to Congress requesting additional funding for farmers on top of what has already been allocated through aid packages.
- “Working with the Iowa and Nebraska cattlemen, we’re going to put in a bill that at least 50% of the slaughter of cows needs to be done by independent negotiations between a willing buyer and a willing seller, as opposed to what we’re up against now, where let’s say 80% of the market is contracted and there’s only about 20% out there for the independent producer. We need more of a market for the independent producer that we don’t have today,” he said.
Boxed beef update
- Choice boxed beef: $468.58 (+$7.70)
- Select boxed beef: $452.97 (+$3.98)
Bottleneck eases, wholesale beef marches higher
- Last week ended with an estimated cattle slaughter of 452,000 head, a 6% increase from the week before. The same week a year ago, slaughter was at 667,000. So far this year, slaughter is 5.8% lower than 2019.
President Trump announces federal government will buy $3 billion in meat, dairy, and produce
- On Saturday, President Trump announced that the federal government will be purchasing $3 billion of food from farmers. The buying will begin early this week.
- These purchases will include dairy, meat, and produce that will be given to food lines and kitchens.
- Many Americans are bracing for a food shortage. Some analysts are saying that meat prices could jump 20%.
- In certain parts of our country, consumers are finding it hard to find meat in the grocery stores. So far we have seen Wendy’s temporarily stop offering some of its fast-food menu items, Costco has capped meat purchases at three items, and Krogers has also set in place a similar policy.
Elizabeth Warren and Cory Booker join forces on bill to ban most factory farming by 2040
- Senator Elizabeth Warren announced last week that she will be co-sponsoring Senator Cory Booker’s bill to phase out large-scale factory farming by 2040.
- The Farm System Reform Act would prohibit new large factory farms from going into business and forces others to cease expansions before halting operations entirely within two decades.
- Senator Warren’s support for the law stems from reports of unsafe conditions in the meatpacking industry that have arose due to the Covid-19 pandemic.
- If passed, the law would place an immediate moratorium on new large factory farms (aka concentrated feeding operations, CAFOs.)
- The law would also enforce MCOOL on beef, pork, and dairy products, while prohibiting the USDA from labeling any imported meat as “Product of USA.”
Boxed beef increases slightly
- Choice boxed beef: $460.88 (+2.34) An increase of $83.43 on the week.
- Select boxed beef: $448.99 (+$.42) An increase of $91.86 on the week.
President Trump to Department of Justice: Investigate Meatpackers
- Yesterday, President Trump asked the Department of Justice to investigate meatpacker pricing activity.
- “I’ve asked the Justice Department to look into it. … I’ve asked them to take a very serious look into it, because it shouldn’t be happening that way and we want to protect our farmers,” the president said at a White House event.
- All three national cattle and beef organizations, along with 23 state cattle organizations, many senators and others have asked that the DOJ help the USDA with the investigation they were already planning to conduct.
- USDA has been investigating meatpacker pricing activity since last fall when the cattle markets took a nose dive following the Holcomb, KS Tyson meat plant fire in August.
- Since Covid-19 has hit, boxed beef prices have more than doubled, while live cattle prices have fallen about 20%. These two instances have caused a massive gap between cattle producer and packer profit margins. This large gap has raised concern about possible price manipulations and other unfair practices within the beef industry.
- The cattle industry is in dire need of some answers in a time when cattle markets are threatening to take many producers out of the industry.
Smithfield Foods to reopen Sioux Falls, SD facility
- Smithfield Foods will take a phased approach to resume its operations. The harvest floor will reopen on May 11th and if everything goes as planned, the facility will be fully operational by late May.
- The facility has been closed for three weeks now. It is one of the largest pork processing facilities in the country, representing 4%-5% of the US pork production. The plant employs 3,700 people.
- The State of South Dakota is offering testing for the Coronavirus to all employees before returning back to work.
Senator Fischer Highlights Covid-19 Impact to Agriculture on Fox News
- “Right now, we are seeing great prices for the packers. I understand that markets cycle up and down but when you have such a discrepancy in prices compared to the family farmer working on his ranch to produce that critter which is going to end up as a good steak, that needs to be looked into…We want to make sure we have a supply chain that works well for all participants—and we also want to make sure we have good protein on our shelves,” said Senator Fischer during the interview.
- Senator Fischer was then asked, “Where do you think this investigation will end up? And what do we face as a country as far as the availability of meat on our shelves?” “The supply chain is working, we don’t want to see beef turn into a situation like toilet paper faced earlier during this pandemic,” said Senator Fischer.
- Senator Fischer went on to say that we need some transparency within our processing sector and we need answers to know what is truly happening for the packer margins to be through the roof and at the same time, cattle producers are facing record lows.
Boxed Beef Continues to Increase
- Choice boxed beef: $458.54 (+9.36)
- Select boxed beef: $448.57 (+16.61)
USCA: Prioritize the U.S. Beef and Cattle Industry
- On Wednesday, the United States Cattlemen’s Association sent a letter to Secretary of Agriculture, Sonny Perdue, emphasizing the prioritization of the US beef and cattle industry over foreign product during the Covid-19 pandemic.
- Bold and immediate action needs to be taken within our industry to avoid mass liquidation in the livestock sector. If action is not taken, it could take up to a decade to recover from these tumultuous times, or worse, we will be forced to import our food like we import so many other products to this country.
- As Americans, we are used to a safe and steady food supply. As an industry, we must continue to consider all possible solutions to ensure that Americans can continue to depend on this for generations to come.
Proposed ‘Fed Cattle Set-Aside Program’ Surfaces
- A proposal that would fund placing feedlot cattle on a maintenance diet for 75 days is being circulated in Washington D.C.
- This proposal would seek to “alleviate the risk of massive economic collapse in the beef cattle industry.” The proposal was developed by the Beef Alliance and modeled after a set-aside program used in Canada after the BSE crisis in 2004.
- This program was developed using USDA data and assistance from CattleFax.
- The Beef Alliance is hoping to build support for the proposal from other cattle industry groups and members of Congress.
- The proposed payment rate for cattle in this program would be fixed at $2.90 per head per day. This is intended to offset additional feed and operating costs incurred by holding cattle back from slaughter for 75 days.
- The program is not intended to allow producers to recoup all economic damages. However, it will prevent massive economic losses throughout the cattle industry. It should also provide certainty and confidence in the food supply.
Boxed beef increases
- Choice boxed beef on Wednesday, May 6th: $449.18 (+20.19)
- Select boxed beef on Wednesday, May 6th: $431.96 (+21.25)
11 AGs in cattle country ask for Department of Justice Investigation into meat industry concentration
- South Dakota’s Attorney General, Jason Ravnsborg and Attorneys General from ten other Midwestern and Western states are urging the Department of Justice to pursue a federal investigation into suspected national price fixing by meat packers in the cattle industry.
- The need for this investigation stems from the four largest meat packing companies controlling 80% of the beef processing in the US, the shelf price of beef being incredibly high, and cattle prices are low and continue to nose dive.
- “These activities should be alarming to all cattle producers and consumers,” said Ravnsborg. “A federal investigation is warranted to protect consumers and promote competition in the marketplace.”
- While the packers are using their power to control the cattle markets and harming producers, they are also hurting consumers who are struggling themselves due to loss of employment and reduced incomes.
- Ravnsborg stands with Attorneys General from North Dakota, Nebraska, Iowa, Minnesota, Montana, Colorado, Wyoming, Missouri, Idaho, and Arizona.
Wendy’s pulls burgers off menu in some locations due to meat shortage
- Some Wendy’s restaurants across the nation have taken their signature hamburgers off the menu. Shortages have been reported in California, South Carolina, and Kentucky.
- Wendy’s is warning that some items on the menu will be in short supply from time to time during this Covid-19 pandemic. However, the restaurant chain expects this to only be temporary.
- Wendy’s has about 5,800 locations across the country.
Boxed Beef Increases
- On Tuesday, choice boxed beef increased to $428.82 (+18.77). Select boxed beef increased to $410.54 (+33.88).
Cargill packing plant in Schuyler shutting down due to COVID-19
- The Cargill packing plant is Schuyler, NE is temporarily closing as it’s workforce deals with the impacts of Covid-19.
- The company is shutting down in order to prioritize their employee’s health.
- “This was a difficult decision for our team as we operate an essential service, but our values are guiding our actions,” North America Lead Jon Nash said. “Our focus now is continuing to keep our employees safe and getting our facility back to normal operations as soon as we can.”
- The Schuyler plant lies in the East Central District Health Dept. where 331 confirmed cases were reported on Sunday evening. This district encompasses four counties.
- Tentatively, Cargill plans to resume operations the week of May 18th.
- This plant employs 2,200 people and processes 4,500 hd. of cattle per day.
- The Schuyler plant is the third NE packing plant to completely halt operations. It follows Tyson plants in Dakota City and Madison.
Beef output in US much lower than plant shutdown reduced capacity suggests
- America’s beef output has decreased at a more significant rate than what plant closings due to the coronavirus pandemic originally suggested, signaling that the current beef shortage could continue after processing plants reopen.
- USDA reported that cattle slaughter dropped 37% this past week compared to what it was a year ago. This percentage is quite a bit higher than the 10%-15% that packing plants across the country have lost due to the pandemic.
- Hog slaughter numbers are showing the same thing; hog slaughter is down 35% from a year ago, while plant shutdowns since the pandemic have only caused a 25%-30% decrease in slaughter.
Scientists Create Antibody That Defeats Coronavirus in Lab
- This experimental antibody has neutralized the virus in cell cultures.
- The antibody may help prevent and treat Covid-19 and related diseases in the future, either alone or in a drug combination, according to a study published Monday in the journal Nature Communications.
- More research will be needed to see whether the findings are confirmed in a clinical setting and how precisely the antibody defeats the virus.
- Experiments have shown that the antibody, 47D11, not only defeats coronavirus but also SARS.
Kroger is limiting ground beef and pork purchases in some stores
- A slowdown and closures in meat processing plants from the coronavirus pandemic has caused a new wave of panic shopping. Some grocery stores are now imposing limits on meat purchases to prevent empty meat cases.
- Kroger, America’s largest supermarket chain, is adding purchase limits on ground beef and fresh pork in some stores.
- As of last Tuesday, 20 meatpacking and food processing workers have died so far due to Covid-19.
- Meat sales have increased by 40% in recent weeks, according to data shared by grocery industry trade group FMI.
- Grocers aren’t expecting meat shortages, however, they are adjusting to the spike in demand and the difficulties securing supply.
- The largest grocer in the US, Walmart is not expecting it will have to set product limits on meat. Instead, they are focusing on supplying the most-commonly bought meat products.
- Smaller chain grocers are also being affected by the slowdown. In New York City, grocery chain Morton Williams’ co-owner Av Kaner said, “the most severe shortages have been with packaged cold cuts” because consumers are looking for pre-packaged items instead of meat from the deli counter. “Beef prices have increased the most, followed less so by pork and poultry,” Kaner said.
Workers’ union: JBS-Worthington plant to reopen Wednesday with new safety precautions;
- The JBS plant in Worthington, MN is scheduled to reopen on Wednesday after it was shut down due to a sharp increase in Covid-19 cases last month.
- The United Food and Commercial Workers (UFCW) Local 663 said JBS will open the “kill side” of the plant on Wednesday after an executive order from President Trump that mandated meatpacking and poultry plants to reopen or remain open during the Covid-19 pandemic.
- Social distancing will be enforced in the plant and in the common areas along with “frequent and thorough disinfecting” and daily communication with plant personnel.
- Over the past week while the plant was shut down, nearly the entire plant was cleaned “floor to ceiling.” Eighty touchless sanitizer dispensers and 30 touchless water faucets were installed throughout the plant to ensure worker safety.
- Choice boxed beef ended day at $410.05, up $32.60.
- Select boxed beef ended the day at $376.66, up $19.53.
Meat Giants From Brazil Are Ready to Cover American Shortfalls
- JBS has come forward saying that they have America covered when it comes to meat supply shortages after numerous processing plants have shutdown due to Covid-19.
- The CFO of JBS claims that the company can increase exports from Australia and has idle capacity in Brazil for beef shipments to the US.
- “Our geographic diversification has been a natural hedge for trade barriers and sanitary issues,” said CFO Guilherme Cavalcanti in a recent webinar.
- Minerva, the largest South American beef exporter, is also ready to meet US needs from their eight plants in Brazil, Argentina, and Uruguay, according to their CFO, Edison Ticle.
- Minerva’s sales to the US have been increasing since early April, when Covid-19 began to pose a threat to our domestic meat supply.
- Last week, the CEO of Marfrig Global Foods, another Brazilian meat giant, said US demand for South American beef has strengthened since the onset of Covid-19. Marfrig ships beef to the US from three South American countries.
- The United States reopened its doors to Brazil’s fresh beef back in February after a three-year suspension on the imports due to safety concerns. Brazil is allowed to export 60,000 metric tons a year to the US in a tariff-free import quota shared with other nations, according to Edison Ticle (Minerva’s CFO.)
- Any shipments exceeding this quota are required to pay a 26% tariff, which is most likely still profitable due to current price differentials, claims Ticle.
- JBS’ shares jumped 18% in April. Marfrig stocks climbed 42%. Minerva shares spiked by 50%.
Wasted milk, euthanized livestock
- The coronavirus pandemic has caused a major disruption in our nation’s food supply chain.
- Those in agriculture have seen financial hardships pile up over the past few years; the US-China trade war, rampant floods that wiped out entire harvests, and poor commodity prices.
- Wasted products;
- Farmers in Washington are facing a surplus of one billion pounds of potatoes due to the restaurant and school closures, according to the Washington Potato Commission.
- At least $5 billion worth of fresh fruits and vegetables have been wasted, according to estimates from the Produce Marketing Assoc.
- John Tyson, chairman of Tyson Foods, has warned that plant closures due to the pandemic will result in the loss of millions of chickens, pigs, and cattle.
- Dairy farmers are currently dumping out as many as 3.7 million gallons of milk every day, according to estimates from Dairy Farmers of America.
Cattle producers bring Ft. Pierre packing plant back online
- Thirteen investors are bringing a meat-harvesting locker in Ft. Pierre back online this month.
- “We saw it happen in the 80s with the pork industry where the large companies controlled the kill space and over 400,000 hog producers were wiped out. Now in the cattle industry, there are four packers that own over 85 percent of the kill space. Major corporations want producers to become employees and we can’t have that,” said Kim Ulmer, one of the investors.
- The updated facility is called US Beef Producers and has investors from Minnesota, North Dakota, and South Dakota. The plant’s investors are all cattle producers, either feeders or ranchers.
- US Beef Producers was able to secure a $100,000 loan at a low interest rate with the help of the Governor’s Office of Economic Development.
- Understanding and meeting the regulations required for a locker has been the toughest challenge; the manual of requirements is 503 pages long, said Ulmer.
- The locker has a goal of harvesting 35/hd per week by Aug. 1st.
NCBA Applauds Bipartisan Senate Effort to Provide Flexibility to Livestock Haulers
- NCBA’s executive director, government affairs, Allison Rivera, released the following statement in response to a bipartisan letter from 24 US Senators to US Senate Committee on Commerce, Science, and Transportation Chairman Roger Wicker and Ranking Member Maria Cantwell.
- “Now more than ever, we can see how vitally important it is for haulers to have the flexibility they need to get live and perishable goods to market as quickly and as safely as possible. Hauling livestock is inherently different than hauling typical consumer goods, and we continue to look for flexibilities within Hours of Service to safely haul livestock around this country. As we look toward an infrastructure package we are grateful for the continued support on Hours of Service flexibilities.”
- Transporting perishable and live goods presents a unique set of circumstances. These laws need to be flexible concerning these goods.
- Transporting these types of goods requires a commonsense framework for drivers, rather than a one-size-fits-all model.
Nine meat plants in southern Brazil face Covid-19 outbreaks
- According to health authorities in Brazil’s southernmost state of Rio Grande do Sul, coronavirus has spread to nine local meat-processing plants.
- Approximately 16,345 people who work at these meat plants have been exposed to the virus.
- Coronavirus has been gaining momentum in Brazil. On Thursday 78,162 cases were reported, with 5,466 deaths.
- There have been 124 confirmed cases of the virus among workers in the meat facilities, and at least one person has died from Covid-19 linked to the processing plants.
Estimated weekly meat production
- Under Federal inspection for the week ending Saturday, May 2nd, 2020, total red meat production was estimated at 682.3 million lbs. according to the US Dept. of Agriculture’s Marketing Service.
- 9% lower than a week ago and 34.9% lower than a year ago.
- Cumulative meat production for the year to date was .4% lower compared to the previous year.
- Boxed beef continues to shatter records
- This morning’s boxed beef was reported at $373.85, which is $80.48 higher than last Friday’s close. And 108.26 higher than the previous high set on May 19th, 2015.
Groups ask DOJ to help investigate packers
- SD Cattlemen’s Assoc. is among 23 groups that are currently asking that the US Dept. of Justice get involved in the USDA investigation into meatpacking pricing activity surrounding the coronavirus pandemic.
- Eric Jennings (Spearfish, SD), the organization’s president, said his group is worried that without the help of the DOJ, the USDA investigation isn’t going to produce any results.
Tyson Foods helped create the meat crisis it warns against
- John Tyson, whose family reigns as the largest meat processor in the US, took out an ad in the Sunday edition of the New York Times this past Sunday, warning that the food supply chain is breaking.
- A few days later, President Donald Trump invoked the Defense Production Act to keep processing facilities open.
- In all actuality, the real problem goes back to decades of consolidation in the processing sector.
- Tyson, JBS, and Cargill control 2/3 of America’s beef processing.
- The bulk of this beef is processed in a few dozen giant plants.
- Twelve closures of US slaughter plants in the last month have led to a 25% reduction in pork processing and a 10% reduction in beef processing. At the same time, beef prices at the retail level have surged.
- Theses issues stem from consolidation.
- The number of slaughter plants has plummeted by 70% since 1967.
- Tyson clocks in an annual income of about $2 billion and its shares have surged 60% in the last 5 years, bringing its value to $23 billion.
Interviews with Bryan Reed and Shane Kaczor
- Both of these gentlemen are concerned about the consolidation of the packing industry.
- Both feel that an increased level of negotiated trade would greatly benefit the industry.
- Kaczor said that rural America is in deep trouble if we don’t somehow find a way to solve our issues in the cattle industry.
- Kaczor feels that the CME is broken and not a viable tool for risk protection.
- Both gentlemen don’t quite understand why it is so difficult to reinstate MCOOL
R-Calf’s MCOOL Petition Gains 250k Signatures in 7 Days
- Through a letter, R-calf is urging President Trump and Congress to determine if the packing industry should be decentralized.
- Restricted market access, depressed prices for America’s cattle farmers and ranchers, lack of available beef in some or many American grocery stores, and record beef prices for consumers have revealed that the US must immediately begin the development of strategic, national food production, processing and distribution policy that can meet America’s food security interests
- R-calf feels that food security interests are the most viral of all interests here in America.
- The letter explains that the closure of one or two plants should not destroy the livelihoods of America’s cattle producers or disrupt America’s access to beef.
Grand Island Mayor Roger Steele, asking for Federal Assistance and U.S. Ag. Secretary Sonny Perdue to visit
- Mayor Roger Steele of Grand Island, NE is requesting President Trump to provide adequate testing and continual testing for all those workers at the JBS plant in Grand Island.
- There have been 1,100 confirmed cases of Covid-19 in central Nebraska, 37 deaths, with 10 of those deaths occurring on Wednesday.
- “If you’re going to order a meat processing plant to remain open 24 hours of the day, then you should have dedicated testers assigned to that plant, rather than once in a while we have testers in our city,” said Mayor Steele.
Boxed beef continues to skyrocket
- Choice boxed beef ended the day at $367.56
Box beef is skyrocketing as the bottleneck at packers continues, though some relief may come after Trump declared packers essential to keep their doors open. Hopefully, they’ll be running at capacity soon so producers see some relief on the horizon.
–ShayLe Stewart, DTN Market Analyst
R-Calf’s mandatory country of origin labeling petition has gained 250,000 signatures in just seven days
- R-Calf’s MCOOL petition was launched last Thursday, 7 days ago, and has already gained 250,000 signatures.
- This petition is urging President Trump and Congress to immediately pass MCOOL for beef, pork, and dairy products.
- Bill Bullard, R-Calf’s CEO, thinks reinstating MCOOL will strengthen national food security and help stimulate economic growth.
- Kerry Cranton, Kansas cattle producer who, among several other grassroots cattle producers, was instrumental in launching the petition. “There is a handful of very powerful lobbying groups that have held the President and Congress at back on this critically important initiative and our petition clearly shows that our government has been misled.
- Last month R-Calf launched a new website, usabeef.org, a free platform for cattle ranchers and farmers who raise and sell cattle or beef that is exclusively USA born, raised, and harvest directly to consumers. This website is rapidly growing; it includes 335 farms, ranches, and businesses from 41 states.
Bipartisan pair of senators request antitrust probe into meatpacking industry;
- A pair of bipartisan senators are currently requesting an antitrust probe into the meatpacking industry.
- Senator Josh Hawley of Missouri and Senator Tammy Baldwin of Wisconsin have asked the Federal Trade Commission to open an antitrust investigation into the meatpacking industry and it’s potential to cause significant disruptions in the food supply chain.
- The senators noted that the beef industry is dominated by Tyson Foods, Cargill, JBS, and Smithfield Foods.
- “Following a series of COVID-19 infections among plant workers, in recent days these oligopolistic companies have closed three pork plants indefinitely, resulting in the shutdown of a staggering 15 percent of America’s pork production,” the senators wrote to the FTC.
- This letter comes a day after President Trump signed an executive order to keep processing plants open in an effort to prevent further disruptions of the food supply.
- Both senators urged the president to exercise the same authority to investigate the growing concentration in the meatpacking and processing industry and any anticompetitive behavior resulting from this concentration.
South Dakota Cattlemen’s Association spokesman Eric Jennings said “It’s a terrible situation that we’re in with packer concentration. It’s a poor system, but I don’t know that there is any illegal wrongdoing. They have put themselves in a good position,” he said. The South Dakota Cattlemen’s Association joined 22 other state cattle organizations to ask the Department of Justice to get involved in the USDA investigation into packer buying activity in recent weeks. Tri-State Livestock News will provide more complete coverage of that story this week.
Smithfield plants in Missouri, Wisconsin and South Dakota that have closed due to coronavirus outbreaks.
USDA boxed beef daily negotiated sales report
- Choice boxed beef climbed $16.98, ending at $347.80
- Select boxed beef climbed $11.37, ending at 332.25
- The last time boxed beef prices were close to this level (2014, and please note they were actually only at $300/cw, so we’ve surpassed them by almost $50.00), but that year fat cattle were selling for as high as $168.50.
- Fat cattle today were traded close to half of that value.
Coteau Cattlemen step up
- The Coteau Cattlemen of Watertown, SD and surrounding area, have been trying to find a way to help surrounding communities during this pandemic.
- With the donation from Hamlin Co. Livestock Improvement Assoc. and Pheasants Forever, Dry Lake, SD Chapter #485, the cattlemen’s group were able to purchase beef bucks to be given away to consumer to purchase beef.
- These $5 beef bucks were given away on local radio stations by calling in to the stations.
- Smaller increment beef bucks will hopefully help more people purchase beef during these trying times. Also a win-win for consumer and beef producer
- The Coteau Cattlemen are finalizing plans to distribute more beef bucks with various food giveaways in the coming weeks and months to help those in need.
NCBA.org; A phone call to the White House
- NCBA’s CEO, Colin Woodall and NCBA’s President, Marty Smith, participated in a phone call today with President Trump, Vice President Mike Pence, and Secretary of Agriculture, Sonny Perdue.
- The White House is focused on keeping packing plants functioning, beef on the shelves, and beef available for export.
- Meat Supply- Both Colin and Marty feel that the executive order put in place by President Trump will go a long way to make sure we don’t have a nationwide shortage of beef
- The President remains focused on how this pandemic is affecting farmers and ranchers, and what we need to do to move through this tough situation.
- Worker safety is a top priority for the White House.
- “The focus of the White House is safety, but also to get this thing back to normal,” said Woodall in regards to processing plant issues. He is hoping to see some turn arounds within the processing sector in the next couple weeks.
- “We are the only group representing cattle producers that were part of the call with the president this morning and we have been in contact almost daily with the White House and all the various federal agencies that continue to engage with Congress. So the NCBA team has been at work every single day since this pandemic started and we continue to make sure that the steady voice of NCBA is there to influence ALL those decisions that are being made,” said Woodall.
Trump orders meat plants to stay open
- Trump signed an executive order on Tuesday that compels slaughterhouses to remain open.
- This move by Trump is setting up quite the showdown between big packers and the unions and activists who are wanting to protect workers during this pandemic.
- Despite packing house closures, Trump said in his order, “such closures threaten the continued functioning of the national meat and poultry supply chain, undermining critical infrastructure during this national emergency.
- Environmental working group called this order a potential deal sentence.
- At least 20 workers in meat and food processing have died, and 5,000 meatpacking workers have either tested positive for the virus or were forced to self-quarantine.
- The White House decided to make this move amid estimates that as much as 80% of US meat production capacity could shut down.
- Dairy farmers continue to dump milk that can’t be sold to processors, broiler operations have been breaking eggs to reduce supplies, hogs are being euthanized, and some fruit and vegetables are rotting in fields amid labor and distribution disruptions.
- Low-income Americas have been waiting in long lines at food banks, that claim to have reported food shortages.
- When asked about the country’s food supply, Trump responded, “There’s plenty of supply.”
America’s mass hog cull begins with meat to rot in landfills
- The mass culling of America’s hog herd has begun as numerous shutdowns at processing plants have created a glut of hogs that farmers can no longer sustain.
- Starting today, about 13,000 pigs a day will be killed at a JBS slaughterhouse in Minnesota, according to US representative Collin Peterson. But instead of these cuts being turned into ham and bacon, the carcasses may be dumped in landfills or go to rendering plants.
- Estimated 160,000 hogs/day nationwide have to be euthanized.
- Peterson went on to say, “Clearly in the meat sector we are going to have shortages. What I worry about is people are going to find this out and they are going to be hoarding it and that will exacerbate the problem.”
Boxed beef continues to hit records
- On Tuesday, choice boxed beef ended the day at 330.82, up almost $19 for the day.
- Select box beef ended the day at 320.88, up $22.10 for the day.
Minnesota Ag Department helping processors and producers with pandemic challenges
- Minnesota State Ag Dept. is helping livestock producers and processors address current challenges caused by the Covid-19 pandemic.
- Agriculture Commissioner Thom Peterson claimed that prior to the pandemic some farmers were selling directly to smaller processing plants. Now with the pandemic, consumers have been purchasing directly from farmers 4-5 times more than normal.
- Peterson said his dept. is moving up state inspections and starting grant programs to assist smaller processors. Peterson’s Ag Dept. is also developing an expedited process to enable plants that currently do not sell wholesale within the state to do so. If these establishments meet the minimum requirements, they’ll be granted a 90-day provisional grant of inspection.
R-Calf says 63,000 sign mandatory COOL petition
- More than 63,000 signatures have been collected urging President Trump and Congress to immediately pass Mandatory Country of Origin Labeling for beef, pork, and dairy products.
- R-Calf CEO Bill Bullard stated that, “MCOOL will strengthen national food security and help stimulate economic growth.”
- He went on to say that he encourages producers and consumers to sign the petition at demandusabeef.com.
Cutout Soars; Futures Stabilize
- Extremely small cattle slaughter is causing USDA cutout values to reach heights never dreamed of.
- As of this morning, the choice cutout was quoted at an astounding $326, $120 higher than the low in February of this year.
- Cash cattle prices have declined 22.2% thus far, which set a new low for the year last week.
- Record high boxed beef prices coupled with low cattle prices have led packers to find themselves deeply in the black even though their costs have increased by 40%.
Farmers should act fast to receive economic relief
- Congress recently appropriated $310 billion of additional funding to the Small Business Administration’s Paycheck Protection Program and an additional $60 billion for the Economic Injury Disaster program. Funds are expected to only last 4 days.
New York partnering with state dairy producers to give excess milk to food banks, and those in need
- New York’s Gov. Cuomo announced on Monday that New York will be partnering with state dairy producers to process and distribute excess milk to food banks and those in need. o This excess milk will be made into yogurt and cheese and then distributed to food banks and those in need.
Texas Gov. Abbott to allow stay-at-home order to expire on April 30th
- Gov. Abbott will raise the stay-at-home order on April 30th
- Opening the state back up will occur as a two-phase plan
- Phase 1- All retail stores, restaurants, malls, and movie theatres will be allowed to reopen with 25% limited occupancy.
- Phase 2- Set to begin on May 18th (barring phase one is successful.) Occupancy levels will be increased to 50%. Further increases will hopefully occur in the near future.
Market to Market
- According to Market to Market, Iowa State University economists estimate a possible $.40 drop in the price of corn through the summer
Choice boxed beef sets record
Tyson Foods releases full-page ad in the New York Times
- Warning people that the food supply chain is breaking.
- Tyson roughly employs 100,000 workers
- Tyson closed it’s pork plants in Waterloo, IA and Logansport, IN so workers could be tested.
- Pork processing plants have been hit incredibly hard since Covid-19; 3 of the largest going offline indefinitely.
- JBS Pork Processing in Worthington, MN
- Smithfield Foods in Sioux Falls, SD
- Tyson Plant in Waterloo, IA
- These plants combine to make up 15% of pork production.
South Dakota’s Gov. Kristi Noem, plans to reopen Smithfield Foods ‘in a matter of days’
- Noem stated in an interview with Foxs’ Ed Henry, Noem claimed that she thinks the plant can open back up within a few days.
- Over 800 people at Smithfield Foods plant in Sioux Falls, SD have tested positive for Covid-19. This makes the plant the largest hotbed for the virus in all of the United States.
- Noem has yet to issues a statewide stay-at-home order. SD is one of the five holdout states; Arkansas, Iowa, Nebraska, and North Dakota.
JBS closes its Green Bay, WS plant
- Employs 1,200 people. Linked to 189 cases of the illness.
- JBS will continue to pay it’s employees while the plant is closed down.
Boxed beef hits record levels
- Boxed beef reached $293.37
- Just last week (the week of April 20th), this price increased $54.38
United States receives it’s first shipment of beef rom Namibia
- This shipment included prime cuts, chuck, blade and trimming.
- These exports come after 18 years of extensive negotiations between the US and Namibia.
Cattle on feed report
- Placements reported at 1.56 million head, down 23% from last year.
- These placements were the lowest for March since the series began back in 1996.
- Marketing’s reported at 2.01 million head, up 13% from last year
- These marketing’s are the second highest for March since the series began back in 1996.
MSGA joins other state cattlemen’s associations requesting investigation into cattle markets
- MSGA joined 22 other state cattle organizations alst week in sending a letter to US Attorney General William Barr, requesting a formal investigation by the DOJ into packer corruption, collusion, and manipulation of the cattle markets.
- This letter was prompted by the fire at the Tyson processing plant in Finney County, Kansas back in Aug. of 2019 and most recently, Covid-19. Both events caused major disruptions in the cattle markets.
Jennie-O closes operations at Willmar, MN plants temporarily due to Covid-19
- A pair of Jennie-O turkey store processing plants were closed in Willmar, MN after 14 employees tested positive for coronavirus.
- Close working conditions and incentives to stay on the floor despite systems, allowed the virus to spread through the plant and communities.
Over the past decades, the American public has stood by and watched the destruction of the family-owned poultry and pork producers. A few large processing companies controlled the price and broke every one of the independent producers. Today the American cattle producer is standing on the brink of oblivion. If something isn’t done soon the ranching way of life will be gone and anyone raising cattle will be doing it for one of the multi-national companies who will control all beef from birth to plate. Someone should do something about it but we are always too busy ourselves, the time has come to act or be forced out of business.
This was the wake-up call issued at the Rally to Stop the Stealin’ held in Omaha, Nebraska on October 2nd in the Ramada Inn Ballroom. This event was sponsored by Organization for Competitive Markets. A variety of other groups were invited to attend and participate, including R-CALF USA, Family Farm Action, Farm Aid and a score of other groups and organizations. Close to 400 cattle producers and feeders from close to a dozen different states came to listen and learn. A number of OCM board members spoke stressing the need of reimplementation of Country of Origin labeling, and for the government to step in and investigate the fat cattle market manipulation and to take additional action to save the cattlemen. They are urging people to continue calling Washington, Tweeting President Trump and using social media to let their voices be heard.
Corbitt Wall, host of Feeder Flash and commercial cattle manager and livestock market analyst for DV Auction spoke in the morning to a full house. He used slides and humor as he stressed how we have lost all competitiveness in the fat cattle market.
Imploring cattle feeders to sell more cattle on the negotiated cash market rather than in formula contracts, Wall talked about his concern that the cattle industry will go the way of the hog industry due to the same vertical integration tactics being employed by the big packing companies.
Wall emphasized that for cattle producers to remain viable, changes might be necessary. “Sixty-five percent of our supply all on the same side. If you look at some of those cattle inventory reports, that says what half of the year your calves were born in, you always have more than 65 percent of them were born in the spring. It’s lopsided… We need to stop being idiots,” he joked. “You got to look at yourself in the mirror and try and think about some things you can do to change it up a little bit. We got to stop being idiots, look at ourselves and start doing things different.”
Wall acknowledged that some operations, in much of the country are not in a position weather-wise or labor-wise to calve in the fall, but drove home the point that all producers need to be educating themselves in order to capture as much profit as possible, so as to never become dependent on government assistance.
OCM board members David Wright, Mike Callicrate, Wes Shoemyer and Vaughn Meyer all spoke about the six issues that OCM has outlined as most important and in need of President Trump’s immediate attention.
Fred Stokes, the founder of OCM is a small purebred cattle producer from Mississippi. “I retired from Army Military Intelligence in 1972, having grown up on a small farm all I ever wanted to do was raise cows. At that time cattle markets were at record highs, money was easy to borrow and I borrowed a bunch. The bottom went out and they were worth 30 percent of what I paid for them. I owed more than everything I owned was worth. I worked years to get out of debt, I did it but I’m still mad.
“I’m 85 and I don’t have any skin in the game anymore but I feel that with the beef check-off we have been funding our own demise. People say, ‘Someone should do something but I’m all tied up.’ We all have to come together and put aside our differences to do something. We must preserve our independent, domestic cattle industry,” Stokes said. “We supported President Trump and now we are calling on him to fulfill his campaign promises.”
OCM board members Chris Petersen of Clear Lake, Iowa and Jonathan Buttram of Alabama related their own experiences as hog and poultry producers who were bankrupted and warned that the same fate is coming for cattle producers if things don’t change.
Bill Bullard, CEO of R-CALF USA, spoke at length outlining the issues faced by cattlemen. “We warn that if we lose the critical mass of those cattle producers, cattle feeders, auction yards and the other infrastructure that is needed to facilitate a competitive market, if we lose the critical mass it’s game over. Because your industry will be headed down the same path as your sister industries, the hog and poultry industries that are now completely controlled from either birth to plate or egg to plate by the multi-national meat packing industry…Our industry faces an impending crisis, a crisis that was emphasized by the Tyson Fire on August 9th… Today’s cattle prices are as much as 25 percent less than those five year averages. This is serious and something must be done to sustain the viability of our industry, while we address the broken market problem…The very worst thing this nation can do to America’s cattle producers today is to do nothing.”
“We are going to win this for ourselves and for our children,” Bullard said in closing.
Tatum Lee of R-CALF USA gave a rousing impromptu talk urging producers to join together and fight for their way of life.
She clarified R-CALF USA’s purpose as focused solely on the profitability and viability of the US cattle producer and explained that the group is not and has never been connected with the Humane Society of the United States, as some have said.
Al Davis from OCM pushed for the government to step in and work to fix the problem. “Farm and ranch families are facing a great extinction. If our government won’t stop the stealin’ now, the family farmer or hardworking rancher will be just a dusty memory in a Louis L’amour novel.”
“We must make sure the President understands our problem and makes a move to fix it,” Stokes said. “I’m very happy with the number of people who came and thankful to Corbitt Wall, Joe Maxwell, R-CALF and the others who pulled this thing off at very short notice.”
OCM did address their relationship with the Humane Society of the United States. The HSUS provides pro bono legal representation for its beef checkoff program transparency lawsuit. “Without them, there would be no lawsuit,” OCM stated.
After the meeting, OCM, via social media condemned “Mr. Corbitt Wall’s ignorant and bigoted comments” at the rally – apparently referring to jokes made during his presentation. Many meeting-goers took to social media to defend Wall and show appreciation for the information he shared.
OCM Board member Vaughn Meyer, a South Dakota Angus and Red Angus breeder, said he hopes this is just the beginning of new energy and cooperative mentality for the cattle production and feeding sector.
“It was a good rally, the momentum is building. It was a start to fixing our problems and we’re going to continue to fight for improved competition and profitability for the U.S. cattle producer,” he said.
Article originally published in Tri-State Livestock News, October 4, 2019
R-CALF USA announced a lawsuit against the “big four” packers who, they allege, violated U.S. antitrust laws, the Packers and Stockyards Act, and the Commodity Exchange Act by unlawfully depressing the prices paid to American ranchers.
On April 23, 2019, the cattlemen’s group based out of Billings, said Tyson Foods, Inc., JBS S.A., Cargill, Inc., and National Beef Packing Company, LLC, and certain of their affiliates from at least January 1, 2015 through the present, conspired to depress the price of fed cattle they purchased from American ranchers, thereby inflating their own margins and profits.
Weinreis Brothers Partnership, Minatare Feedlot, Inc., Charles Weinreis, Eric Nelson, James Jensen d/b/a Lucky 7 Angus, and Richard Chambers as trustee of the Richard C. Chambers Living Trust are plaintiffs in the lawsuit, along with R-CALF USA (Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America). The plaintiffs feed cattle in Iowa, Nebraska, Kansas, and Wyoming.
The suit will likely last for years, predicted R-CALF USA CEO Bill Bullard, and is intended to uncover some truths and data not yet known.
“We do not know if there is more blame on one packer than another,” said Bullard. “Our evidence and analysis strongly indicates that all four of them are engaged in coordinated activities that caused the artificial reduction in cattle prices.”
“For many years, Cargill has served as a trusted partner to American cattle ranchers, committed to supporting their family farms and livelihoods. We believe the claims lack merit, and we are confident in our efforts to maintain market integrity and conduct ethical business,” said Cargill spokesman Daniel Sullivan.
The suit seeks to recover damages for two classes believed to be directly harmed by the packers’ buying practices:
1. Anyone who sold fed steers or heifers from Jan. 1, 2015 through the present time to those packers.
2. Traders who transacted live cattle futures or options contracts on the Chicago Mercantile Exchange from Jan. 1, 2015 to the present.
Bullard believes cattle ranchers would also benefit from a court win because “the price that cow-calf producers receive is based largely on the expected future value of a fat animal, so stopping the abuse that occurs in the pricing of the fat animal will essentially free up competitive forces to provide economic rewards to cow-calf producers.”
The fed cattle market is the initial price discovery market for the entire industry, said Bullard.
The amount of damages sought is not yet known, said Bullard, but initial analysis indicates that fed cattle prices have been artificially depressed by 7.9 percent since Jan. 1 of 2015 through present, he said.
In addition to potential damages that would be paid out in the case of a court win, Bullard believes by the filing of the suit could result in better prices across the board.
“By virtue of filing the lawsuit we have put the packers on notice that we’ll no longer tolerate the unlawful conduct that we’re alleging in the complaint. That in itself should have a disciplinary effect on the marketplace. Additionally because of the awareness created by the lawsuit, there may be actions outside of this litigation that could resolve additional problems.
One of the illegal activities the packers use to artificially lower the cash market is purchasing cattle outside of their own USDA “reporting area,” claimed Bullard.
“We allege this is part of the conspiracy. The four packers would transport cattle uneconomically long distances – outside of the area they’ve tied their formula contracts to – in order to obtain cattle that are not reported in that pricing structure, and won’t elevate that pricing structure.” Bullard said this includes shipping cattle from Canada and Mexico in order to avoid affecting the cash market in the particular region the packer reports in.
By sourcing cattle outside of the region, and avoiding reporting regulations, the packers can buy cattle that may be higher priced, but because they aren’t reported, the official “cash price” in that region remains depressed. This not only results in artificially low cash deals but affects all formula deals in that region because they are based on the cash market, said Bullard.
“This is just the beginning. We have essentially taken a stand and said ‘we’re going to address this,’ and we’re in a forum where it will be addressed, in the judicial branch of government.”
The two firms representing the plaintiffs, Scott+Scott Attorneys at Law LLP (“Scott+Scott”), and Cafferty Clobes Meriwether & Sprengel LLP (“Cafferty Clobes”) specialize in securities and anti-trust law, and are working on a contingency basis, said Bullard.
JBS, Tyson and National Beef have not responded to a request for comments.
This article was originally published in Tri-State Livestock News, April 24, 2019
While some see David preparing to hurl a stone at Goliath, others perceive a group of whiny kids expecting special treatment.
Just what is GIPSA, who does it affect and does it need to be updated? The answer, of course, varies drastically, depending on who is asked.
The Packers and Stockyards Act, passed by Congress in 1921, is administered by the Grain Inspection, Packers and Stockyards Administration (GIPSA).
Upon instruction from Congress, GIPSA wrote and released last month the “Farmer Fair Practices Rules,” two proposed rules and an interim final rule to update the Packers and Stockyards Act. The proposals are based on 2010 rules, some of which were never implemented.
The proposal includes three pieces, expected to primarily affect the poultry industry, but the cattle industry believes it will be impacted as well.
- According to USDA’s news release, the proposals will:
- Affirmatively establish the Department’s long-time position that it is not necessary to demonstrate that an unfair practice harms the entire market in order to prove a violation of the Packers and Stockyards Act. “Such overly broad interpretations have put family farmers at a disadvantage for decades when pursuing their rights under the Act,” said the release.
- Clarify what GIPSA views as practices that clearly violate the Act and would establish criteria to protect the legal rights of farmers. Establish criteria that GIPSA would consider in determining whether a live poultry dealer has engaged in a pattern or practice to use a poultry grower ranking system unfairly.
The first one listed, the interim final rule, is the cause of much debate within the cattle industry.
According to its website, GIPSA is the U.S. Department of Agriculture’s agency that facilitates the marketing of livestock, poultry, meat, cereals, oilseeds, and related agricultural products, and promotes fair and competitive trading practices for the overall benefit of consumers and American agriculture. The agency oversees enforcement of the Packers and Stockyards Act, as well as some grain inspection regulations.
The Packers and Stockyards Act was implemented in 1921 to protect the cattle industry from the control exerted over it by five meatpackers who had control of 45 percent of the beef produced in the country.
Former GIPSA administrator J. Dudley Butler fears that the cattle industry is in the process of being “chickenized” or vertically integrated, like the pork and poultry industries have been. Four packers now control over 80 percent of the beef supply.
“The independent pork producer has all but disappeared,” he said in a paper, The Dismantling of Independent Farm and Ranch Agriculture.
Butler, who oversaw GIPSA from 2009 to 2012, said that updates are badly needed to protect independent feeders and producers.
“There is a reason that around 35,000 small to medium sized feeders have gone out of business in the last 20 years. When vertical integration zeroes in, it is on the concentration of the chicken house, the swine parlor, and now the feedlot. So the companies take over the feedlots through ownership, contracts or deals. Then the cow-calf person becomes a price-taker not a price-maker. He’s captured.” The cow-calf producer can’t survive without a healthy independent feeding segment, he said.
The third-generation Mississippi cattleman became so discouraged when Congress continued to refuse to fund its own directive for GIPSA updates that he stepped down from his administrative post in 2012. “If I couldn’t make a difference, I didn’t want to be there. I went there to try to help, to make a difference,” he said.
The current Packers and Stockyards law lists seven subsections describing specific behavior that is illegal for meatpackers. The first two subsections say that it is unlawful for a meatpacker to:
a) Engage in or use any unfair, unjustly discriminatory, or deceptive practice or device; or
b) Make or give any undue or unreasonable preference or advantage to any particular person or locality in any respect, or subject any particular person or locality to any undue or unreasonable prejudice or disadvantage in any respect.
A disadvantaged feeder can file suit – and some have, and won in the lower courts. The most well-known case, Pickett v. Tyson Fresh Meats (originally IBP), resulted in summary judgment by the judge against the plaintiff, even though the jury found for the plaintiff on all counts. The appeals court then agreed with the judge, finding that the entire industry wasn’t harmed, and essentially threw out the case.
“In the historic cattle trial, Pickett v Tyson Fresh Meats, Inc., Plaintiff cattlemen alleged that Tyson/IBP used captive (contracted) supplies of cattle ready for slaughter to manipulate the cash market, in violation of the 1921 Packers & Stockyards Act (PSA). After a five-week federal trial, the jury found Tyson/IBP guilty on all counts and assessed actual damages of $1.28 billion, which applied to a large but unspecified number of cattle, likely 10-50 million head. Justice for plaintiff cattlemen was short, as the trial judge set aside the Jury’s verdict – a rare but not unprecedented legal action – and entered summary judgment for Tyson. The Eleventh Appellate Court subsequently sided with the trial judge. In 2006, the United States Supreme Court denied without comment plaintiff’s petition to rehear the case, thus ending legal activities in Pickett v Tyson and effectively killing similar legal action pending under the same trial judge against two other major beef packers, Excel (Cargill) and Swift (ConAgra),” described Auburn University’s Dr. Robert Taylor in 2007.
Kansas feeder and United States Cattlemen’s Association director Allan Sents said that the new rules will remedy the case law precedent set by the Pickett case. “This rule says an individual producer or feeder can claim there has been an action or violation of the Packers and Stockyards Act and they don’t have to prove that the entire industry’s competition was harmed.” The new rule clarifies that long-held position that livestock producer cases don’t have to meet the same standards as general anti-trust cases, he said.
Sents said, as a feeder, he has reminded packers of the GIPSA rules when he believes he’s been treated inappropriately.
“There have been times when they have been able to assert their power and do something that’s not right and they basically tell you to take it or leave it. Then if you have the GIPSA rules to fall back on and point them out, it changes their behavior. I’ve seen that in two or three cases,” he said. “I think the rules are critical to maintaining market integrity.”
In the supporting documents with their December 2016 proposal, GIPSA administration states that the rule changes are not meant to limit alternative marketing agreements, he said.
GIPSA doesn’t expect any rapid effect on the market or on packer-feeder relationships, he said. “They indicate the actual interpretation of this rule would likely be done through the legal system and that may or may not happen anytime soon. They don’t anticipate any immediate change in buying practices,” he said.
Although the proposed rules appeared to be another of the Obama administration’s last minute actions before handing over the reins to a different party, because of the timing, this was not the case, said Butler. The agency was just unable to carry out the directive until 2016 when funding was finally available in the budget, he said.
And with the releasing of the rules came a fire storm of responses – some saying the rules will eliminate competition from the marketplace by eliminating value-based pricing, others saying the rules don’t go far enough to protect the independent feeder and – farther down the chain – the independent producer.
The National Cattlemen’s Beef Association will submit comments urging that the rules be rescinded, said the group’s president Craig Uden, a Nebraska feeder and rancher.
“How it stands now (the proposed rules), it’s kind of a trial lawyer’s dream,” said Uden, who operates Darr feedlot near Elwood, Nebraska.
Uden worries that the rules will scare packers who are currently paying premiums for better quality cattle.
“Who determines what is fair and what is not fair?
“People spend money to buy genetics or carry out management techniques that will give them an advantage. Here (with these rules) they say there is no difference.”
The biggest concern among his group is that “there has to be no proof. Let’s say they are all Angus cattle but some are of better quality, here they say there is no difference, everything is created equal.”
Butler doesn’t believe this is the intent, or will be the result of the rule.
Litigation will be rare, he believes. “In most cases, if not all cases, the farmer would make a complaint to GIPSA and GIPSA would take over handling the complaint if it was legitimate,” he said. Complaints can be resolved through the agency, without litigation, he said.
A plaintiff would have the burden of proof, with specific parameters, said Butler. “It has to meet muster. ‘Unjustly’ – there is a reason that term ‘unjustly’ is in there. And there is a reason ‘undue’ is in there. Those terms further explain the terms that follow them. Unjustly discriminatory is not just any kind of discrimination. There must be a reasonable and legitimate business justification for the discrimination.
“That’s the bottom line. In no way does it do away with value-based marketing.”
In his commentary on the rule, the out-going GIPSA administrator said the 2013 rule update “does not prevent packers from offering quality incentives to hog or cattle feeders, and any vertical coordination among feeders and producers would be outside of GIPSA’s jurisdiction.”
Iowa feeder Eric Nelson believes there are many in his industry sector who need GIPSA’s protection, and their fear of publicly asking for it is proof of their vulnerability.
The R-CALF member estimates that about 75 cattle feeders attended a recent cattle producer meeting hosted by Iowa Congresswoman Ernst, and a few testified as to their concerns in the industry. “Most of them were scared sh**less of saying anything for fear of retribution that the packing companies would quit buying their cattle. I told them I am a third generation Iowa cattleman and the fourth generation was with me. I explained that my sons won’t have a chance to be involved in the industry if something doesn’t change. I’m afraid too, but if people like me don’t come forward and call these things out, the next generation won’t have a chance. There were several that thanked me afterward, saying they were afraid to say the same thing in public.”
A cattle feeder friend of Nelson’s, after 20 years of dealing successfully with the same packer buyer, waited two months for a call back in 2015 when the market crashed. “When that buyer finally called back – put yourself in their shoes – all they knew was they had a bunch of fat cattle way too fat and they had to take whatever price was offered to them. That’s called limiting access.” That action was not an anomaly, Nelson said, but was common around the region.
“So now we fast forward 18 months. Bankers in feeding country were keenly aware this was going on. Now there are way more cattle contracted to packers than have been for years because a lot of feeders are scared that will happen again.”
The packer organizations say they need an organized, consistent, known supply of cattle, Nelson said. “But I’m selfish, I want to get all I can for my cattle. I want the packer to be in a situation, once in a while, where he didn’t buy enough for the next month. That causes a price rally and the price ends up being elevated for a few months.”
Nelson said about 10 years ago he testified before the senate ag committee about his real world experience. One packer would consistently bid him slightly higher than the others for about two years at a time, then, like clockwork, another packer would be the top bidder for about two years. The day Nelson testified to this, he sold a pen of cattle to a different packer while sitting in the airport. “Since then it’s been a rainbow, a pen to this packer, a pen to that packer. That’s anecdotal, there is no way to prove anything, but it’s that kind of control that makes me want to help the little guy any way I can.”
But Uden believes that feeders, himself included, will be discouraged from paying premiums for higher quality cattle because packers won’t reward him with premiums for those cattle, for fear of being sued for discrimination. “If I’m buying certain attributes of quality, if I’m looking for high choice cattle that feed really good – I’m going to get the same money as someone with lower quality cattle.”
Butler doesn’t expect unfounded lawsuits.
“I’ve been around farmers and cattlemen all over this country and they are probably the least litigious people in the world. I don’t know of one farmer or rancher who goes out and files frivolous lawsuits.” Ambiguity causes litigation. but clarity diminishes litigation, he said. “By putting these rules out there you’ve got the rules of the game, you know how you have to operate.”
Uden said that beef on the whole is perceived as a higher quality product than competing proteins, allowing it market privileges and a higher dollar value. “We sell our product because it is all about the quality, right? If everything is the same and markets tend to gravitate lower, then who’s making the money? Not the producer.” Uden believes that strengthening the GIPSA rules will remove competition from the marketplace, lower prices and give the packer a wider profit margin. “It would go up the chain, not down the chain.”
“I don’t want to throw the packer under the bus. If you were told you were going to get sued if you did something, you are going to play it safe. Why would you pay the guy that had above average cattle more?”
He doesn’t want the government in his business, he stresses, and believes the current law is sufficient. “There are ways to handle this, if you prove injury.”
Nelson said he believes the government exists, at least in part, to protect small businessmen like himself, not big corporations.
“Rural America has kind of laid their bets on President Trump. Is he going to come through or not?” asked Butler.
The industry will wait to find out if David is now better equipped to battle the giant or if Goliath is really just a figment of the imagination.
The comment deadline for the proposed rules and interim rule is Feb. 21. The president enacted a freeze on all rules released by USDA so the expected implementation date is unknown.