Q: What do you think are the major issues standing in the way of fair cattle markets?
The concentration of our packing industry is a major issue that has allowed packers to import cattle and market them as a product of the USA. Packers have the ability to buy cheaper product from 22 other countries and mislead the consumer with false labeling. Packers are able to import an unlimited supply of cheaper product that they use to offset any shortages in supply. This causes U.S. cattle markets to become depressed.
Q: What are your thoughts on increased negotiated cash trade?
When packers participate in the open market it allows the independent feeder who isn’t under contract to market their fat cattle. An open market also produces a transparent market.
Sale barns across the country have auctions with true price discovery that is fair to both sides and establishes a true market. Our fat cattle market doesn’t have this type of price discovery; instead it is controlled by formula contracts and captive supply.
Q: When do you see this backlog of cattle really taking a toll on the cattle markets?
We are already seeing the negative effects of backlogged cattle. Even though we’ve seen a bump in the cattle market, the price of boxed beef is still extremely disconnected from cattle prices.
Ever since the repeal of country of origin labeling, we’ve seen a massive spread between boxed beef and cattle prices. They still move together in similar fashion, however the gap between them has grown drastically.
Back during the Holcomb fire, we saw packer profits soar to $700-$800/hd. for fat cattle. At the same time, cattle feeders were losing a significant amount of money. Now, with Covid-19, the packers have made the Holcomb fire look like child’s play as their profit margins exceed record levels.
Q: Can you elaborate on South Dakota Livestock Auction Market Association’s push for a beef checkoff referendum?
Demand for beef is high, but cattle producers aren’t seeing the benefits of this. Producers pay the checkoff dollar, but that money is benefiting the packer and leaving the producer sitting by the wayside. We need to have checks and balances in all our checkoff programs.
Q: What do you see happening to the cattle industry if substantial change isn’t implemented?
We saw vertical integration in both the hog and chicken industries. If we don’t turn things around within the cattle industry we’ll see the same thing happen.
Q: Do you see these tough cattle markets affecting your area?
The best stimulus package is to give the agriculture producer a fair market. Whether you’re a corn farmer, a fat cattle feeder, or a cow calf operator, if you’re making money you’re going to spend it. That money helps local businesses thrive and in turn rural communities thrive.