VIDEO: Mathew Dierson, SDSU Professor, Risk & Business Management Specialist, discusses the economic impacts of Covid-19 on the cattle industry

by | May 19, 2020 | 0 comments

 

Q: What are the major issues standing in the way of fair cattle markets?

Covid-19 has had a substantial effect on all the meat markets, especially the beef markets. Big picture, we have a small number of large packers and when any of those packers are disrupted in any way, the markets are largely affected.

 

Q: What do you feel are some solutions that would fix these issues?

There is no easy solution for Covid-19. Some kind of treatment or vaccine is needed for the US and global economy to open back up. The beef market has been overly affected compared to the other meats because such a large portion of high valued beef goes into restaurant and food service markets.

 

Q: How do we create more competition within our cattle markets?

We have a small number of packers, however, we have had this limited number of packers for quite some time, so this is not a new issue. Packers are very efficient and effective getting meat from the producer to the consumer. In general, if we had more competitors or if they were spaced out better, we would have more confidence in the prices feeders are receiving.

 

Q: In your opinion do we need an elevated level of market transparency in our cattle markets?

More transparency is preferred to less. Whether or not we need more than we currently have is a researchable issue that needs to be looked into.

 

Q: Do you feel more cash negotiated trade is necessary to help our cattle markets?

There is no cut and dry answer. This depends on the area, the time of year, and various other factors.

 

Q: Do you think changes need to be made within the CME and how cattle are traded on the board?

Trading on the board is difficult. The CME is often misunderstood, but it is still an effective way to hedge your cattle. It does have problems, but if you look long enough, every market has problems.

Days with limit moves up and down has made it more difficult to get orders in and get reasonable bids and asks. It has been effective at the same time for producers that have had cattle hedged during the last few months.

 

Q: In one sentence, what does the cattle industry need most right now?

If you could solve the global Covid-19 problems, a lot of other short run problems would solve themselves.

 

Q: Any closing statements?

These are challenging times. It’s easy to only blame Covid-19 for the problems; there are other issues as well.

 

Q: What does the other side of this Covid-19 pandemic look like?

The end result to this, six months to a year from now; the cow calf producer is in a good position to respond. It’s not too late to start thinking about where a meat supply shortage will occur. There isn’t a definite answer, it’s a wait and see situation.

Related Topics: COVID-19 | Economics

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How did we get here?

From the Holcomb Tyson fire to COVID-19;
Click to see a timeline of events that have brought to light the profit and pricing disparity in cattle markets.

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