VIDEO: Trey Wasserburger discusses how packer concentration has led to the inability to kill cattle

by | Oct 13, 2020 | 0 comments

Photo Credit: TD Angus at Rishel Angus, https://www.facebook.com/RishelAngus

Interview Part 1 of 2

 

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

Packer concentration is the biggest issue standing in the way of fair cattle markets; this issue has to be addressed and solved. Never in the history of the cattle industry have we not been able to kill cattle, but that’s where we’re at today. I wasn’t able to get a bid in June, July and certain times in August. This isn’t a new problem; we’ve slowly watched packer concentration grow through the years. 

 

Q: What do you think would be a viable solution for packer concentration? 

Currently, there are a lot of great ideas and legislation floating around to address this issue. An idea that would force the packers to compete would be to make each packinghouse its own entity, make them compete regionally. This would be a viable solution to packer concentration, however the packers would never let this happen. 

A year ago there were some comments within the industry about busting up the packers and anyone who said this was labeled as a radical, but now cattle feeders are there, that statement has become real life. 

Another huge problem is that formulas and captive supply are confidential; mandatory price reporting is like a swear word in the industry. Ninety percent of the live cattle trade today is under lock and key. 

Correlating the feeder market to the cash cattle market is almost impossible, as they do nothing the same. The feeder cattle market has competition and true price discovery every day, in real time, but the cash cattle market is lucky to have 10 percent cash trade in a week, basically no true price discovery. 

 

Q: Do you think Senator Grassley’s 50/14 legislation would create competition in our cattle markets? 

Yes, 50/14 would increase competition in our live cattle markets. If this legislation were implemented, it would only take a week to know if it increased competition, it wouldn’t hurt anything to give it a try. 

It makes no sense that live cattle trade is treated so differently than the rest of the industry; every sector within the industry has competition except live cattle trade. 

 

Q: What are your thoughts on cattle and beef imports? 

The USDA recently reported that exports are down while imports are up significantly compared to year-over-year levels. Australia just came through a record drought, which caused their cow numbers to contract and their beef prices to increase to an all time high. CoincidentallyU.S. imports of Australian beef are at an all time high. We need the lean imports to supply for the grind, but why are we importing Australian beef when cattle feeders can’t get a bid on cash cattle?   

 

Q: What are your thoughts on MCOOL? 

This summer, G.A.P. 4 cattle, origin and source cattle, were selling for $20-$30/cw. more than conventional cattle. It’s clear as day at the feeder level that there is a premium for origin and source cattle and that the consumer wants to know where their food comes from. However, at the live cattle level we don’t see a premium for origin and source cattle because the packer controls that. 

 

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