Current cattle market daily headlines for October 20, 2021

by | Oct 22, 2021 | 0 comments

Bovine tuberculosis confirmed in Blaine County, Montana herd

According to the Montana Department of Livestock, bovine tuberculosis has been confirmed in Blaine County.

For the first time in decades, an infected cow at slaughter was identified by meat inspectors during routine inspection at a Minnesota processing plant.

Once the infected animal was linked to a Blaine County herd, subsequent testing revealed three additional TB infected animals. The herd has been placed under quarantine.

Finding bovine tuberculosis in the Blaine County herd has triggered a full investigation to evaluate the extent of the disease, and to mitigate further spread. This effort includes the testing of adjacent herds and herds that have shipped animals into or received animals from the source herd.

State Veterinarian, Marty Zaluski said “We are working closely with the herd owner, United States Department of Agriculture, tribal, and wildlife officials on next steps. The purpose of the investigation is to determine if other herds or wildlife are involved, and if possible, to determine the source of disease introduction.”

Tuberculosis has an incubation period that can range from months to years and infected animals rarely show clinical signs, meaning cattle appearing healthy may be infected with the bacteria.

Although TB is a zoonotic disease capable of infecting and people, it is not a food safety threat thanks to a robust meat inspection program and the pasteurization of milk for retail sale.


Ranchers launch effort to build own meat plants to fight against low beef prices

According to Fox News, like other ranchers across the country, Nebraska’s Rusty Kemp for years grumbled about rock-bottom prices paid for the cattle he raised, even with the cost of beef at grocery stores climbing.

Pointing the finger at consolidation in the beef industry, Kemp and his neighbors have decided it is time to stop complaining, and start competing.

With Federal data showing that for every dollar spent on food, the share that went to ranchers and farmers dropped from 35 cents in the 1970s to 14 cents recently, Kemp launched the audacious plan to raise more than $300 million with fellow ranchers to build a plant themselves.

Crews will start work this fall building the Sustainable Beef plant on nearly 400 acres near North Platte, Nebraska, while other groups are making similar moves in Iowa, Idaho and Wisconsin.

The move is well timed, as the U.S. Department of Agriculture is now taking a number of steps to encourage a more diverse supply in the beef industry, after the Biden Administration stated their concern that the meatpacking industry was “pandemic profiteering.”

While many support Kemp’s efforts, including Texas Agriculture Commissioner Sid Miller, it’s hard to overstate the challenge, going up against huge, well-financed competitors that run highly efficient plants and can sell beef at prices that smaller operators will struggle to match.

The question is whether smaller plants can pay ranchers more and still make a profit themselves.

David Briggs, the CEO of Sustainable Beef, acknowledged the difficulty but said “Cattle people are risk takers and they’re ready to take a risk.”

Consolidation of meatpacking started in the mid-1970s, with buyouts of smaller companies, mergers and a shift to much larger plants. Census data cited by the USDA shows that the number of livestock slaughter plants declined from 2,590 in 1977 to 1,387 in 1992, with big processors gradually dominating, going from handling only 12% of cattle in 1977 to 65% by 1997.

Currently four companies — Cargill, JBS, Tyson Foods and National Beef Packing — control over 80% of the U.S. beef market thanks to cattle slaughtered at 24 plants. That concentration became problematic when the coronavirus infected workers, slowing and even closing some of the massive plants, and a cyberattack last summer briefly forced a shutdown of JBS plants until the company paid an $11 million ransom.

The Biden administration has largely blamed declining competition for a 14% increase in beef prices from December 2020 to August 2021, all the while, prices paid to ranchers have barely budged.

Kemp and backers of similar plants have no intention of replacing the giant slaughterhouses, but say they will have important advantages, including more modern equipment and, they hope, less employee turnover thanks to slightly higher pay, benefits, more favorable work schedules.

Derrell Peel, an agricultural economist at Oklahoma State University, said noted that research shows even a 30% reduction in a plant’s size will make it far less efficient, meaning higher costs to slaughter each animal. Unless smaller plants can keep expenses down, they will need to find customers who will pay more for their beef, or manage with a lower profit margin than they’re much large competitors.


‘Montanans should be able to choose for themselves’: Tester backs bill to restore food label law

According to the Great Falls Tribune, Federal legislation mandating American consumers be accurately informed about where their beef and pork comes from was first passed by Congress in 2005.

Those Country of Origin Labeling (COOL) requirements were quickly faced with legal challenges from within the World Trade Organization as Mexico and Canada threatened to impose more than $1 billion in tariffs against the United States unless labeling was removed. As a result of this pressure, in 2015 President Barack Obama signed a bill removing Country of Origin Labeling requirements for the two commodities.

The beef industry, nationally and in Washington, has been divided over whether to bring the labels back ever since.

In the six years that have followed since the repeal of Country of Origin Labeling, Montana ranchers have weathered increasingly miniscule profit margins while the big four multinational meatpacking corporations, JBS, Cargill, Tyson and National Beef, have raked in record profits.

On Friday, Montana Sen. Jon Tester announced his support of a bipartisan Senate bill to reintroduce country-of-origin labeling regulations within the next few years.

While speaking at the Montana Farmers Union office in Great Falls, Tester stated “This puts American ranchers who adhere to the strictest safety standards and protocols in the world … on an even playing field, and would ensure that beef raised in the United States is labeled ‘Product of the USA.

Tester has long supported the reintroduction of COOL. He said he fully anticipates corporate packing interests will forcefully oppose the newly composed Senate bill on the grounds that it will impose unreasonably expensive demands upon packers to track and label the inflow of meat from multinational sources.

Country-of-origin labeling is just one component of a larger menu of reforms U.S. beef producers are demanding of Congress. Groups like R-CALF and the Montana Stockgrowers Association are also pushing for legislation demanding greater transparency in how market cattle prices are set, and stronger enforcement of the Packers and Stockyards Act which regulates trade practices within the meatpacking industry.


GOP lawmakers offer an alternative to 30×30 plan

According to the Western Livestock Journal, as an alternative to President Biden’s 30×30 plan, the Senate and Congressional Western Caucuses unveiled a report supporting a holistic approach for locally led conservation, active land and water management, and multiple use.

In a joint statement, Rep. Dan Newhouse (R-WA-04) and Sen. Steve Daines (R-MT) called the recommendations in the Western Conservation Principles report “real conservation outcomes for our lands and waters.” They further stated the report contrasts with the Biden administration’s “preservationist” approach of “locking up” public lands to keep them untouched.

The report states while the Biden administration has since renamed the 30×30 plan to the America the Beautiful initiative, the issue remains ambiguous as to what is defined as “conservation status,” and what percentage of lands and waters meets the 30 percent status.

The 10-year approach posed in the Caucus report focuses on “issues plaguing our lands and waters like invasive species; overgrown, diseased, and infested forests; and post-wildfire restoration.”

To achieve these goals, the report proposes:
• Streamlining the National Environmental Policy Act to increase active forest management.
• Controlling, preventing and eradicating harmful invasive species using recommendations from the Invasive Species Advisory Committee
• Reducing the overpopulation of wild horses and burros.
• Encouraging the Environmental Protection Agency to work with stakeholders to clean up the 1,327 Superfund sites.
• Leveraging the funds available in the Great American Outdoors Act to support long-term public land infrastructure and encourage visitation to our larger and smaller national parks.
• Restoring abandoned mines and orphaned wells by removing administrative, regulatory and liability burdens that can impede critical conservation-restoration work.
• Improving the “checkerboard” land access that mixes federal and private land through better mapping of easements.
• Calling on the Biden administration to abide by the definition of conservation under the Endangered Species Act, utilizing transparent and science-based processes in listings and critical habitat determinations.
• Offering title transfers to address the rehabilitation and maintenance of federal water infrastructure.
• Eliminating the “D.C. knows best” mentality and pursuing policies that encourage healthy landscapes with “those whose livelihoods depend on them.”

The report calls on a collaborative approach to “maximize the conservation benefits provided by activities like grazing, hunting, logging and mineral development” through the expertise of local partnerships and existing shared stewardship authorities.

Agricultural, mining and logging organizations supported the report, while some environmental groups gave lukewarm support. Industry groups called the report a “commonsense approach” to conservation and working landscapes.

Chase Adams, American Sheep Industry Association Senior Policy and Information Director supported the alternative plan, stating “The commonsense recommendations provide a needed and beneficial framework for the president’s 30×30 initiative and recognize the role of all stakeholders in preserving our nation’s public lands through multiple use.”×30-plan/article_26160aec-2dc5-11ec-82e0-237782751839.html


Consolidation Concerns

According to the Western Ag Reporter, shortly after the deadline to reauthorize the Livestock Mandatory Reporting (LMR) Program for five more years came and went, albeit with a temporary extension, the subject, by no surprise, was one of the main topics of conversation in the fourth of recent Congressional hearings regarding the state of the livestock industry.

The first two panels included testimony from Secretary of Ag Tom Vilsack and U.S. Senator Chuck Grassley (R-IA). The final panel was made up of producer witnesses including those from the cattle, hog, and sheep sectors, along with a processor.

National Cattlemen’s Beef Association (NCBA) Vice President Todd Wilkinson, a South Dakota cow calf producer and feeder, kicked off the final segment of the hearing with his testimony in which he listed the four priorities of NCBA being:
Price Discovery
Market Transparency
Processing Capacity
Market Oversight

These priorities guided the two-hour panel discussion as U.S. Representatives raised many questions about Congress’ role in each issue.

Wilkinson strongly urged Congress to resist one-size-fits-all policy prescriptions which may have disastrous unintended consequences, and emphasized that careful consideration must be given to the risk and reward of enacting market influencing laws for hundreds of thousands of American ranchers and millions of consumers.”

He urged lawmakers to consider and adopt a “multi-pronged” approach to bring more transparency to the markets and resiliency to the supply chain.

One avenue for more transparency was discussed regarding the reauthorization of the Livestock Mandatory Reporting (LMR) Program.

While all of the producer panelists underscored that the most important step is ensuring the program receives full funding again, some suggested improvements.

On behalf of the National Farmers Union, fifth-generation farmer/rancher, and Oklahoma Farmers Union President, Scott Blubaugh, said while the Livestock Mandatory Reporting (LMR) Program is a critical tool for transparency in the marketplace, the Act has not been updated to meet the modern market issues as so much of the live cattle market is now sold on a contract basis, or marketing agreements, with very little sold on a cash basis anymore.

Blubaugh suggested all livestock marketing arrangements be reported the same as cash basis agreements while Wilkinson agreed that the confidentiality rule hinders the LMR data.

There was a general consensus that an advantageous change could be the creation of a cattle contract library. This is already implemented in the pork industry and aids in price discovery by providing a library of the types of contracts offered by packers to producers, including for those purchased for future delivery.

A conversation with much less consensus that could not be avoided was the topic of increasing negotiated trade.

Blubaugh said his organization is supportive of increased negotiated trade, but he didn’t “have the magic number” as to just how much is needed.

Legislation has been introduced by Senator John Grassley and Senator Jon Tester which would mandate packers to purchase at least 50 percent of their weekly volume on the open market.

Wilkinson said while NCBA is concerned about the declining negotiated trade, they support a voluntary approach to remedy the problem and expressed concern about government mandates. He suggested the bill intended to improve prices for cow calf producers and feeders may instead limit their options.

Another avenue discussed to improve the markets and shift leverage is to create more competition at the packing level with more processing capacity. Many Representatives questioned how USDA’s funding to create and aid small- and mid-sized processing facilities could be best utilized. Both Wilkinson and Blubaugh adamantly agreed that it is essential for the funding to go to the regional packers, not members of the Big Four processors.

Wilkinson said increasing capacity should “deleverage the packers” and take away the “stranglehold” they have on the market.

A representative of the North American Meat Institute highlighted on another concern, stating as a processor, startup costs are a major burden, and lately, labor shortages are a large obstacle, and that cattle supply for new packing facilities could become a concern.

Along those lines, Wilkinson suggested USDA funding isn’t needed just to get small and medium facilities built, but also to cover operating capital and the ability to guarantee loans.

Blubaugh underscored the severity of the consolidated meatpacking sector by sharing the recent examples in which the market was severely disrupted by just a single plant going offline.


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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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