Bullard

R-CALF USA CEO Bill Bullard speaking at a meeting in Mobridge on Sept. 12.

“Changes need to be made in our industry,” R-CALF USA CEO Bill Bullard told a crowd of about 200 ranchers and farm/ranch-related individuals at a meeting on Sept. 12 at the Moose Club in Mobridge. “If we don’t make these changes, we will end up just like all the other vertically-integrated livestock and poultry industries.”

Throughout his presentation, Bullard used statistics from the USDA. In 1992 he noted that there were 268,000 hog farms in the United States. By 2012, that number was down to 68,000 hog farms. In that same time frame the average size went from 300 head to 1,200 head per farm.

“As the number of farms decline, rural communities are hollowed out,” he stated.

This strategy, of eliminating a large number of hog farms, was pursued to allow vertical integration of the hog market. “The packers do not own the hogs, but they control the market,” Bullard stated.

The cattle industry is the last frontier that is not yet vertically integrated, Bullard said. R-CALF was founded in 1999 to help fight that trend (vertical integration).

Effects of NAFTA

In 1990 there were about 925,000 independent beef cattle operations in the United States. In 1994, when the North American Free Trade Agreement (NAFTA) was passed, the number was about 900,000 producers. That number went down to about 725,000 producers in 2018.

In 1975 there were about 45 million cows in the United States. With the implementation of NAFTA, that number went down to 29 million cows in 2014, which was a 70 year low for the industry.

In 1996 there were about 110,000 feedlot operators. That number has dropped to about 28,000 operators now, which represents a 75 percent loss in the number of cattle feedlots. “Over the last 19 years, the average return for feedlot operators has been a loss of $20.80 per head per month,” Bullard stated.

Bullard noted that Ag Secretary Sonny Perdue recently moved to eliminate some Grain Inspection, Packers and Stockyards Administration (GIPSA) rules that helped enforce the Packers and Stockyards Act that was passed in 1919. The effect would allow large cattle feeders some positive benefits, Including a $25 per head bonus on cattle delivered to the packers.

R-CALF fought against this, but Bullard noted that the rest of the cattle industry lobbying groups was in favor of the move. “They told us we were just a fringe group,” he added.

The return on a cow/calf pair for the cattle producer was $50 per bred cow per year from 1987 to 1994. After the implementation of NAFTA, that number has fallen to $37 per bred cow per year. There was a spike in the return, especially after the full implementation of mandatory country of origin labeling (COOL), but following the elimination of COOL in 2015 the return fell dramatically.

Prior to 1994, the producer share of the consumer beef dollar was about $.60. That fell to $.42 in 2009 and the new normal seems to be less than $.45. “This is the result when the natural competitive market forces are disrupted,” Bullard stated. “Some get a bigger share and others get less.”

From 2009 to 2014 (during the years of partial or full implementation of COOL), the price for 1,300 pound steers going to market had increased steadily to $170 per hundredweight, with fresh beef prices increasing accordingly. With the elimination of COOL in 2015 the fed cattle price collapsed and is now at about $112 per hundredweight. However the retail beef price paid by consumers is remaining at the near record levels set in 2015.

“Somebody is making record profits,” Bullard said, “but it is not the cattle producers.”

R-CALF actions

In response to all of the changes they were observing, R-CALF decided that new strategies were needed to change the course of the US beef industry. In 2002 they helped lead the fight to pass mandatory COOL. In 2004, 2005 and 2007 they filed court actions against the USDA to block or reduce Canadian cattle imports, as multiple mad cow disease outbreaks were still occurring in Canada. In 2008 they led the fight to block the proposed merger between two of the Big 4 packers, when Brazilian-owned JBS was prohibited from buying National Beef.

Currently they are working on reforming the beef check off system, which generates about $80 million nationally. Some specific changes they would like to see are separating the State beef federations from the National Cattlemen’s Beef Association (NCBA), not allowing any checkoff dollars to go to lobbying groups and developing programs to specifically promote US beef.

Bullard said that some of the beef checkoff dollars had went to the Global Roundtable for Sustainable Beef, which produced the 2012 Living Planet Report in conjunction with the World Wildlife Federation. One of the recommendations in the report was to lower consumption of beef, especially in high income nations.

R-CALF also filed a lawsuit in 2016 on behalf of cattle producers in Montana against the USDA for its operation of the beef check off. They won a preliminary injunction in that case to prevent checkoff dollars from being sent to the Montana Beef Council. Part of the argument was that Montana checkoff dollars were being used to favor multinational meat packer interest and/or not promoting Montana and US beef. In 2018 they expanded that lawsuit to include 15 other states.

Bullard sad that another anomaly in the market recently is the spread between the lightweight calf price and the fed cattle price, with a run up in the calf price but no change in fed cattle prices. “This is an attempt to force feedlots out of business and help kill the industry,” he stated.

Bullard also noted that packers are making record margins of over $300 per head, which is about $150 per head higher than the 10 year average margin.

What now

“If we sit silent and do nothing, we will lose our infrastructure and end up like the other industries,” Bullard said. “One step we can take is to aggressively enforce the antitrust laws as they currently exist.”

Bullard also took aim at the newly negotiated United States-Mexico-Canada Agreement (USMCA). Under NAFTA, beef exports grew from less than $1 billion in 1994 to about $2 billion now, and because of that the negotiators argued that there did not need to be any substantive changes in that area of the new agreement.

“But what was ignored by negotiators is the fact that beef imports now far outweigh our exports,” Bullard stated. “We import about $4 billion in beef products while only exporting about $2 billion worth.”

“We all thought Pres. Trump understood, and he did for some industries, such as auto, truck and textile, but not for beef,” Bullard added. “For beef USMCA does absolutely nothing. Because we are not as big as NCBA, they listened to them rather than to us.”

Because of this problem, R-CALF has urged its members to contact their representatives and senators and urge them to vote “NO” on passage of the USMCA unless it is changed to include mandatory COOL. “COOL will allow us to show the difference between US raised and grown beef and beef imported from other countries,” Bullard said.

In April 2019, R-CALF filed a class action lawsuit in Minnesota federal court against the Big 4 packers (JBS, Cargill, Tyson and Marfig/National Beef). The lawsuit alleges the Big 4 packers have and are continuing to conspire to artificially depress prices that are paid to US cattle producers.

“The four packers control 85 percent of the fed cattle industry, and there is no true competition between them,” Bullard said.

He added that R-CALF expected a motion to be filed Sept. 13 by the packers to dismiss the lawsuit based on a lack of sufficient evidence. “We will be busy the rest of the month preparing our reply to that motion,” Bullard added.

Bullard finished his formal presentation the way he began. “You have two options,” he said. “You can sit on the sidelines and watch as your industry is taken over. The packers don’t want to own farms and ranches, but they want to control you by controlling the markets.”

“Your other option is to support R-CALF in our fight to retain our industry,” Bullard continued. “We need to increase our membership to make our voice stronger on the national level, and your $50 membership will go a long way to making that happen.”

According to a flyer handed out at the meeting, R-CALF USA is the largest national cattle organization representing only cattle producers in the USA. Their mission statement is “To represent the US cattle industry in trade and marketing issues to ensure the continued profitability and viability of independent US cattle producers.”

Following the formal presentation there was a question and answer session.

A roll over auction to benefit R-CALF USA was held at the end of the evening. A fat heifer, donated by Pat Thorstenson of Selby, was sold several times. The auction generated $17,500 for R-CALF. There were also 34 new memberships totaling $4,030.

“We had a great turnout and meeting,” said Casey Perman with Mobridge Livestock. Mobridge Livestock was one of the sponsors of the event.

Reprinted with permission from the Prairie Pioneer.

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