Struggling producers seek answers in tough times

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Farm Forum

Cattle producers facing plummeting prices and a future where they’re not sure a profit is on the horizon gathered recently in Aberdeen hoping to hear a solution.

Doland farmer Preston Miles said times are tough, operating costs are increasing and his calf check was $40,000 less than last year’s.

He’s not optimistic about making a profit this year.

Market prices for cattle as of Nov. 10 were $104.475 per hundred pounds. This is a slight recovery from $94.475 in mid-October, but both prices are significantly down from January 2015, where market prices were $170.05.

“This is an a– kicking,” Miles said during the question-and-answer portion of an informational meeting on Nov. 10 featuring speakers from the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America, a special interest group for the cattle industry commonly called R-CALF. “How do we help you make something happen within 100 days?” Miles asked.

The group is urging cattle producers to join its effort aimed at turning prices around. Their aim is to increase membership and take their message to Washington, D.C., within the first 100 days of President-elect Donald Trump’s administration.

R-CALF CEO Bill Bullard and co-founder Herman Schumacher, who is from Herreid, were in Aberdeen on Nov. 10 speaking to a group of nearly 400 cattle producers about what they see as needed industry changes. The meeting was sponsored by Hub City Livestock and was the first of a half-dozen planned in South Dakota and North Dakota.

Bullard told Miles and a room full of cattle producers that the key to change is taking the problems and the solutions to Washington. Following the meeting, Miles said, he wasn’t sure he got an answer to his question.

More frustration

Miles wasn’t alone in his frustration.

A woman stood up and said her family’s profits have been halved and halved again. But when she spoke to one of South Dakota’s congressional delegates, his priority was the Farm Bill, an answer she didn’t feel was adequate when it came to the issue at hand.

A North Dakota businessman doubted some producers could make it to the 100th day.

Yet another in attendance suggested a class action lawsuit against the meat packers as an alternative attention-grabber.

One of Bullard’s primary points focused on the large meat packers and his belief that their activities are causing lower prices.

During his hour-long talk, Bullard emphasized the importance of raising awareness about cattle industry issues with officials in Washington and proposing solutions, such as reinstating country-of-origin labeling and enforcing antitrust laws.

“This is a plan of action,” Schumacher said. “We have to move this industry forward.”

“We have 100 days to show we’re serious about restoring competition,” Bullard said.

Bullard said R-CALF has a plan, but it needs a larger membership base to have a stronger voice. Current membership is about 4,500, Bullard said. That’s not enough.

“If we don’t have 10,000 producers, we aren’t likely to get anywhere,” he said.

Solutions

Bullard said country-of-origin labeling needs to be reinstated. The purpose of the program was to identify in which country beef products originated. Country-of-origin labeling — or COOL — was approved by Congress in 2002, but was challenged in the World Trade Organization by producers in Canada and Mexico, according to information from the U.S. House Committee on Agriculture.

Steve Hellwig, co-owner of Hub City Livestock, said COOL regulations ultimately went into effect in 2014 and 2015.

According to information released by the U.S. Department of Agriculture, labeling requirements on beef and pork products were removed in February 2016 to bring the U.S. into compliance with international trade obligations.

Bullard said studies from the University of Kansas revealed that consumers showed a preference to U.S. beef when products were identified.

“Consumers cannot show a preference if U.S. beef in undifferentiated from other beef,” Bullard said.

Hellwig said reinstating COOL will help local producers.

“When country-of-origin labeling was in effect, the U.S. cattle market was at an all-time high,” Hellwig said.

Bullard and Hellwig both said studies have proven U.S. consumers are willing to spend more on beef identified as grown in the United States.

Hellwig said another major issue is captive supply. With the present market, he said, large packers have beef under contract and aren’t buying as much on the open market.

“It’s hard to get true price discovery when they’re not buying on the open market,” Hellwig said.

Anti-trust laws

Bullard said enforcing anti-trust laws — such as the Sherman Antitrust Act of 1890, the Clayton Antitrust Act of 1914 and the Packers and Stockyards Act of 1921 — would help.

“These three laws are vitally important,” Bullard said.

The Sherman Act prohibits anti-competitive business activities; the Clayton Act prohibits specific conduct; and the Packers and Stockyards Act regulates interstate and foreign commerce of livestock and livestock products. The laws were specifically adopted to investigate packer activities that were affecting the markets in the early 1900s.

Bullard said R-CALF has opposed numerous mergers involving JBS and other companies, but the U.S. Department of Justice cared less and less each time R-CALF objected.

He said cattle producers are also seeing less of a profit. At one time, he said, a farmer’s profit accounted for 55 percent of the retail price. Now that cut is closer to 37 percent.

Bullard said cattle producers do not want a marketplace controlled by the packers.

Hellwig said this comes down to ensuring competitive cattle sales are happening on the open market.

Investigation

Bullard said this past January the Senate Judiciary Committee was asked to investigate the cattle industry and the reasons behind record low prices. After five staff meetings, he said, the investigation was turned over to the comptroller general at the Government Accountability Office.

That investigation is ongoing, Bullard said, but it could take nine to 12 months.

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