Beef labeling solution on ice

Farm Forum

Low cattle prices might be more a result of an oversupply of beef than the repeal of beef labeling regulations, according to some in the industry.

U.S. Sen. John Thune, R-S.D., said he supports the idea of country-of-origin labeling, or COOL. During a teleconference with South Dakota media on Nov. 16, he said he fought for it in both the 2008 and 2014 farm bills. But COOL was ultimately litigated before the World Trade Organization and removed.

About 400 farmers attended a meeting in Aberdeen on Nov. 10 during which representatives from the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America, commonly called R-CALF, laid out a plan for improving low beef prices. They called for country-of-origin labeling to again be implemented.

The country-of-origin labeling law was in effect for about two years and required retailers to identify where certain foods came from. For example, beef grown in the United States would be labeled as a U.S. product.

But bringing back COOL isn’t that simple, Thune said.

He said he still holds out hope that country-of-origin labeling can be approved in a way that’s acceptable to the World Trade Organization, because he believes consumers have a right to know where their food comes from.

But, he said, “I don’t believe, at this moment, there’s an appetite to bring back mandatory country-of-origin labeling.”

Sen. Mike Rounds, R-S.D., also said COOL isn’t likely to return because the World Trade Organization found it was discriminatory to Canadian and Mexican trade. In a teleconference with South Dakota media on Nov. 17, Rounds said he favors an alternative to country-of-origin labeling.

“I’d like the idea of coming up with a certified beef plan,” Rounds said.

Through this method, he said, beef would be marketed based on where it was grown, the quality of the meat, its age and its source.

“That’s what adds value,” Rounds said. “If there’s a way we can do that, we have a chance to compete with other locations and export products to other areas.”

Differing view

Not everybody in the cattle industry believes country-of-origin labeling is a solution.

Jodie Anderson, executive director for the South Dakota Cattlemen’s Association, said country-of-origin labeling wasn’t a program the association supported. Members felt it could be pricey and cost consumers more, she said.

“That was indeed the case,” she said. “It did add cost to the system without adding any benefit to the producer.”

Anderson admitted cattle prices were high in 2015 before country-of-origin labeling was repealed, and that prices have since declined. But, she said,a recent economic analysis of the industry points to a different reason: supply and demand.

“Timing-wise, it appears there may have been a correlation, but correlation does not mean causation,” she said.

Cyclical markets

Prices dropped, Anderson said, because the cattle population increased. The increase in cattle came about because of low prices, she said, but a larger cattle population led to lower beef prices.

“Cattle markets have always been cyclical,” she said.

That is true, though members of R-CALF believe that country-of-origin labeling would boost prices because consumers would be willing to pay more for U.S.-raised beef.

Shannon Sand, livestock business management field specialist for South Dakota State University Extension, said the current tough market is a reflection of an increasing number of cattle available. When prices were high, she said, cattle population was at a historic low.

That’s reflected in U.S. Department of Agriculture data. In 2014, there were 88.5 million head of cattle in the U.S. Now, the population is nearly 92 million.

“That’s why the cattle market is the way it is,” Sand said. “The unfortunate thing is it happened much quicker than it did in the crop market.”

Sand said there’s also quite a bit of processed beef in cold storage.

She’s optimistic, though, that cattle producers will be able to survive, just as they have during past market lulls.

Anderson said South Dakota Cattlemen’s Association members are more concerned with the volatility of Chicago Mercantile Exchange markets.

“There’s so much that doesn’t seem to be driven by market fundamentals,” she said.

Exports important

Export markets are also a concern.

“The thing we also have to bear in mind is while we import, we rely on exports to keep our markets high as well,” Anderson said. “We are good exporters of quality beef around the world.”

That’s why the association supports the Trans-Pacific Partnership, a proposed trade agreement with 12 foreign countries.

“That would open up new markets with fewer tariffs,” Anderson said.

Thune said that, in its current form, the Trans-Pacific Partnership isn’t likely to pass because President-elect Donald Trump has already said he doesn’t support it.

Thune said the 12 countries that are part of this Trans-Pacific Partnership represent 40 percent of the world’s economy.

“If we’re not competing, China will be,” Thune said.

Rounds said he also favors the Trans-Pacific Partnership, but an alternative being presented by Trump is the pursuit of individual trade contracts with the 12 countries involved.

“Regardless of how we get it done, whether through TPP or individual plans, that really would be one of the answers to making sure our prices are more stable,” Rounds said.

U.S. Rep. Kristi Noem, R-S.D., in an email response, said current low prices in the ag industry should be taken seriously and that she supports expanded market access abroad.

She said she’s advocated for increased transparency in the futures market, supported the Government Accountability Office investigation into low cattle prices, and asked for a halt to imports from Brazil that could threaten food safety.

Follow @ElisaSand_aan on Twitter.