Oklahoma Farm Report - Missouri Cattle Industry Leader Taking Wait-and-See Approach on Industry Price Discovery Plan

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Missouri Cattle Industry Leader Taking Wait-and-See Approach on Industry Price Discovery Plan

Mon, 04 Oct 2021 11:29:03 CDT

Missouri Cattle Industry Leader Taking Wait-and-See Approach on Industry Price Discovery Plan As 2021 begins to wrap up, cattle producers are waiting for the latest price discovery numbers from the 75% Plan. President of the Missouri Cattlemen's Association and member of the National Cattlemen's Beef Association Live Cattle Marketing Committee Bruce Mershon is one of the folks eagerly waiting to see how well the plan is working to increase price discovery for cattle producers.

Ron Hays, director of Radio Oklahoma Ag Network, spoke with Mershon about his hopes and expectations of the latest feedback from Dr. Stephen R. Koontz of Colorado State University, the third-party "go between" in the plan.

"Finally, (we are) going to get some information through third-party verification (about) what cash-trade the packers are actually doing," Mershon said. "That has been kind of (a) secret to us."

Historically, there has been little to no market transparency on the packer side of the beef industry, whereas the opposite is true for live-cattle producers. With beef demand reaching record highs, many cattle producers feel they are not sharing in the success of their industry.

The 75% Plan aims to use a third party to access realistic data from packers to gain market transparency while maintaining packer confidentiality. The plan began setting goals and gathering data in Jan. 2021. The data is evaluated through two lenses: the producer side and the packer-participation-from-procurement side, for producers to achieve robust price discovery in the fed cattle market.

The plan works on a voluntary basis and it was only recently that the packer-participation silos were complete, meaning until now, only the cattle-producer side of the data has been available.

"We finally got (the packers) to the table," Mershon said. "I am hopeful that we will gain a lot of new information over the next two quarters that will guide us when we get together again in February, down in Houston."

He acknowledged that large changes like this one take time, but the change in leverage from the packer side to the producer side has not happened as quickly as it needs to, in Mershon's opinion.

"I do not think it has flipped near as fast as it needs to," Mershon said. "Even if we add more hooks - more capacity - we still need cash-trade in the southern Plains."

With the way Alternative Marketing Agreements are structured, Mershon said he thinks there are not enough bidders in the marketplace today.

"I am a believer that you have to have some trade to get full price discovery and all the leverage that is out there," Mershon said. "We are gaining some leverage, but at the expense of our rural communities."

To Mershon, it does not make sense that at the same time beef demand is growing, the industry is seeing beef-cow herd liquidation increase.

"We are killing cows at an incredible pace today," Mershon said. "What is that going to do for our rural communities down the road?"

He said that is what is most disappointing to him.

Click on the LISTEN BAR below to hear more from Ron Hays and Bruce Mershon, as they talk about the 75% Plan and the future of cattle production in the U.S.

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