Usual Suspects Pounce on Problem- Part Two- An Op-Ed from Steve DittmerMon, 30 Sep 2019 05:12:01 CDT
Steve Dittmer writes Part Two of this Opinion Piece about certain industry groups wanting a return of mCOOL. Steve is the Executive Director of the Agribusiness Freedom Foundation- you can read more from Steve on his blog by clicking or tapping here.
"The head of Purdue University's ag econ department Jayson Lusk testified to the Senate Agriculture Committee recently(last week).
"Lusk noted that while cattle prices fell shortly after mCOOL's repeal, that was largely a factor of cattle supplies coincidentally increasing just about that time.
"Joe Goggins calculated how much feeders have lost per head over the last 20 years but on the basis of no hedging or carcass premiums. We can't imagine trying to feed any kind of livestock without hedging or utilizing grids or other methods of getting premiums in this day and age. That would certainly explain some profitability issues.
"A Montana cattleman wrote to suggest that Goggins, the starter of this FairCattleMarkets now twitter campaign, had an interest in two auction markets in the state. No wonder he would oppose grade and yield selling in any form. He would support selling anything at auction.
"Which leads us to the OCM-R-CALF sponsored rally: "Rally to Stop the Stealin'!" R-CALF and OCM have have not progressed a millimeter from the '70s when many feeders considered selling finished cattle on a grade and yield basis "grade and steal." The rest of the industry has gotten beyond that mentality by at least 40 years or more. Working out those systems between feeders and packers is the very foundation of the quality, consistency, palatability and grading improvements we have today. It is just a few years ago that the industry was lucky to exceed 50 percent of the harvest grading Choice, with two percent Prime if we were lucky. Now, Choice percentage is often over 80 percent and Prime 8 percent. That is astounding. One can buy Prime grade packer briskets at times only 20 cents more than Choice price. That never used to happen.
"In fact, just this week we received word the CAB was celebrating their 13th year in a row of record sales, as global sales will top $1.25 billion this year, a 3.6 percent increase, year over year. CAB President John Stika noted that a record 35 percent of all Angus carcasses processed met CAB quality specifications. CAB has seen a $60 billion increase in annual consumer expenditures for beef since the demand low of 1998.
"We posit such growth in quality and volume would never have been possible if the whole industry was still selling carloads on the average. OCM & R-CALF's opposition to contracting, alternative marketing and grid selling and favoring a return to selling fed cattle live at auction is the very antithesis of the success of modern quality beef. Packers providing incentives that flow all the way down the chain is what had made a much more satisfied customer for today's beef.
"R-CALF is still stuck on the idea of selling load lots on the average, so that there is no identification of the best and worst animals and no premiums or discounts. In fact, their proposals, the so-called "GIPSA rule" for amending the Packers and Stockyards Act would actually prohibit packers from paying premiums and discounts. Such would not only be the end of CAB and similar programs, but likely the end of the beef industry, given today's discriminating consumers here and abroad.
"Without selling cattle on a grade and yield basis, identifying those carcasses and proper management of cattle and beef products from tank to cooking, CAB would not exist. And it certainly would not have set the standard for beef chain participants to deliver high quality beef to consumers. But that is just the thing that OCM and R-CALF want to put a stop to. CAB may be very successful but it takes a lot of work and attention. OCM and R-CALF members do not want to put in that work, don't want anyone else to be able to take advantage of the opportunity and in all reality, believe all that stuff to guarantee palatability is supposed to be packers' work, along with retailers and foodservice operators.
"The flyer for the rally refers to the "meatpacker monopoly," which irritates us even more than the Democrats who keep whining about "saving our democracy." This nation is a republic, not a democracy and the packers are not a monopoly. A monopoly is one buyer or one supplier. That is not our system. We are not even an oligopoly because it is not just the Big Four. There are dozens of smaller operations harvesting, processing and marketing cattle and beef.
"We hate to further quibble with economic principle with these folks but time of possession does not even override the score in football. One team might accomplish time of possession three times that of the other team and lose, if they turn the ball over too much or fizzle in the red zone. We're Bronco fans. We know all about the latter.
This idea they are complaining about that a rancher might own a critter for a year, the feeder for 100 days and the packer for a week is irrelevant from an economic standpoint. The market pays for value added to the product. We may measure weight per day of age but the packer doesn't buy cattle on the basis of days owned nor do retailers or consumers. The consumer could care less who owned what for how long. They want a tender, juicy piece of meat that tastes good. This is not about fairness. It is about delivering a product the consumer likes, consistently.
"And the industry has proven -- although the OCM and R-CALF members don't agree -- that everyone makes more money and the consumer is happier when all the beef production segments work together to produce the end product that is better, at the least cost possible so there is room for profit. Some may believe that the system only works when everyone but you is the enemy but the results regarding quality and grade we mentioned above prove otherwise.
"As for the "demands" published for the rally, since this is supposed to be about the cattle market, their "demands" regarding changing tournament "grower payment systems" and the ability to join livestock associations without retribution deals with poultry growers, not cattlemen. In addition, their "demand" that the government make sure packers are not just offering "preferential marketing arrangements" only to a "select group of large livestock feeders" is moot, as all one needs to have is a load to participate in most setups. The rub is not that some of their members don't have 40 steers to sell but that they don't want to go through the myriad management hoops that it takes to deliver a high quality carcass these days
"If it was easy, anyone could do it."
Source- Steve Dittmer
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