Nevil Speer's Third-Party Opinion on the Producer-Packer Market DebateFri, 03 Sep 2021 13:32:04 CDT
A combination of record-high demand at home and abroad for boxed beef, plus a bottleneck of live cattle into processing facilities due to the coronavirus pandemic, the U.S. meat packing industry has been dealt a prosperous hand. While packer margins are big, cattle producers do not think they are getting a fair share of the meat pie.
Nevil Speer, director of industry relations at Where Food Comes From, Inc., offered KC Sheperd his opinion on the recurring issue. Where Food Comes From, Inc. is an independent, third-party auditing company recognized and utilized by numerous standard-setting bodies as an accredited verification or certification service provider, according to the website.
“This is not a new topic for our industry,” Speer said. “We have been talking about captive supply and market reform, pretty much for the last 20 to 25 years.”
According to Speer, discussions died down around 2014 and 2015, until a fire at the Tyson Foods’ Holcomb, Kan. beef packing facility in 2019, quickly followed by the global pandemic, sparked the discussions.
“What happens with (the pandemic) is, you get a slow-down of cattle throughput,” Speer said. “Meanwhile, you get an increased demand for boxed beef … so you actually enable the packer to have leverage on both sides of their transactions, so all of a sudden their margins begin to go crazy.”
Speer said there are some folks in the business who believe packers should be sharing the wealth with cattle producers. Despite the business never working that way, the picture gets painted as though it has and should, he added.
“(Some cattle producers) like to make it a David vs. Goliath (scenario) and point to the packer and say, ‘look at their margins and look at our cattle-feeding margins - those aren’t even close; therefore, the market is broken,’” Speer said.
Speer said everyone focuses on the markets, but the real question that should be asked is, “what is the right thing for the business.” He thinks people lose sight of that.
“This is clearly one of the most divisive issues in our business, if not one the most divisive,” Speer said.
He said he thinks the business needs to come together to solve the issue. First, he said producers need to be leery of where they are getting information about this issue.
“There is a lot of noise,” Speer said. “Clearly, there is a lot of posturing on both sides. The first thing I always tell (producers) is, ‘you want to be educated, remove all emotion … and understand leverage.”
Producers get more leverage when they start working together, Speer said. But, with partnership comes less independence, he added.
Click or tap the LISTEN BAR below to hear more from KC and Nevil Speer, where he warns of the pitfalls of looking to the government for solutions, the importance of telling ranchers’ stories and how to navigate uncertainty.
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