R-CALF: Members, Affiliates Urge Reforms To Revitalize Rural America

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Six R-CALF USA member cattle producers from Wisconsin, Ohio, South Dakota and North Dakota, as well as representatives of these R-CALF USA affiliates – the South Dakota Stockgrowers Association (SDSGA), the Independent Beef Association of North Dakota (I-BAND), and the Buckeye Quality Beef Association (BQBA) – convened here last week to participate in the final joint competition workshop hosted by the U.S. Department of Justice (Justice) and the U.S. Department of Agriculture (USDA). In addition, participants held several meetings with congressional offices and met with Deputy Agriculture Secretary Kathleen Merrigan to urge reforms to revitalize Rural America.

SDSGA Director Vaughn Meyer and I-BAND Director Allen Lund participated on separate panels during the day-long Justice/USDA workshop that focused on margins between what U.S. livestock producers are paid for their livestock versus what consumers pay for the meat derived from those livestock.

Meyer, who served on a panel with Agriculture Secretary Tom Vilsack and U.S. Attorney General Eric Holder, said the new competition rule issued by GIPSA (Grain Inspection, Packers and Stockyards Administration) was immediately needed to begin addressing what he called an alarming loss of 1,000 cattle producers per month from Rural America. Meyer pointed to the disrupted cattle cycle – which he said was a historical indicator of competitiveness in the cattle industry – as evidence the cattle market is no longer functioning properly. He said the industry’s challenge for the next 10 years will be to figure out how to keep ranchers ranching. Vilsack then backed Meyer’s concern by saying the number of U.S. cattle operations, just since 1980, has declined from 1.6 million to 975,000.

Lund, who participated on a panel with Kansas State University economist John Crespi and Auburn University economist C. Robert Taylor, explained how the lack of competition and lack of transparency in livestock markets harm cow/calf producers like himself. He said because he is at the beginning of the cattle supply chain, losses that feedlot owners experience from the non-transparent market for fed cattle are passed on to him as a cow/calf producer in the form of lower prices for his calves.

Crespi said though his research found the widest spreads in the cattle industry, he found it difficult to discern if these spreads were caused by market power. Taylor, however, cited data collected in the fed cattle market in the Amarillo, Texas, market region that showed for 40 percent of the year, cattle feeders received only one bid or less for their cattle.

“That’s not competition,” he said.

An important fact impacting margins was proffered by American Antitrust Institute President Albert Foer, who said it takes a much smaller market share to exercise market power in the supply side or buying side of an industry than it does to exercise market power in the output side or seller side of an industry.

“This is a critical issue we hope the Justice Department and USDA focus on carefully because this fact suggests that in the cattle industry, where just four packers already control over 80 percent of the fed cattle market, packers are unrestrained in offering take it or leave it prices to cattle producers,” said R-CALF USA CEO Bill Bullard, who also attended the workshop.

Several congressional visits also were made to urge congressional support for the GIPSA rule, including with the office of Sen. Sherrod Brown, D-Ohio. Former R-CALF USA Region VIII Director David Hutchins presented Brown’s staff with 341 signatures from Ohio cattle producers who support the GIPSA rule.

The South Dakota Stockgrowers Association delegation urged their congressional offices to support stronger disease protections for the U.S. cattle industry by taking action to reverse USDA’s recent relaxation of foot-and-mouth disease (FMD) restrictions for Brazil and also urged USDA to reverse the over-30-month (OTM) rule that currently allows cattle born in Canada during the time that bovine spongiform encephalopathy (BSE) was known to be circulating in the Canadian cattle herd to, nevertheless, be exported to the United States.

The final meeting during the trip was with Deputy Agriculture Secretary Kathleen Merrigan. The group expressed their concern that the Beef Checkoff Program is being misused and mishandled by the National Cattlemen’s Beef Association (NCBA) and the group urged the Deputy Secretary to conduct a comprehensive investigation into the misuse of Checkoff dollars that previously was revealed in a sample audit of the program.

“We expressed our concern that NCBA was using the Beef Checkoff program to advance its political agenda to the detriment of Checkoff-paying producers,” Bullard said.



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