NATIONAL PERSPECTIVE PROTECTING PROFITABILITY FOR THE U.S. CATTLE PRODUCER by National Cattlemen’s Beef Association President Jerry Bohn Profitability is a common theme in the conversations I have with members, and for good reason, which is why improving the business climate for U.S. cattle producers is one of NCBA’s top-line priorities. This past month, our organization has been hard at work on two issues that remain top of mind for members – cattle marketing and taxes. By now, you’ve probably heard that last month six groups representing different demographics within the U.S. cattle industry came together to talk about the current state of the marketplace and what can be done to try to address these issues on the behalf of cattle producers. These groups came to consensus on three items that we all believe can go a long way in trying to help the overall strain within the countryside. Leading that list is pushing the Department of Justice (DOJ) to conclude its investigation that was launched over a year ago. It’s in the best interests of both producers and consumers for the DOJ to get to the bottom of the current market dynamics, and assess why they seemingly always result in producers getting the short end of the deal. Cattle producers deserve to know whether or not the price disparity that has plagued our market is the result of anti-competitive or other inappropriate practices in the packing sector. NCBA is working with Congress to ensure the requests for a progress report will be met at DOJ with the urgency it warrants, and we hope to see results from the Attorney General soon. The next point of consensus was in terms of packing capacity. We know that the squeeze point right now in our beef supply chain is at the processor. We have plenty of consumers that want our product, and we have plenty of cattle. We just don’t have plenty of places to process. NCBA has long worked to increase processing capacity and expand opportunities for producer profitability by lowering the hurdles for small and medium size processing facilities. We are working with Congress and the administration to try to find ways to incentivize new packing capacity and also provide incentives to try to expand existing capacity. We know this will go a long way in helping ease the tension that we’re currently seeing in the supply chain. It’s also important to note that we’ve been contacting Congress to let them know that these individuals who currently have employment at these packing plants need to get to work. And finally, there was consensus with the need to reauthorize mandatory price reporting. LMR was due to be reauthorized for five years last September but it was only reauthorized for one year. LMR now expires September of this year. We need another five-year reauthorization for
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the inclusion of a cattle contracts library so U.S. cattle producers know the types of contracts that are available. This will help our members determine if any of those contacts fit within a producer’s marketing plan. As we look at protecting your opportunities and profitability, it’s more than just NCBA’s work with cattle marketing. It’s also making sure that we put in place a business climate that helps you succeed. And that is all the buzz right now as we look at the proposals coming out of President Biden’s administration regarding tax increases. If there’s one thing I know it’s that America’s farmers and ranchers deserve certainty in the tax code. Without it, transition planning for the next generation of producers is nearly impossible. And, we know that typically when there is a tax increase, those of us in agriculture carry a significant part of that burden. When you look at some of the proposals we have seen or talk regarding the step-up in basis, the Death Tax, capital gains taxes and depreciation, all of those are going to have a direct impact on us. We understand that a lot of money has been spent by this administration and the previous administration in trying to address the pandemic, but we’re going to do everything we can to make sure that we’re not the ones that pay those bills. We are fighting to protect all of the great tax provisions that we achieved from the past four years during President Trump’s administration. In particular, we are trying to protect the step up in basis. In fact, we just saw the results of a study that we were a part of, along with other small businesses, that makes it very clear that preserving the step up in basis is going to be a key component in allowing the generational transfer of operations. If we lose that step up in basis, it is going to be a tax nightmare for cattle producers and NCBA is not going to allow that to happen. Our focus is to make a difference for cattle producers every day. We are the only trade association that never closed its doors throughout the pandemic. It was our priority to be there with you every step of the way. We’re going to remain there fighting for you, our members, because we have to have you be successful in order to make sure that we’re putting that high quality protein on the plates of Americans and our consumers around the world.
