CALIFORNIA CATTLEMEN’S ASSOCIATION ______________ Since 1917
1221 H Street Sacramento CA 95814 (916) 444-0845
A CALL FOR UNITY: TELLING IT LIKE I SEE IT by CCA President Mark Lacey
We are half way through 2020 and it has been a wild ride, to say the least. Not to mention somewhat disappointing on many different levels. As we all know, in February, COVID-19 came to the U.S. with all the subtlety of a tornado and since the middle of March, nothing has been the same. The subsequent response of the government was greeted with a swift and volatile reaction in the cattle markets. Not coincidentally, the blowback from producers and members was very similar. The feedback I received was not unexpected, and varied from straight criticism, to constructive criticism (which can be productive), some good ideas and frankly some irrational comments. I feel like some of the criticism is warranted, so I take full responsibility for the real or perceived actions, or in action by CCA. As they say, the buck stops here. To address that I would like to clarify a few things about trade associations like CCA. We have consolidated many different sectors of our supply chain in order to coordinate our efforts to fight external issues like regulations, or government policy. For this purpose the model works well by banding together our common interests to create a unified voice, and the strength of numbers. On the other hand, when we have internal issues like price discovery and country of origin labeling, those common interest become competing interests so it becomes difficult to reconcile the different agendas. It also sometimes causes divisions that are irreconcilable and when that happens we lose relationships, members, producers and ultimately that makes us weaker. The other feature of competing interests is that it inhibits our ability to reach 100 percent consensus (I know complete consensus is a pipe dream) so the outcomes often result in half measures, kicking the can down the road or policy that is vague or ambiguous. The definition I would apply to that is COMPROMISE and that is a word that ranchers really despise because it is a politician’s word. So how do we find equitable solutions to internal issues that usually result in us forming these circular firing squads? Specifically, in the case of price discovery the first thing is every segment of the supply chain has to be honest about their contribution to the
situation we find ourselves in. To cow/calf and stocker producers: face the fact that when the market was record high earlier in the decade, we wanted to take advantage of the great prices, and expanded from 70-year lows in inventory to 30-year highs. So you can sprinkle fairy dust on it, or whatever, but the economic fundamentals of supply and demand still apply, though COVID-19 and the government disturbed the orderly unraveling of our large inventories. To cattle feeders: you can’t have it both ways by selling only high quality cattle on the formula/ grid then selling lower quality cattle on the cash market – that’s not true price discovery. Let me say it another way. Turning cattle in without establishing a negotiated base price, or a basis simply allows you to be a market rider while other people do the work selling on cash. The way I see it, negotiating a base price, or basis would not prohibit you from committing your cattle to one packer on formula or grid. The hazard of the current situation is that if all the independent feeders that are left are forced to sell on formula just to compete, or be able to get slots for their cattle, then in my mind that is vertical integration. In other words feedlots might as well be broiler houses. The packers need to be transparent and accommodating because if Trump loses (and right now, that’s 50/50 chance at best) the grim reaper is coming for you because Sen. Elizabeth Warren may very well be the next U.S. Attorney General. I don’t think it is a stretch to say she isn’t a big fan of big corporate business entities which also includes corporate feedyards, so that isn’t an environment you want to be want to be explaining your business models in. Last, but not least the trade associations have to bring all our competing interest together to facilitate real solutions the old fashion way – by rolling up our sleeves and sitting down across from one another, and everybody taking one for the team. I apologize if I seem a little short on patience. I am. The time is ripe to solve this problem ourselves instead of letting the government solve it. It will be challenging because there are no easy answers just hard choices. Let’s get it done.
SERVING CALIFORNIA BEEF PRODUCERS SINCE 1917
4 California Cattleman June 2020
Bolded names and businesses in editorial represent only current members of the California Cattlmen’s Association or California CattleWomen, Inc. For questions about your membership status, contact the CCA office at (916) 444-0845. The California Cattleman (Publication #8-3600) is published monthly except July/August is combined by the California Cattlemen’s Association, 1221 H Street, Sacramento, CA 95814, for $20/year, or as part of the annual membership dues. All material and photos within may not be reproduced without permission from publisher. Periodical postage paid at Jefferson, Mo. National Advertising Group: The Cattle Connection/The Powell Group, 4162-B Carmichael Ct, Montgomery, AL 36106, (334) 271-6100. POSTMASTER: Send address changes to: California Cattleman, 1221 H Street, Sacramento, CA 95814
