Straight Talk: Mike Deering

Straight Talk with Mike Deering

United We Stand

We have all heard the phrase, “United we stand, divided we fall.” It’s a phrase with a bloody history as brave leaders were on a relentless pursuit to establish the United States of America. The phrase was first used by Founding Father John Dickinson just ahead of the Revolutionary War. Dickinson said, “Then join hand in hand, brave Americans all! By uniting we stand, by dividing we fall!” The phrase has been used countless times since then and even appears on our state flag.

The phrase is also applicable in our industry as we face unprecedented challenges and many producers are forced to make difficult decisions. Following the fire at a Tyson facility in August and now COVID-19, we witnessed extreme market degradation followed by sharp increases in boxed beef prices and unseasonal profitability to the packing segment. The repeat nature of these market reactions absolutely emphasizes how the production sector of the industry is exposed to the highest potential for risk with little-to-no leverage to change that risk position.

In a very rare move, we did call for economic relief for cattle producers to be included in the COVID-19 stimulus package. While we are hopeful this will help producers, we are not naive enough to believe this is going to make people whole or that the pending structure of the payments is going to make everyone happy. That’s why we need to continue our focus on long-term solutions over short-term relief.

Absent of robust cattle marketing policy, a state working group was formed to examine all options to provide longterm structural changes to the cattle markets. This is a work-in-progress. Our leaders understand the importance of moving quickly, but we do not want to do something full of unintended consequences.

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other state cattle organizations to collectively call for the Department of Justice to investigate the extreme market shifts. Any evidence of fraudulent business practices within the meatpacking industry needs to be addressed by the highest level of government. A few associations previously sent letters, but enough with the piecemeal approach. We need to come together to send a powerful message. Along with 22 other state cattle groups, the message was sent on April 17.

Livestock Mandatory Price Reporting is up for reauthorization and now is the time to determine what can be modified to bring-forth meaningful change. MCA continues to be a leader in the conversation on requiring more details to be reported on formula trade. We are also diving into ways to increase negotiated cash trade. There are several proposals we are reviewing, including requiring processing facilities to purchase a minimum percentage of their fat cattle through negotiated cash trade. The struggle is price discovery and transparency. We remain laser focused on these objectives and will not be asleep at the wheel.

As proposals are presented, we see business-as-usual attacks by those who prefer divisiveness over unity. While we continue to review all ideas and move forward carefully and methodically for Missouri cattle producers, we will not have tolerance for those circling the wagons and shooting inward. The biggest losers in the game of potshots are producers and consumers. It needs to stop. As Mr. Dickinson proclaimed, “By uniting we stand, by dividing we fall!”

MCA (Along with 22 Others) Asks DOJ to Launch Beef Market Investigation

COLUMBIA, MISSOURI (April 20, 2020) - The Missouri Cattlemen’s Association, along with 22 other state cattle organizations, sent a letter to U.S. Attorney General William Barr today, April 20, 2020, requesting a formal investigation by the United States Department of Justice to identify and investigate any evidence of fraudulent business practices within the beef meatpacking industry. The letter was prompted by extreme beef market volatility following the fire of a Tyson processing plant in August and the current cornonavirus crisis (COVID-19).

“Our members are facing economic and financial destruction during the current crisis, which is compounded by the extreme market shift following the fire in Holcomb, Kansas, eight months ago,” said MCA President Marvin Dieckman. “One segment of the industry is making unprecedented profits while the rest of us are counting pennies. We can not afford to wait another eight months for results of an investigation. We need DOJ to open an investigation immediately.”

The 23 state cattle organizations made clear in the letter that these events have emphasized how volatile cattle producers are.

“The nature of previous and current concern in both situations is extreme market degradation to the producer segment quickly followed by sharp increases and unseasonal profitability to the packing segment through boxed beef prices,” penned the 23 state cattle organizations. “The repeat nature of these market reactions absolutely emphasizes how the production sector of the industry is exposed to the highest potential for risk with little-to-no leverage to change that risk position.” While USDA is still investigating subsequent to the fire and have added the current crisis to that investigation, the organizations collectively believe DOJ engagement is critical.

“We understand and acknowledge there is a pending USDA investigation. However, as our industry looks for clarity of business function moving forward, we believe the DOJ would be the appropriate agency to open an investigation and also support USDA in its investigation allowing this process to be concluded in a timely manner,” the letter stated. “This is of vital importance to the future of one of the largest sectors of U.S. agriculture.”

According to Dieckman, both events continue the undue financial burden for all cattle producers within the production side of the beef cattle industry and in turn affect rural America short-term and long-term.

In addition to MCA, the letter was signed by Alabama Cattlemen’s Association; Arizona Cattle Growers’ Association; Arkansas Cattlemen’s Association; Georgia Cattlemen’s Association; Hawaii Cattlemen’s Council; Illinois Beef Association; Iowa Cattlemen’s Association; Michigan Cattlemen’s Association; Minnesota State Cattlemen’s Association; Mississippi Cattlemen’s Association; Montana Stockgrowers Association; North Carolina Cattlemen’s Association; North Dakota Stockmen’s Association; Ohio Cattlemen’s Association; Oregon Cattlemen’s Association; South Dakota Cattlemen’s Association; Tennessee Cattlemen’s Association; Utah Cattlemen’s Association; Washington Cattlemen’s Association; West Virginia Cattlemen’s Association; Wisconsin Cattlemen’s Association; and Wyoming Stock Growers Association.

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Source: NCBA

DENVER (April 14, 2020) - A study released today estimates cattle industry losses as a result of the COVID-19 pandemic will reach $13.6 billion. The study was commissioned by NCBA and conducted by a team of industry-leading agricultural economists led by Derrell Peel, Breedlove Professor of Agribusiness and Extension Livestock Marketing Specialist at Oklahoma State University, to assist USDA in determining how best to allocate CARES Act relief funds to cattle producers.

The study shows cow-calf producers will see the largest impact, with COVID-19-related losses totaling an estimated $3.7 billion, or $111.91 per head for each mature breeding animal in the United States. Without offsetting relief payments, those losses could increase by $135.24 per mature breeding animal, for an additional impact totaling $4.45 billion in the coming years.

Stocker/backgrounder segment losses were estimated at $159.98 per head, for a total economic impact of $2.5 billion in 2020, while feeding sector losses were estimated at $3.0 billion or $205.96 per head.

“This study confirms that cattle producers have suffered massive economic damage as a result of the COVID-19 outbreak and those losses will continue to mount for years to come, driving many producers to the brink of collapse and beyond if relief funds aren’t made available soon,” said NCBA CEO Colin Woodall. “This study also clearly illustrates the fact that while the relief funds provided by Congress were a good first step, there

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remains a massive need for more funding to be allocated as soon as members of Congress reconvene.”

Woodall pointed out that relief funds that were meant to provide aid directly to cattle producers were divided among multiple commodities, many of which already have government programs in place to support production. However, cattle producers have always maintained their independence from government programs, and most operate today without the safety net others enjoy.

“It’s only because of the extraordinary circumstances we face today that cattle producers need relief. While we appreciate the many members of Congress who supported the cattle industry and ensured cattle producers were eligible for relief funds, we need these same members to do more to make certain every cattle producer who needs relief can access funding. That’s why we’re calling today for additional funds to be made available specifically for cattlemen and women,” said Woodall.

STUDY SUMMARY

The study conducted by Oklahoma State University estimated total beef cattle industry damages of $13.6 billion as of early April 2020. Damage estimates include: •Revenue losses of $3.7 billion in 2020 to the cow-calf sector, equivalent to $111.91/head for each mature breeding animal in the U.S. If these damages are not offset, additional long-term damages of $4.45 billion or another $135.24 per mature breeding animal will impact the cow-calf sector in coming years.

• Revenue losses of $2.5 billion to the U.S. stocker/ backgrounding sector in 2020, equivalent to $159.98/ head.

• Revenue losses of $3.0 billion to the U.S. cattle feeding sector in 2020, equivalent to $205.96/head.

• The current situation is very fluid and uncertain. Additional damages are likely.

The economic damage assessment was conducted by Derrell S. Peel, Oklahoma State University; Dustin Aherin, Rabobank; Randy Blach, CattleFax; Kenneth Burdine, University of Kentucky; Don Close, Rabobank; Amy Hagerman, Oklahoma State University; Josh Maples, Mississippi State University; James Robb, Livestock Marketing Information Center; and Glynn Tonsor, Kansas State University.

Livestock Groups Send Letter Advocating for Needs of Rural Healthcare Providers Amid COVID-19 Pandemic NCBA Delivers “Paycheck Protection Program Increase Act” for Cattle Producers and Small Business

WASHINGTON (April 21, 2020) - National Cattlemen’s Beef Association Vice President, Government Affairs, Ethan Lane today issued the following statement in response to U.S. Senate passage of additional legislation, the Paycheck Protection Program Increase Act of 2020, to provide relief in the wake of the COVID-19 pandemic: “We applaud the Senate for advancing this critical replenishment of funding to programs like Paycheck Protection Program (PPP), and we are pleased to see the reaffirmation of Congress’s intent that cattle producers be granted access to the Economic Injury Disaster Loan (EIDL) program administered by the Small Business Administration. “We urge the House of Representatives to move swiftly to approve this package and deliver these funds to producers across the country who are continuing to keep grocery store shelves full during this economic disaster.”

BACKGROUND:

The U.S. Senate on Tuesday evening approved so-called “CARES 2.0” $484 billion emergency relief legislation by unanimous consent. The measure would provide an additional $321 billion in funding for PPP. Of this amount, $60 billion is set aside for small lenders and community-based financial institutions who serve the needs of unbanked/ underserved small businesses, specifically: • $30 billion for loans made by Insured Depository

Source: NCBA

DENVER (April 14, 2020) – The National Cattlemen’s Beef Association (NCBA), the American Sheep Industry Association (ASI) and the Public Lands Council (PLC) called on the U.S. Department of Health and Human Services (HHS) and the U.S. Department of Agriculture (USDA) today to request rural healthcare providers have resources and funding to properly respond to the COVID-19 virus.

“Rural healthcare providers have unique needs unlike densely populated areas. We are calling on Secretary Alex Azar and Secretary Sonny Perdue to ensure rural healthcare providers have needed resources, particularly where the number of providers are limited across a vast geographic area, and technology to allow for expanded tele-health services amid the COVID-19 pandemic.” - NCBA CEO Colin Woodall

Institutions and Credit Unions that have assets between $10 billion and $50 billion; and • $30 billion for loans made by Community Financial

Institutions, Small Insured Depository Institutions, and Credit Unions with assets less than $10 billion. An additional $50 billion is provided for SBA’s Economic Injury Disaster Loan (EIDL) program – allowing for approximately $300 billion in new loans for small businesses – and $10 billion in funding for SBA’s Emergency Economic Injury Grant program. Authorizing language was included to allow agricultural enterprises as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)) with not more than 500 employees to receive EIDL grants and loans.

“This is not business as usual for the sheep and cattle industry. Poor market conditions bring unprecedented levels of stress to farmers and ranchers. COVID-19 has exacerbated this burden through isolation and uncertainty for these industries. We must ensure farmers and ranchers do not navigate this alone by providing ample access to mental health assistance.” - ASI Executive Director Peter Orwick

“Much of rural America operates with limited numbers of healthcare providers. If doctors, nurses, or administrators serving rural areas become exposed to COVID-19, it could result in loss of access to care for large regions. It is essential these hospitals have resources to protect their employees and the rural communities at the frontlines of this crisis.” - PLC Executive Director Kaitlynn Glover