Auction Markets

of the application of these technologies in will be irreversible but incomplete – so our food markets. These cost curves underpin the analysis considers a period out to 2035 to adoption and implications analysis presented provide a more complete picture. We focus on in this paper. cattle but have extrapolated our findings to

They should be seen as a ‘beta’ analysis cover all livestock and the impact on arable or a ‘first pass’ and we will update them as more evidence emerges. We welcome feedback that will help in developing this analysis. The pace of development of new technologies and their adoption and “ Legal economic sabotage!” Brown said. He understood that the facts the processes that drive the concurrent didn’t compel people as strongly collapse of industrial farming depend on many interacting factors, including policy as their craving for meat, and that and social responses to the disruption, shame was counterproductive. So responses that are inherently uncertain he’d use the power of the free and difficult to model. Clearly, the further out in time the market to disseminate a better, model runs, the less certainty there is, cheaper replacement. And, because but we believe our proven framework, methodology, and findings capture the 60 percent of America’s beef gets direction of travel and the complex proground up, he’d start with burgers.” cesses involved. The exact timing of the disruption may shift by a handful of years depending on the choices made across society. crop farming, global agriculture, and beyond.

Our core model runs to 2030. By then, our Given the magnitude of the disruption, central scenario shows that the disruption society should be prepared for the dramatic changes to an industry that has not seen this scale of disruption in thousands of years. We FARMERS will continue to track the disruption of food and agriculture as well as disruptions in key

Livestock Market

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Even better reading is the disclaimer: Any findings, predictions, inferences, implications, judgments, beliefs, opinions, recommendations, suggestions, and similar matters in this report are statements of opinion by the authors and are not statements of fact. You should treat them as such and come to your own conclusions based upon your own research. The content of this report does not constitute advice of any kind and you should not take any action or refrain from taking any action in reliance upon this report or the contents thereof. This report includes possible scenarios selected by the authors.

The scenarios are not designed to be comprehensive or necessarily representative of all situations. Any scenario or statement in this report is based upon certain assumptions and methodologies chosen by the authors. Other assumptions and/or methodologies may exist that could lead to other results and/ or opinions.

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Summary before we close:

The impact of this disruption on industrial animal farming will be profound. By 2030, the number of cows in the U.S. will have fallen by 50 percent and the cattle farming industry will be all but bankrupt. All other livestock industries will suffer a similar fate, while the knock-on effects for crop farmers and businesses throughout the value chain will be

severe. (Emphasis added.)

While cattlemen are being blinded by industry infighting that is crucial to their survival, and disruption is taking place in our cities, this is what is going on in the background. Who is fighting this?

Editor’s Note: Caren Cowan is the publisher of the Livestock Market Digest. She has spent more than 35 years in breed and trade association management. Today she also publishes the New Mexico Stockman magazine, is the executive director of Protect Americans Now, a non profit focused on private property rights and assists the New Mexico Federal Lands Council in their mission of protecting federal and state allotment owners and lessees. ▫

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Cattle Industry Divided on Negotiated Cash Cattle Bill

by: Michelle Rook, www.agweek.com

Many cattle producers feel like the market is broken and that has been exaggerated even more during the COVID-19 pandemic.

Negotiated boxed beef prices hit record highs during the height of the pandemic, while at the same time the prices cattle producers were receiving for cattle in the negotiated cattle market moved lower. In the northern feeding areas, producers believe it is strongly tied to the large amount of captive supply or formula cattle packers can use to fill their weekly processing needs. That means the packers don’t have to bid in the open market and can commonly offer lower prices for negotiated cash cattle. In the north, most of the cattle are procured through negotiated sales, which are based on the quality of the animals, breed and other specifications for slaughter.

In the southern feeding areas, the vast majority of cattle are formula priced where the packer and feeder strike an agreement and at the time of slaughter are delivered to the packer and the net price received is the base value plus a premium. That premium is based on feedlots’ ability to deliver a large amount of cattle. Nationally, between 80 percent to 85 percent of cattle are priced in this manner.

Cattle producers in the north say the lower negotiated cash cattle prices have left very little profitability for their operations, especially the last five years. This was exaggerated during the COVID-19 pandemic as many were unable to get their animals harvested because the packers used their formula cattle. At the same time, boxed beef values were at record levels, so the packers reaped the financial benefit. This disconnect in the cattle market has prompted a legislative fix.

A group of senators, led by Iowa’s Chuck Grassley, have proposed legislation to require large packers to buy at least 50 percent of their weekly cattle slaughter on a negotiated basis, with a 14-day delivery. Some cattle feeders and associations in the north are supporting this legislation, including the Nebraska Cattlemen Association. Troy Stowater, past president of the group, says it’s needed to restore price discovery.

“Price discovery happens when we have enough cattle in the marketplace that we are able to establish that. We know in Nebraska we need a short 40,000 head a week and we need participation by the three major packers that have facilities in our state,” he says.

Stowater adds that the cattle industry needs to get the weekly slaughter back to a Monday-through-Friday schedule because cattle producers are losing leverage with beef packers having a Saturday kill. Stowater says from 2013 to 2015, the beef packing industry lost four plants across the country as numbers declined after the 2012 drought. When producers rebuilt the herd, there were too many cattle and too few hooks for cattle slaughter and thus packers had to go to Saturday processing.

Other Midwest cattle groups are backing the 5014 bill, including the Iowa Cattlemen’s Association. However, their national organization, the National Cattlemen’s Beef Association, is not in favor of the legislation.

“Well NCBA is opposed to it because that’s their current policy. The Association is a policy driven organization, so current policy, whatever is on the books, is where they stand,” Stowater explains. He serves on the NCBA committee looking at cattle market reform and is hopeful that can get that policy changed at the August meeting.

Todd Wilkinson, past president of the South Dakota Cattlemen’s Association, also serves on the same NCBA committee with Stowater. He agrees the cattle market is

broken but isn’t sure the bill will help the northern feeding areas, as they generally run a higher percentage of negotiated trade and some weeks already hit the 50 percent mark.

“So I don’t see as how it’s going to impact us as much, but as you get into the southern part of the United States, I mean you get Kansas and Texas, there isn’t very much if any negotiated trade on a regular basis,” he says.

Wilkinson, who is also an attorney, is unsure if a marketplace mandate is the way to go.

“I’m concerned that a legislative fix is sometimes brings more baggage than it promises to deliver,” he says.

It’s uncertain if the bill has congressional support to pass, and so far, no lawmakers from southern states have signed on. ▫