President’s Perspective

making tough choices

By OCA’s President Tom Sharp

sharpranches@aol.com

Within the beef and cattle industry, we are in the position to make some tough agribusiness choices and we have some painful questions to ask ourselves like: Do we apply for or accept CARES Relief PPP, MFP, EIDL, CFAP, or other programs with government assistance? How do we achieve a minimum negotiated cash trade such as “30/14”? Will the PRIME Act enable us to go more vertical from beef production to the consumer plate? Does the industry need more beef packers? “Where’s the Beef?”

Gone are the days of choices when Aunt Margie or Uncle Mel would send us a birthday card with a five-dollar bill in it with the choice to either put it in the piggy bank or to buy a hula hoop. For the last few months now, our choices have included some tougher questions like: “When do we re-open the economy?”, “Am I social distancing enough?”, “Can I go out again?”, “Should I wear a mask?”, “How about seeing the grandkids?”, and “Will I ever get another haircut, or should I just do it myself!?”

A “silver lining” emerging out of the COVID-19 pandemic response might be the heightened public and political awareness concerning the essential importance of food and the luxury of experiencing no disruptions in our beef supply chain. Increasingly, the financial profit and loss disparity existent between “Packers in the News” and “Ranchers in the News” has gained public attention and greater elected official willingness to assist. But this silver lining might be more like a silver sword and it could cut both ways if the response actions go over the top by becoming excessive, exaggerated, or poorly informed.

No doubt the politics of the moment highlight this bizarre time in the cattle and beef market. Packers are still unable to resume a normal slaughter schedule due to disruptions related to COVID-19 and the result has been sky-rocketing beef prices and shortages at the consumer level. At the same time, cattle feeders are unable to sell market-ready cattle in a timely manner because of the same production problems. And each week, producers manage to get some cattle harvested, but for the last month the prices have only been higher because some packers have voluntarily paid more due to their expanding margins. So, supply and demand, the usual determinants of price, have seemingly been cast aside.

Government Assistance? The independence and pride of the American rancher has traditionally resisted government intervention including financial assistance in our operations, but because of events outside of a rancher’s control like the global health pandemic disaster, executive orders requiring the public’s isolation, potential market manipulation, or lack of profitability as a beef producer, operations have been dealt a bad hand for success. So, an alphabet soup of various government assistance programs (PPP, MFP, EIDL, CFAP, etc.) are now available to help keep farmers and ranchers www.orcattle.com | Oregon Cattleman

operating. Contact the OCA office for any needed help or questions on how to apply. 30/14 Minimum Negotiated Cash Trade? On May 12, the Oregon Cattlemen’s Association’s Board of Directors voted to support a concept called “30/14”, which would require a minimum 30 percent of each packer processing plant’s weekly volume of beef slaughter to come as a result of purchases made on the open market, defined under a Negotiated Purchase Agreement with sold cattle delivered to the packer within 14 days. OCA has written a letter to USDA officials recommending “30/14” to encourage fair, competitive, and transparent markets. The Livestock Mandatory Reporting Program (LMR) is due for legislative reauthorization on September 30, 2020, and OCA believes this is the optimum time to make significant changes in market formulation.

PRIME Act? The Processing Revival and Intrastate Meat Exemption, or PRIME Act is a bipartisan Congressional bill co-sponsored by Oregon’s Representative Greg Walden in support of livestock producer expanded access to Oregon custom-slaughtered meat processing facilities to help better meet intrastate consumer demand. OCA is currently working with Oregon Department of Agriculture to define the food safety inspection services within Oregon to safeguard the public’s health needs supporting this expanded local market access from Oregon producers to consumers.

More Packers Needed? There are some 6,000-meat packer and processor facilities in the United States; however, only four of the largest packing companies in the United States (the Big Four) have owned more than 80 percent of the country’s meat packing capacity. The capacity capabilities of the Big Four have beneficially provided efficiency of operations and packaged meat through capabilities important to the supply chain distribution needs of this country’s restaurants, grocery retailers, and consumers. And the consumer has typically enjoyed plentiful beef supply and good prices. However, the dominance of the Big Four packing companies has also led to the suspected market price manipulation and formula price trading of live cattle to the detriment of producers and has led to calls for USDA and DOJ Antitrust Division investigations of possible wrongdoings.

“Where’s the Beef”? As beef producers know, the United States does not have any shortage of live cattle ready to go to market. Rather, we are experiencing a beef supply problem due to the current COVID-19 imposed packing house worker illness/shortage, workspace social distancing, and occasional plant operation shutdowns for facility cleanings. These factors have dramatically affected the capacity capabilities of the Big Four packing companies to process the country’s 80 percent normal source of beef supply to restaurant, retailer, and consumer markets. Exacerbating this supply problem is the consumer’s need to eat, consumer’s preference for beef and the resulting grocery store panic buying that has cleared some of the Oregon Cattleman | www.orcattle.com shelves.

Would mCOOL help? Mandatory Country of Origin Labeling (mCOOL) would provide no relief or benefit to the current pandemic and economic events that we are currently experiencing in the beef and cattle industry. mCOOL is largely an unnecessary distraction to be considered during this time of other difficulties. mCOOL as a government mandated regulation was imposed and already tried for six years in this country. It cost the industry a billion dollars during that time to establish the necessary tracking and reporting systems necessary for implementation. mCOOL was ended on the brink of World Trade Organization (WTO) trade law infringements, which would have resulted in the imposition of retaliatory tariffs against the United States in its beef exports. OCA policy does support Voluntary Country of Origin Labeling (vCOOL) and Voluntary Transparency (Truth) in Product Labeling for beef products bred, raised, and processed in the United States.

In closing, there are many considerations and tough decision choices currently in front of the Oregon Cattlemen’s Association. I can assure you that your OCA District Vice-Presidents, OCA staff, OCA Officers, and OCA Committee Chairs are fully engaged and working tirelessly to understand and represent the best interests of OCA’s members every day at local, state, and national levels of our Oregon beef and cattle industry. •