The Cattle Journal - Fall 2020: Fair Cattle Markets by Tri-State Livestock News - Farmer & Rancher Exchange

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JC HEIKEN ANGUS & SONS 14TH ANNUAL PRODUCTION SALE

TUESDAY, FEBRUARY 23, 2020 1:00PM MILES CITY LIVESTOCK COMMISSION

MILES CITY, MONTANA

SITZ LOGO 12964

HA COWBOY KIND

AAA 19274974

AAA 17746620

Logo continues to be a major player in our herd. His fertility, disposition and phenotype are examples of the qualities we strive to provide in our cattle.

Cowboy Kind sires low birth weight calves with explosive growth. He adds length while holding frame. His first calves fit in with our top calves.

VERmILLION SpUR E119 E119â&#x20AC;&#x2122;s excellent EPD spread, along with his steep hoof angle, make him an excellent fit in our herd. His daughters are clean and pretty fronted and showcase the Heiken look

AAA 18838098

INTRODUCING ....

HEIKEN BROADVIEW Call for more information:

John (406)855-7839 Brian (406) 861-3151 Ben (406)860-7331 Joe (406)861-1020

Or come visit the ranch anytime!

AAA 19421003

Heiken Broadview was the top seller in our 2020 sale to ABS Global.

This Spur E119 son is a herd maker! He will add growth and carcass qualities to your herd. Check out our website or follow us on Facebook for the most up-to-date information www.JCHeikenAngusAndSons.com or facebook.com/JCHeikenAngusAndSons

r e r e b e v Bi Fe

Fall Female & Bull Production Sale

thurSday, novemBer 12, 2020 online or in PerSon at the ranch near leola, Sd

250

Registered Red Angus Females

Red Angus Coming Two-Year-Old Bulls

Â®

100

Commercial Red Angus Females

Visit www.BieberRedAngus.com or call us at

(605) 439-3628 to join our mailing list. TRI-STATE LIVESTOCK NEWS

FALL CATTLE JOURNAL 2020

TRI-STATE LIVESTOCK NEWS

Annual Production Sale February 8, 2021

Fall Female Sale October, 2021

NJW 79Z Z311 Endure 173D ET :: Reg #43722088 :: Polled

H FHF Advance 628 ET :: Reg #43720817 :: Horned

Owned with Ned & Jan Ward, Wyoming & Upstream Ranch, Nebraska

Owned with Harrell Cattle Co., Indiana; Hoffman Herefords, Nebraska; Frederickson Ranch, South Dakota

KCF Bennett Encore Z311 ET x NJW 73S M326 Trust 100W ET

HH Advance 4075B ET x CJH Harland 408

CED

Milk

M&G

REA

MARB

SCF

BMI$

BII$

CHB$

CED

Milk

M&G

REA

MARB

SCF

BMI$

BII$

CHB$

1.3

4.3

128

0.78

0.32

21.7

468

578

131

3.1

3.7

107

0.75

0.18

14.6

354

438

134

ECR 628 ADVANCE 8014 :: Reg 43965003 :: Horned

NJW 84B 10W JOURNEY 53D :: Reg #43721750 :: Polled

Owned with Genex, Wisconsin; Baumgarten Cattle Co., North Dakota; Freking Farms, Minnesota

Owned with Ned & Jan Ward, Wyoming & Perez Cattle Company, New Mexico

H FHF ADVANCE 628 ET x ECR 0132 DOMINETTE 3374

LJR 023R WHITMORE 10W x NJW 16S 100W JOEY 84B ET

CED

Milk

M&G

REA

MARB

SCF

BMI$

BII$

CHB$

CED

Milk

M&G

REA

MARB

SCF

BMI$

BII$

CHB$

5.3

2.8

0.55

-0.04

15.8

345

412

115

11.6

0.4

110

0.74

0.10

19.2

399

488

116

Keith, Cheryl, Matt & Erin 605-870-0161â&#x20AC;¢ 605-943-5664 Dan, Kyla, Hollis & Ivy 605-870-6172 Weston, Kristin, Falon & Jensen

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FALL CATTLE JOURNAL 2020

FCSAMERICA .COM

NAME:

Josh & Raenell L O C AT I O N :

Hulett, WY

O P E R AT I O N :

Cattle & Sheep Producers

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NOBODY FINANCES AGRICULTURE LIKE FARM CREDIT SERVICES OF AMERICA. Financing agriculture isn’t just one thing we do – it’s all we do. So along with our attractive rates, money-saving services and management tools, you can benefit from an entire organization dedicated to your business and people who work for your success. Discover the difference.

(605) 342-0678 2510 N Plaza Dr Rapid City, SD

FALL CATTLE JOURNAL 2020

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NEW RANCHER’S CHOICE LICK TUBS MINERAL TUBS • ORGANIC TRACE MINERALS • LOWER COST PER HEAD PER DAY • WON’T CAKE OR BLOW

ALL NATURAL PROTEIN TUBS • CONTROLLED CONSUMPTION • PREBIOTIC FOR GUT HEALTH • COOKED BEET MOLASSES

Dependable Nutrition for the Farm and Ranch 800-255-6927 • www.ranchers-choice.com Available through Consumers Supply Distributing LLC TRI-STATE LIVESTOCK NEWS

FALL CATTLE JOURNAL 2020

Headlining the coming two-year-olds are 11 flush brothers by HA Prime Cut. 610 is the dam of Raven Jackpot that was purchased by Maher Angus for $23,000.

Dam of many herdsires and the high income cow in the history of our ranch. 1249 has 12 sons of Prime Cut that will be featured in the two-year-old division.

Known as the Dam of Powerball the Sitz & ABS sire that has become a real "cowmaker". She also will have sons by Prime Cut that will definitely be sale attractions.

This cow is a beast and she stamps it in her progeny. Sons by Regard, Reno, and Blackout will represent this cow line.

Sires represented:

Spring Cove Reno, Jindra Blackout 1037, Raven Jackpot D164, Raven Pleasant View D212, Raven Stride F34, S A V Regard, Poss Maverick 764, Dam that has stood the test HA Cowboy Up, HA Prime Cut, S A V Raindance 6848, of time. We have retained and BUBS Southern Charm AA31 numerous daughters that have surfaced as some of our top young cows. 3669 has a tremendous set of Flush brothers by Spring Cove Reno.

Also selling 400 Purebred Heifers Private Treaty this Fall A.I.â&#x20AC;&#x2122;d to Raven Stride F34 (Reg: 19252213) and Raven Laughlin G43 (19507499)

Rod Petersek: (605) 840-1496 | RJ Petersek: (605) 840-1826 | Reed Petersek: (605) 840-1292 32554 287th St., Colome, SD 57528 â&#x20AC;˘ ravenang@gwtc.net

Sale will be broadcasted live on:

FALL CATTLE JOURNAL 2020

www.RavenAngus.com TRI-STATE LIVESTOCK NEWS

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FALL CATTLE JOURNAL 2020

Bryan Ratzburg: (406) 937-5858 Cell: (406) 788-3272 Ernie Ratzburg: Cell: (406) 788-3244 Email: bobcatangus@northerntel.net

www.bobcatangus.com 16th ANNUAL

Production Sale

12:30 | SATURDAY, JANUARY 30, 2021 Western Livestock Auction | Great Falls, MT 200 Bulls, 800 Bred Females 8

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New Location!

Wilken Ranch

BLACK FRIDAY FALL SALE Friday, November 27 at 1 PM Selling 130 Potent, Virgin Coming Two-Year-Old Angus Bulls 20 SAV Resource 1441 sons

15 Hoover Dam sons

14 SAV Raindance sons

15 KM Broken Bow 002 sons

15 SAV Ten Speed 3022 sons

20 Mill Bar Hickock sons

19 Treasure sons

15 LD Capitalist 316 sons

“God made him who had no sin to be sin for us, so that in him we might become the righteousness of God.”

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FALL CATTLE JOURNAL 2020

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FALL 2020

CONTENTS 14 Editorial - Maria Tibbetts 16 Turbulent Timeline

20 What Next?

Industry discusses effects of â&#x20AC;&#x153;black swanâ&#x20AC;?

28 Problem Solvers and Paradigm Shifts Brown Family

42 A Fair Price

Feeders, others say more packing, GIPSA enforcement, faster reporting

50 Magic Formula

Is formula pricing a boon or a bust for the beef industry?

56 Get the Beef

Process verified programs available to ranchers

64 Filling the Gap

Custom processors overcome challenges to put meat on the table

74 Cutting Out the Middle Man 84 Selling the Story

Branded beef is strong

92 Beef Check-off

Past, present & future? TRI-STATE LIVESTOCK NEWS

FALL CATTLE JOURNAL 2020

What Ranchers Read. 1501 5TH AVE., SUITE 101, BELLE FOURCHE, SD 57717 1-877-347-9100 · (605) 723-7001 · 877-347-9126 (FAX)

SUBSCRIPTIONS:

1 (877) 347-9100

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Publisher: SABRINA “BREE” POPPE Cell (605) 639-0356 | Office (877) 347-9104 spoppe@tsln-fre.com GM of Sales & Marketing & Fieldman: DENNIS GINKENS Cell (406) 670-9839 | dginkens@tsln-fre.com Editor: CARRIE STADHEIM (605) 222-8935 | cstadheim@tsln-fre.com Digital & Sections Editor: MARIA TIBBETTS (605) 484-4488 | mtibbetts@tsln-fre.com Digital Engagment Editor: LIZ BANMAN MUNSTERTEIGER marketing@tsln-fre.com Graphic Designer: CHRISTA VANDYKE Reporter: MACKENZIE JOHNSTON (402) 350-6372 | faircattlemarkets@tsln-fre.com Special Projects & Major Account Coordinator: DIANNA PALMER Northern Black Hills Territory (605) 723-7010 | dpalmer@tsln-fre.com Nebraska Account Manager: GAYDAWN ROGERS (970) 301-2190 | grogers@tsln-fre.com Commercial Account Manager: LEAH BRENCE West River Territory SD/ND/MT/WY (406) 839-1097 | lbrence@tsln-fre.com Commercial Account Manager: TRACY L. HAUK East River SD/ND Territory (406) 951-3211 | thauk@tsln-fre.com Cattle Marketing Assistant & NE Territory Account Manager: CARISSA LEE (877) 347-9114 | clee@tsln-fre.com Director of Field Services & Ringman: SCOTT DIRK West of River ND & SD Territory (605) 380-6024 | sdirk@tsln-fre.com Field Service & Ringman: DAN PIROUTEK (605) 544-3316 | dpiroutek@tsln-fre.com Field Service & Ringman: DREW FELLER CO & NE Territory Field Service & Ringman : MATT WZNICK MT & WY Territory (406) 489-2414 | mwznick@tsln-fre.com

CLASSIFIEDS: CLASSIFIEDS@TSLN-FRE.COM COPYRIGHT 2020. ALL RIGHTS RESERVED. ERRORS: The Tri-State Livestock News shall be responsible for errors or omission in connection with an advertisement only to the extent of the space covered by the error. Opinions stated in letters or signed columns do not necessarily reflect the official opinion of Tri-State News.

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COVER ILLUSTRATION BY LIZ MUNSTERTEIGER

CONTENTS 98 What a Consumer Wants

Despite efforts, a gap remains between what consumers want from producers, and what producers are delivering

108 Leaning In 117 Fair Cattle Markets Q & A’s

128 Ag Events

Sales & Events Calendar

136 Fair Cattle Market

Glossary of Terms

139 Advertiser Index

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FALL CATTLE JOURNAL 2020

s we watched the markets plummet last spring, as packing plants closed to slow COVID-19 outbreaks, as feeders watched fat cattle get fatter, while their margins got slimmer, then disappeared completely, we felt helpless

MARIA TIBBETTS, DIGITAL & SPECIAL SECTIONS EDITOR

As an ag media company, we did what we always do–we told the stories, looked for answers and tried to keep our readers informed. But this time, we also decided to dig deeper. Last fall, one of our counterparts, Western Ag Reporter, started an effort to get attention for the disparity in profits between the various sectors of the cattle industry. They attached the hashtag #faircattlemarkets to add some consistency online. That effort was part of the Rally to Stop the Stealin’ in Omaha last year, which provided a point for producers to

FALL CATTLE JOURNAL 2020

TRI-STATE LIVESTOCK NEWS

literally rally and bring some attention to a situation few truly understand. We didn’t want to lose that momentum, so when the industry faced challenge after challenge this year, we decided to dive into the issues that are standing in the way of profitability for a lot of cattle producers. We picked up the banner of #faircattlemarkets and took up the fight online. We interviewed nearly anyone in the industry who would talk to us about what issues face the cattle industry, and what needs to be done to fix them. Those interviews are on a Fair Cattle Markets website, www.fair-cattle-markets.com. Looking through them, there’s a lot that we agree on. And a lot we don’t. I’d be willing to bet that every person who fights for legislation, or files a

lawsuit, or signs a petition, or runs for an office, or offers their voice to the issues in the industry, is doing what they feel they need to, to help keep their livelihood alive. There are no clear answers. It’s the murkiness, difference of opinion, background, logic and just plain misunderstanding that pits neighbors against each other in the fight to make a living. If you’re fighting for mCOOL, or for mandatory ID, or for more transparent pricing, you have my admiration and respect. I may not agree with what you’re fighting for, but the fact that you’re doing something, in a world that’s most content to bicker on social media, is worthy of respect. When we joined the #faircattlemarkets fight, our goal was to focus on “one ask”– a Department of Justice investigation into the packers. That was the closest the industry has come to being united behind an issue in a long time. Since then, our efforts have meandered into all sorts of topics, and we’ve covered a number of tangential issues, but I’d like to think we’ve remained respectful and inclusive in our coverage.

As we wade deeper into waters that we can’t see the bottom of, there are two things we need to do to fight for our industry. 1. Don’t make it personal. Disagree with your neighbor, but don’t hate your neighbor. Respectfully point out faults in their logic, ask questions, but don’t stoop to name-calling, back-biting or revenge. Not even on social media, with strangers you’ll never meet. 2. Ask the hard questions, and find the answers. Don’t take things at face value because someone you’ve always agreed with says it. Don’t fight something because of the name on the statement. Sit down and really talk to the people you disagree with, really investigate the issues you’re so staunchly supporting. In our journalism training my teacher preached, “If your mama says she loves you, check it out.” Do the research, find the answers in the murkiness and bring clarity and kindness to these discussions. I know we aren’t going to agree on everything. But if we would take the time to really listen to each other, we’d probably find there’s a lot more to unite than divide us.

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FALL CATTLE JOURNAL 2020

TURBULENT

TIMELINE 19 17

FIRST INVESTIGATION President Wilson directed the Federal Trade Commission (FTC) to investigate the facts relating to the meatpacking industry.

19 18

THE BIG FIVE

19 5 8

20 0 2

USDA JURISDICTION EXPANDED

MCOOL ESTABLISHED

Congress expanded USDA’s jurisdiction to all auction markets operating in commerce. Prior, only auction markets with an area of 20,000 square feet or more were covered.

Country of origin labeling signed into American law under Title X of the Farm Security and Rural Investment Act of 2002 (also known as the 2002 Farm Bill). This law had required retailers to provide country-of-origin labeling for fresh beef, pork, and lamb.

Report of the Federal Trade Commission on the Meat Packing Industry, concluding that the Big Five (Swift, Armour, Cudahy, Wilson and Morris) controlled the market in which they bought their supplies and the market in which they sold their products. The FTC, in fact, recommended governmental ownership of the stockyards and their related facilities.

1900

1925

19 6 7

PACKERS AND STOCKYARDS ADMINISTRATION Established by Secretary Orville L. Freeman

1950

1978 Packers and Stockyards moved under the Agricultural Marketing Service under the Carter Administration.

1990

1975

$169.50 Historic high for live cattle prices

A P RI L 20 09

$57

$81

Lowest live cattle price in 25 years

Live cattle prices drop

2018

2000

19 2 1

19 8 1

1 2/18 /20 1 5

20 18

PACKERS AND STOCKYARDS ACT PASSED

The Packers and Stockyards Administration was created as part of a departmental reorganization under Reagan.

COOL REPEALED

GIPSA ELIMINATED

Congress repealed the original COOL law for beef and pork, as a part of the omnibus budget bill because of a series of WTO rulings that prohibited labels based on country of origin on some products.

U.S. Department of Agriculture (USDA) formalized the elimination of Grain Inspection, Packers, and Stockyards Administration (GIPSA) as a standalone agency by transferring its delegation to the Agricultural Marketing Service (AMS).

The Act‘s purpose at the time was to regulate interstate and foreign commerce in livestock, live-stock produce, dairy products, poultry, poultry products, and eggs, and for other purposes. It prohibited packers from engaging in unfair and deceptive practices, giving undue preferences to persons or localities, apportioning supply among packers in restraint of commerce, manipulating prices, creating a monopoly or conspiring to aid in unlawful acts.

A P RI L 19 9 6

SEPT. 2 0 14

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19 8 5

BEEF CHECKOFF PROGRAM The Checkoff program was established as part of the 1985 Farm Bill. The checkoff assesses $1 per head on the sale of live domestic and imported cattle, in addition to a comparable assessment on imported beef and beef products. The checkoff assessment became mandatory when the program was approved by 79 percent of producers in a 1988 national referendum vote. The checkoff program was designed to stimulate restaurants and grocery stores to sell more beef and stimulate consumers to buy more beef. This is accomplished through initiatives such as consumer advertising, marketing partnerships, public relations, education, research and newproduct development.

20 0 3

“MAD COW DISEASE” BSE confirmed in adult Holstein cow in Washington state, stopping U.S. beef exports to nearly 20 foreign countries.

1900-2019

Exploring the relationship between packers and producers in America.

04/2 3 /2019

R-CALF LAWSUIT AGAINST THE BIG FOUR R-CALF USA announced a lawsuit against the “big four” packers who, they allege, violated U.S. antitrust laws, the Packers and Stockyards Act, and the Commodity Exchange Act by unlawfully depressing the prices paid to American ranchers. On April 23, 2019, the cattlemen’s group based out of Billings, said Tyson Foods, Inc., JBS S.A., Cargill, Inc., and National Beef Packing Company, LLC, and certain of their affiliates from at least January 1, 2015 through the present, conspired to depress the price of fed cattle they purchased from American ranchers, thereby inflating their own margins and profits.

0 8/0 9/2 019

09/16/2 019

TYSON PLANT FIRE IN HOLCOMB, KS

WESTERN AG REPORTER LAUNCHES #FAIRCATTLEMARKETS CAMPAIGN

President of Tyson’s Fresh Meats Division says a spark from welding during maintenance likely caused the fire that heavily damaged the company’s plant near Holcomb in Finney County.

On behalf of cow-calf producers and independent cattle feeders nationwide, Western Ag Reporter is launching a Twitter campaign asking President Donald Trump for assistance in rebalancing the cattle markets. The ever-widening gap between packer profit margins and producer’s price for cattle has raised concern across the countryside.

2019

CONTINUED ON NEXT PAGE

04/26 /2019

08/2 8/2 019

10/02 /2 019

CONSUMER LAWSUIT

HOLCOMB FIRE INVESTIGATION BEGINS

“RALLY TO STOP THE STEALIN’!” IN OMAHA

“As part of our continued efforts to monitor the impact of the fire at the beef processing facility in Holcomb, Kan., I have directed USDA’s Packers and Stockyards Division to launch an investigation into recent beef pricing margins to determine if there is any evidence of price manipulation, collusion, restrictions of competition or other unfair practices.” U.S. Secretary of Agriculture Sonny Perdue.

Cattle producers rallied in a daylong event at an Omaha hotel, calling on President Donald Trump to bring more fairness to cattle markets and to reduce the influence of imported beef and cattle on U.S. market prices

“An investigation has revealed that for years, major food corporations have engaged in illegal conduct regarding the marketing and sale of beef products, causing millions of U.S. consumers to be deceived during their purchases of products such as hamburgers, ground beef and steak.” Hagens Berman Sobol Shapiro LLP. Hagens Berman sought reimbursement for these illegal actions by leading food manufacturers that have deceived purchasers of beef products.

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2020

0 4/2 3/2 0 2 0

KANSAS RANCHER INTRODUCES M-COOL PETITION

S P RI NG 20 20

BOXED BEEF PRICES SOAR At the end of February boxed beef was priced at $205, by May 4th they had doubled to $410. Prices peaked on May 12th, 2020 at $475.39.

“Petition to Immediately Pass Mandatory Country of Origin Labeling for Beef, Pork and Dairy Products” In response to the COVID-19 Crisis, Kerry Cramton petitioned that the President and Congress should immediately pass Mandatory Country of Origin Labeling for beef, pork and dairy products to strengthen national food security and help stimulate economic growth. Within 7 days, the petition hit 250k signatures.

0 5 /0 6 /2 0 2 0

02/21/2020

BRAZILIAN BEEF APPROVED FOR SHIPMENT

0 4/0 8 /2 0 2 0

USDA INVESTIGATION EXTENDED

DOJ INVESTIGATION ANNOUNCEMENT

Brazilian Agriculture Minister said the United States reopened its market for Brazilian fresh beef exports, effective immediately. Fresh beef from that country has not been allowed since June 2017 when some shipments didn’t meet food safety requirements. The country is a leading exporter of beef, and two of the United States major meatpackers, JBS and National Beef are Brazilian-owned.

The Department of Agriculture has expanded an existing investigation into pricing practices in the beef industry to also include recent developments brought about by the spread of the coronavirus. The news, confirmed by Ag Secretary Sonny Perdue in a tweet, follows several requests from Capitol Hill and the cattle industry to take a look at shifting margins between packer and producer profits.

President Trump asked the Department of Justice, on May 6, 2020 to investigate meatpacker pricing activity. “I’ve asked the Justice Department to look into it. … I’ve asked them to take a very serious look into it because it shouldn’t be happening that way and we want to protect our farmers.”

MA RC H 20 20

$85.32 Live cattle price

03/27/2020

0 4/16 /2 0 2 0

COURT RULES AGAINST R-CALF USA IN CHECKOFF CASE

CORONAVIRUS HITS THE PACKING INDUSTRY Packing plants begin to shut down because of the COVID-19 pandemic.

Judge Brian Morris US District Court judge, denied R-CALF USA’s request for an injunction to stop certain state beef councils from collecting checkoff dollars. R-CALF had alleged that because some state beef councils (including Montana and South Dakota) are not appointed by the government or elected by payers of the checkoff, that they are not producing government speech. Each qualified state beef council (QSBC) collects $1 from cattle producers for each head of cattle sold. They are to send $.50 to the Cattlemen’s Beef Board and use the remainder for beef promotion, research and education.

0 4/2 8 /2 0 2 0

PROCESSING DEEMED ESSENTIAL President Donald J. Trump signed an Executive Order to keep meat and poultry processing facilities open during the COVID-19 national emergency.

M AY 2 0 2 0

PRIME ACT REINTRODUCED The PRIME Act was first introduced on May 21st, 2019. Representative Thomas Massie (R-KY) and Representative Chellie Pingree (D-ME) re-introduced the PRIME (Processing Revival and Intrastate Meat Exemption) Act again in May 2020. The bill would loosen regulations to allow meat such as beef, pork or lamb from custom kill plants (not state or federally-inspected) to be sold to consumers, restaurants, hotels, boarding houses, and grocery stores.

FALL CATTLE JOURNAL 2020

TRI-STATE LIVESTOCK NEWS

TURBULENT

TIMELINE 19 17

FIRST INVESTIGATION President Wilson directed the Federal Trade Commission (FTC) to investigate the facts relating to the meatpacking industry.

19 18

THE BIG FIVE

19 58

2002

USDA JURISDICTION EXPANDED

MCOOL ESTABLISHED

Congress expanded USDA’s jurisdiction to all auction markets operating in commerce. Prior, only auction markets with an area of 20,000 square feet or more were covered.

1900

1925

19 6 7

PACKERS AND STOCKYARDS ADMINISTRATION Established by Secretary Orville L. Freeman

1950

1978 Packers and Stockyards moved under the Agricultural Marketing Service under the Carter Administration.

Senator Chuck Grassley and others introduced legislation that would require larger meat packers to buy at least half of their weekly beef slaughter on the open market, and mandates that cattle are delivered within 14 days of delivery.

1 2 /18/2 0 1 5

2 0 18

The Packers and Stockyards Administration was created as part of a departmental reorganization under Reagan.

COOL REPEALED

GIPSA ELIMINATED

Congress repealed the original COOL law for beef and pork, as a part of the omnibus budget bill because of a series of WTO rulings that prohibited labels based on country of origin on some products.

19 85

CHICKEN INDUSTRY EXECS INDICTED

2003

“MAD COW DISEASE” BSE confirmed in adult Holstein cow in Washington state, stopping U.S. beef exports to nearly 20 foreign countries.

Pilgrim’s Pride CEO and three other chicken industry execs indicted for an alleged price-fixing conspiracy.

0 6 /0 6 /20 20

The bill would establish a program to make facility upgrades and planning grants to existing meat and poultry processors to help them move to federal inspection and be able to sell their products across state lines.

CENTRAL GROCERS FILES A CLASS ACTION LAWSUIT Central Grocers filed a class action lawsuit alleging the big four packers have violated the Sherman Act by conspiring to constrain beef supplies in the United States. This action has artificially inflated domestic beef prices the retailers/grocers pay.

J ULY 20 20

INTERSTATE SHIPMENT AGREEMENT W/USDA FSIS

NCBA ADOPTS NEGOTIATED TRADE POLICY

Iowa Secretary of Agriculture Mike Naig finalized a Cooperative Interstate Shipment (CIS) agreement with the United States Department of Agriculture (USDA) Food Safety and Inspection Service (FSIS) today. This means state-inspected meat and poultry processors in Iowa are one step closer to being able to sell their products across state lines. Eligible processors can apply for admission to the CIS program now.

05/13/2020

Senators Jon Tester and Steve Daines signed onto a resolution to reinstate Country-of-Origin (COOL) labeling for pork and beef. Similarly, Congressman Greg Gianforte sent a letter to Secretary of Agriculture Sonny Perdue to find a meaningful solution to allow accurate labeling of U.S. beef.

2018

19 81

PACKERS AND STOCKYARDS ACT PASSED

05/2 0/2 02 0

COOL RESOLUTION

Live cattle prices drop

2000

(Requiring Assistance to Meat Processors for Upgrading Plants ) The bill amends the Agriculture Marketing Act of 1946 by inserting a new section: Sec. 298. Grants for Improvements to Meat and Poultry Facilities to Allow For Interstate Shipment.

6/3/20 20

50/14 LEGISLATION INTRODUCED

$81

Lowest live cattle price in 25 years

RAMP-UP ACT INTRODUCED

USDA Secretary Sonny Perdue announced the Coronavirus Food Assistance (CFAP) program on April 17, 2020. Beginning May 26, USDA’s Farm Service Agency will be accepting applications from agricultural producers who have suffered losses.

05/12/2020

Historic high for live cattle prices

19 2 1

7 /2/20 20

CFAP PAYMENTS ANNOUNCED

$169.50

APRI L 2 0 0 9

$57

1990

1975

05/19/2 02 0

APRI L 199 6

S E PT. 2 0 14

0 6 /0 5 /20 20

The final policy supports a voluntary approach that increases frequent and transparent negotiated trade to regionally sufficient levels, to achieve robust price discovery determined by NCBA funded and directed research in all major cattle feeding regions and includes triggers to be determined by a working group of NCBA producer leaders by Oct. 1, 2020.

BIG 4 MEATPACKERS SUBPOENAED The U.S. Department of Justice has reportedly contacted the four big meatpackers, seeking information related to an investigation into possible anti-trust violations. According to the Bloomberg story, an unnamed source reported that the DOJ sent “civil investigative demands,” which are essentially subpoenas, to the four companies, and is in communication with state attorneys general.

6 /1 1 /20 20

EXPANDING MARKETS FOR STATE-INSPECTED MEAT PROCESSORS ACT OF 2020 INTRODUCED The Expanding Markets for State-Inspected Meat Processors Act of 2020, is legislation to allow meat products inspected by state Meat and Poultry Inspection (MPI) programs to be sold across state lines. Presently, there are 27 states with inspection programs certified by the Food Safety Inspection Service (FSIS), which meet or exceed federal inspection standards. However, products processed at these FSIS approved state MPI inspected facilities are not currently allowed to be sold across state lines.

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FALL CATTLE JOURNAL 2020

PHOTO BY HEATHER MAUDE

FALL CATTLE JOURNAL 2020

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Industry discusses effects of “black swan” events and how to prepare for tomorrow Marvin Mutchler

BY CARRIE STADHEIM

hile some say COVID-19 was an anomaly that will leave no lasting effects on the livestock industry, Marvin Mutchler hopes this is not the case.

No, he’s not praying for another worldwide health scare, but he believes that a spotlight must continue to shine on the cattle industry’s struggle to move cattle fairly and equitably from one segment to another, all the way to the consumer’s plate. And in a twisted sort of way, COVID-19 might be the sickness that saves the cattle business. “I’m hoping we realize more about the bottleneck in the supply chain – the producer as well as the the consumer. We need more diversification in the packing industry – more packing locations scattered regionally,” said the Sturgis, South Dakota, AGRI-Finance loan officer. The Tyson plant fire was actually a telltale indicator that the packing sector is too concentrated, he said. “We’ve been talking about concentration in the packing industry since the 1800s. It never seems to get solved. Maybe this will inspire something,” he said.

Establishing more packing plants won’t be an easy feat, he admits, because of the risk and expense involved in operating one, along with strict government regulations. Iowa-based cattle industry trader Scott Varilek agrees that packer consolidation puts the cattleman in a helpless position. “The producer has zero leverage. As far as fed cattle, we have no leverage, we pretty much are happy if we get an offer from a packer. Feeders have no ability to hold out for a higher price,” he said, adding that the August, 2019 Tyson plant fire and the COVID-19 effects have made the packer control even more obvious. “We think the 50-14 initiative is something that would help,” said the partner in Kooima, Koomia, Varilek Trading. “When the price of boxed beef and the demand for meat goes up, we would like to be able to ask

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Republican Senator Chuck Grassley of Iowa introduced the 50-14 bill earlier this year, which would require packers to buy at least half of their weekly slaughter needs on the cash negotiated or “spot” market.

more for our cattle, we haven’t had the leverage to do that. I think the 50-14 legislation could help that.” Republican Senator Chuck Grassley of Iowa introduced the 50-14 bill earlier this year, which would require packers to buy at least half of their weekly slaughter needs on the cash negotiated or “spot” market, and to take delivery within 14 days. Kansas Senator Pat Roberts, the Ag Committee chairman, has not allowed a hearing on the bill. It is estimated that in 2019 the four big packers purchased around 75 percent of their needs via formula agreements, most of which are not reported in a timely manner, and are based on the “cash market” at the time of slaughter. This leaves a minimal number of cattle trades to establish the market for all or nearly all cattle that are sold. The few cash negotiated trades that do take place are not reported unless they fit the 3-70-20-confidentiality rule. That rule requires that, in order for a sale to be reportable, in the most recent 60 days, at least three reporting entities (packers) need to provide data at least 50 percent of the time; no single reporting entity may provide over 70 percent of the data, and; no single reporting entity may be the sole reporting entity for an individual report more than 20 percent of the time. In other words, if one or two packers

Scott Varilek said he is aware of some producers who had purchased “puts” on their cattle before the market went downhill. “That really bailed them out,” he said. Photo courtesy Scott Varilek 22

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are buying nearly all of the cattle in a certain region, none of those sales are publishable in USDA’s report. This is currently the case in Colorado. The result is that very few cash sales nationwide establish the “market” for all other sales across the country. This gives the large packers great incentive to drive down those reportable cash sales.

Formula Many articles and industry opinions in recent years have urged cattle owners, particularly feeders, to participate in formula arrangements, to limit their market risk. Nearly all members of the industry, however, now agree that this may have gone too far, by limiting cash sales to the point that price discovery is nearly defunct in the live cattle or “fat cattle” sector. But Varilek fears the lack of cash trades, especially considering the regionality of the issue, has the higher quality/better grading cattle of the north being sold for average prices while the lower grading cattle of the south are selling for premium prices under formula arrangements that guarantee numbers for big packers. Iowa, Nebraska and South Dakota feeders remain much more likely to sell in a cash negotiated situation than their friends to the south. However, these feeders have become “price takers” in recent years due in part, says Varilek, to the tremendous amount of committed or formula cattle in the South that tend to fill most of the

FROM CME: The Livestock complex at CME Group was created in 1964 with the introduction of the Live Cattle futures contract, followed by Lean Hog futures in 1966 and Feeder Cattle futures in 1971.

LIVESTOCK RISK MANAGEMENT The Livestock complex at CME Group was created in 1964 with the introduction of the Live Cattle futures contract, followed by Lean Hog futures in 1966 and Feeder Cattle futures in 1971. These contracts provide participants in the livestock industry with a means for hedging, the management of the price risks naturally inherent in the sale or purchase of livestock and meat products. LIVESTOCK HEDGING In hedging, price risk is transferred from those seeking to reduce it to others willing to assume it in hopes of making a profit. Hedgers in the livestock markets include: Those who need protection against declining prices, such as hog farmers, cow/calf producers, feedlot operators and exporters Those looking for protection against rising prices, like feedlot operators purchasing young feeder cattle, meat packers and importers Hedging is essentially taking a position in the futures or options market that is opposite one’s current position in the cash market. Since the cash and futures prices tend to move up and down together, any gains or losses in the cash market will be counterbalanced with gains or losses in the futures market. EXAMPLE A cattle producer with weaned calves currently grazing, plans to sell to a feed lot once they reach the appropriate weight. In market terminology, he has a long cash position. In order to hedge and lock in a selling price, he would take a short position in the futures market, specifically Feeder Cattle futures, by selling futures contracts now and

buying them back later when it is time to sell his herd in the cash market. On the other hand, feed lot operators, meat packers and importers and others who expect to acquire livestock and meat products in the future have a short cash position. For instance, a meat packer expecting to purchase hogs for processing would be concerned about an increase in hog prices before he is ready to purchase the stock he needs. He would lock in a purchase price by taking a long position in the Lean Hog futures market. In other words, they would buy Lean Hog futures contracts now and sell them later when he is ready to purchase the hogs that he needs. Here is a good hedging rule-ofthumb for determining whether to buy or sell Livestock futures: If your future action includes selling livestock in the cash market, an appropriate hedge today is selling futures If your future action includes buying livestock in the cash market, an appropriate hedge today is buying futures Speculators facilitate hedging in the futures markets by taking the opposite side of most commercial trades. They are attracted to the market by the opportunity to realize a profit if they are correct in anticipating the direction and timing of Livestock price changes. In doing so, they provide market liquidity, which is the ability to enter and exit the market quickly, easily and efficiently. A futures position is the most basic price risk management strategy for a livestock seller or buyer. Again, a short position allows the seller to lock in a sell price in advance of the actual sale, providing protection against falling prices and a long position lets a buyer lock in a purchase price and obtain protection against rising prices.

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packers’ needs, with the cash cattle only being looked at as “last resort” options. This is particularly unsettling when taking into account the quality of cattle from region to region, Varilek said. “The large feedyards – mostly in the south – can go direct to the packer and get a deal that’s going to give them an advantage over everyone else. Of course they are willing to take that,” he said.

But just because those feedyards have formula agreements with packers to deliver all of their cattle to that particular packer, that is not an indication that the cattle are of higher quality, said Varilek. It is an issue of quantity and convenience, not quality, he says. “To me, it’s obvious, if you look at the cash price they are getting. Even if we are getting the same price they get in the South – let’s say we had a pen up here sell for $1.03 and they had a pen in Texas sell for the same – follow it through and see the grade, yield, look at plant averages for percent choice. Up here the percent choice will be in the 80s and down there it will be in the 60s or 70s,” he said. The “eared” southern cattle that can better tolerate heat and insects do not tend to grade as well as the northern cattle, Varilek said. So when the feedyards in the south sell cattle on formulas where premiums are added above the cash price, those are not “quality” premiums but rather “captive supply” premiums to allow the packers confidence in knowing they have X number of cattle committed for a certain time period.

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Along with the long term goal of policies that encourage or even help finance more packing capacity, Mutchler says cattle producers can prepare for unexpected catastrophes by purchasing price insurance, as well as by hedging. “Risk has always been a huge part of agriculture,” he admits, and says managing that risk is important.

Some options are: Livestock Risk Protection insurance, which is 20-35 percent subsidized, depending on the coverage level purchased by the livestock owner. Producers can go to www.rma.usda.gov to learn more. Puts -pays the premium purchaser if the market drops below the premium level. • the cattle owner knows the cost of the option and the maximum loss up front: the option premium • The cattle owner can establish a floor price for his sales • The cattle owner still can take advantage of higher prices Feeder cattle contracts are based on 50,000 pounds while live cattle or “fat cattle” contracts are based on 40,000 pounds.

A producer’s “position in the cash market” could be translated into the type of livestock intended for sale, and timing of anticipated sale. If a producer has a pen of fat cattle that will be ready in December, he or she has a “long” position in the December live cattle cash market. He or she could offset this or protect against price drops with a “short” position for that same time period. Varilek points out that anyone can buy options, so even those with breeding animals such as bulls or bred heifers for sale could consider puts or other options

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in order to protect themselves from a catastrophic disaster that throws the entire cattle industry into turmoil.

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Colorado State University agriculture and resource economics professor Dr. Stephen R. Koontz believes that the cattle industry ought not be so fearful, after both the 2019 Tyson plant fire and the ongoing COVID pandemic, that there will be more unexpected cliffs to fall off of. “In all honestly, these things don’t happen very often. In my whole professional life, we’ve had more packing capacity than animal numbers. What we’re seeing is that since 2016, in certain regions, there are more cattle than packing capacity,” he said. The lack of kill space is probably a bigger market influencer than either the fire or the pandemic, he said. For almost two years now, the packing industry had been running Saturday kills to keep up with the cattle supply, he says. It would be naïve to think something wouldn’t happen eventually. “If you are running the industry as hard as it can go, can you not expect some accidents?” he asks. While Koontz believes health care, public interaction and other issues related to the populace’s well-being are more important than the cattle market, he points out some of the same protection options that Varilek discussed – puts, federally subsidized Livestock Risk Protection insurance. “There will be good opportunities in the future, but we need to look at price insurance,” he said. Of bigger concern than another “black swan” event is the impending drought, he adds. “I’m concerned about the dry winter. If we have a significant cattle liquidation or people are buying more forage, that might change supply and demand so that cattle prices look better next year,” he said.

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Some cattlemen are wondering if there are good years ahead. “I think we will have good years,” said Mutchler. “When beef prices were very high a few years ago, a lot of my soybean and corn farmers were in the same boat. There is a huge supply of everything worldwide. We’re such good producers.

“But we have to remember, that government payments are keeping a lot of producers afloat this year, after some disastrous prices, particularly for feeders,” Mutchler said. “Even as Americans go back to work, someone has to repay that money.” –COLORADO STATE UNIVERSITY AGRICULTURE AND RESOURCE ECONOMICS PROFESSOR DR. STEPHEN R. KOONTZ

“But we have to remember, that government payments are keeping a lot of producers afloat this year, after some disastrous prices, particularly for feeders,” Mutchler said. “Even as Americans go back to work, someone has to repay that money,” he said. Consumers getting involved and supporting policy that helps return a bigger portion of the retail beef dollar to producers would be an alternative to taxing the public to prop up the livestock industry, as the nation continues to demand a “cheap food policy.” And while producers are seeking relief in the form of 50-14, COVID-19 has opened at least some consumers’ eyes as to where food comes from and has brought the topics of food security and availability to the forefront of many agricultural and food conversations, Mutchler said.

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AND

PARADIGM SHIFTS John Brown sorts fat cattle at the feedlot. PHOTO BY TAMARA CHOAT

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ABOVE: John Brown (l) pushes up a draft of their Hereford cross fat calves, ready for market. PHOTO BY TAMARA CHOAT

BY TAMARA CHOAT

t was mid-May, and Vern Brown had a three-quarter million dollar problem keeping him up at night. It wasn’t the fear of coronavirus driving his sleeplessness. It was the 360 head of fat cattle he owned that were ready to kill – with no buyers to take them.

In March 2020 society and the world economy crashed to a halt as the panic of coronavirus hit. Now, two months later, storm surges of the pandemic were slamming the cattle industry as already concentrated packing plants shut down with sick employees and precautionary measures.

In a typical year Brown Ranch LLLP, which consists of parents John and Nikki Brown, son Vern and his wife Rachel, and son Nicholas and his wife Maria, all who live along the Little Missouri River in North Dakota (the closest town is Baker, Mont.), send a large cut of their weaned calves to feed at Homestead Cattle Company near Terry, Montana. They keep several hundred head to finish and usually market the fats on the grid to Cargill in Fort Morgan, Colo., with the first load ready to kill in late May. This year the Hereford crossbreds were looking especially good – but now it was May 15 and they were all dressed up with nowhere to go.

LEFT TOP: Vern and Rachel Brown with children Cadence (front left), Clyde and Halle. MIDDLE: Nicholas and Maria Brown with children Ava (held by Nicholas), Miles, Aubree and Mason. BOTTOM: John and Nikki Brown ranch with their two sons, Vern and Nicholas, and their families on the Montana/North Dakota border northeast of Baker, Mont. Their daughter Erin and her family operate their own ranch near them as well. PHOTOS COURTESY BROWN FAMILY TRI-STATE LIVESTOCK NEWS

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The bottleneck at packing plants quickly escalated into a nationwide crisis for livestock owners, particularly for feedlots full of highly perishable finished cattle. Cattle prices cratered. However, it wasn’t the Browns’ problem that made them unique. It was their solution. “They would have eventually taken our cattle, but with the weights they were already at and days warming up, we would have seen a lot of death loss and lost tons of money,” says Vern. “I was looking at Facebook and thought, ‘the hell with it, I’m going to put an ad on there and see if I can start selling some locally.’”

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Vern posted a carefully-worded ad on May 18 on the group North Dakota Farm to Table, stating he had 360 head of cattle ready to go in a freezer somewhere. His timing couldn’t have been better. Grocery stores were limiting purchases of ground beef and fast food restaurants halted hamburger sales. Consumers perceived a lasting beef shortage and the toilet paper panic mentality resurfaced. “It went crazy overnight,” says Vern. “Ridiculously crazy.” In a few days’ time the post had been shared over 9,000 times. He didn’t list a price or weights on the ad to keep in accordance with Facebook policy, but relied on private messaging to communicate

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The Brown grandkids are fifth-generation on the ranch that sits on both sides of the Little Missouri River. All seven, as well as their three cousins, are top hands and an integral part of operations. PHOTO COURTESY OF BROWN FAMILY

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details, which included an average weight of 1,350 pounds and $1.15 per pound for pickup at the feedlot or $1.25 per pound for delivery within a 250mile radius. What began as crisis management turned into a paradigm shift that gave the Browns a new perspective on the product they raised. Over the summer the family successfully sold the entire pen of fats in groups of 1s and 2s, trailer loads and a couple of pot loads. Beef went to more than 10 different states. They collectively put over 20,000 miles on their trucks. Monday morning meetings to coordinate sales and delivery schedules became standard, with all six adults and usually a kid or two taking part in the loading, weighing and delivery duties. 3 a.m. became a normal wake-up time for someone – everyone got plenty of turns – to make the 140mile trip to the feedlot for an early morning weigh-out. While the whole world was spiraling downward, the Brown family simply put their heads down and got to work. “And not once did any of us hit a deer, get a flat tire or get a speeding ticket,” says Vern. “I’m the most surprised about no speeding tickets!” says Rachel. The plan forced a drastic change from the norm at the Brown Ranch. Calves got branded several weeks later than normal. The haying window was short. The hours away from home added up. “Every week this summer at least 1/3 of

our family, which makes up our crew, was away from the ranch for two to three days; most weeks 2/3 were gone,” says Vern. There were three times John and Nikki made the round trip from the ranch to the feedlot and back twice in the same day. Nicholas and Maria shouldered their share of the trips, burning up the miles delivering fat beef trailer load by trailer load. Overnight, Vern went from fulltime rancher, cowboy, mechanic and family guy who lives 30 miles of gravel away from town with no cell service, to being a full-time beef salesman on his phone all day. “We got about 400 Facebook messages the first day, between 300-400 the second day, and probably 50-100 messages each day for the next day and a half,” says Brown. “That’s all Rachel and I did for two days, answer Facebook messages and confirm sales.” It was a major pivot for a guy who had owned a smart phone for only six months. “I said when this is over I want to throw this thing in the river.” With all custom processing shops within a 500-mile radius booked up to a year in advance, the challenge for customers would be finding a place to butcher the beef. “That was one caveat we had – they had to find their own place to process,” he said. “We had people trying to figure out how to butcher them themselves, or asking if they could come butcher them on site at the feedlot – it was nuts, absolutely crazy. People were acting like they were going to starve to death if they didn’t get a beef.”

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Nothing gets by this crew. PHOTO COURTESY OF BROWN FAMILY

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About the third day after the ad posted, Vern got a message from someone who simply gave him a name and a number and said, “Call this guy.” “I’m sure glad I did,” he says. The number was for Louie Hegle, who had just started Backwoods Wildgame Processing in Forsyth, Mont. He had only planned to cut game but, after the demand for beef skyrocketed, decided to go all in. It ended up being a perfect symbiotic relationship. Vern and Rachel went back through their messages and said they had found a processor and within a week had 30 head sold and headed to Forsyth. “We were his very first customers, and the floodgates really opened,” says Vern. “For a while his answering machine simply said, ‘If you’re calling about the Brown beef leave a name and number and we’ll get back to you.’”

“We had a guy we had never met who owned a truck but had never hauled cattle call and offer to take a load to Everson, Wash., to sell,” says Vern. “We put 50,000 pounds on him and sent him out the door. When that truck left the feedlot, I was scared shitless.” Not one check was bad. Not one person no-showed. “It really restored my faith in humanity, in people,” says Vern.

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The Browns ended up delivering a load every week of as many head as Backwoods could take. Several times a week all summer long they drove, weighed, loaded, and drove some more to a myriad of other destinations. Cargill ended up contracting a few loads once their flow through caught up, which relieved some of the pressure of individual sales. When the last of the 360 shipped in early August the Browns agreed it was good to be done, but overall it was eye opening and successful. “When we started this process we figured we would at least get a few bounced checks,” says Vern, but they decided it would just be the cost of doing business this way.

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Rachel added, “Most of the stuff we see on the news tells us people are bad, society is crashing down. This showed us there are a lot of people who want to help, who are good. We sold cattle all over the United States to people we had no idea who they were. They trusted us to get them cattle; we trusted them to pay us back. And they all did.” The road went both ways. They estimate 2,000 of the messages they received said something along the lines of: “We’ve never bought beef this way before, can you tell us what we need to do, can you help us?” The paradigm shift allowed for them to connect directly with the consumers who are eating their beef – and the feedback was overwhelmingly positive. “Now those people know exactly what they are eating, exactly where it came from and that’s good for our industry as a whole,” says Vern.

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When asked: Is the process repeatable? Do they even want it to be repeatable? Vern responds, “Yes and yes.” “It’s repeatable because all these people know what they’re eating, how it tastes and what it costs – we’re cutting the packer out and putting that money in our pocket and leaving some in the consumer’s pocket,” says Vern. “Even if hamburger goes back down to $4 a pound our customers can still save $1,000 buying from us versus at the grocery store.” He estimates with their mileage and time they likely came close to the same margins of previous years, perhaps even $10 per hundredweight more. But compared to the $0.80 per pound mercy offer they were given by packers at the start of the summer, it was a worthy endeavor. Rachel kept names, numbers and spreadsheets in an almost-filled notebook that is not just a souvenir of their steadfast accomplishment – but is also a valuable database

TOP LEFT: Vern Brown (right) pushes a draft of cattle to load out. MIDDLE LEFT: Vern Brown pushes the last fat steer onto a pot of cattle headed for Washington. BOTTOM LEFT: The Brown Ranch calves, here on feed in February 2020, are an F1 Hereford cross that consistently perform on the grid. PHOTOS BY TAMARA CHOAT

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of customers, butcher shops, transportation companies, cattle buyers and a lot of new friends. “Another reason I want it to be repeatable is we met a lot of really good people,” says Vern. He has personally called almost every customer to see how things turned out. “They say it’s the best beef

THE BROWN CREW AFTER A HARD DAY’S WORK.

they’ve ever eaten. Most say they will be back.” The Browns have shifted the way they will do business in the future – even if it’s not to the scale of the summer of 2020.

PHOTO COURTESY OF BROWN FAMILY

And perhaps Vern won’t throw that phone in the river after all.

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FALL CATTLE JOURNAL 2020

Paul Huffman, Owner/Mgr. 605-374-5675 605-645-2493 Chad Hetzel, Asst. Mgr. 701-376-3748 Curt Williams Baker Field Rep. 406-778-3282 or 406-778-3773 Jim Sheridan, Field Rep 605-490-2288 or 605-967-COWS

Owner: Baxter & Skyler Anders 605-685-4862 Auctioneers: Lynn Weishaar: Reva, SD 605-866-4670

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• MANDAN, ND

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Sales every Wednesday Sales on Saturday

(between October 31 and December 19) Sheep Sale 2nd Friday in October Special Sales as advertised Owner – Manager: Tim Larson – 406-480-2666 Field Rep & Yard Manager – Dustin Cymbaluk – 1-701-220-0813 Field Rep – Roger Nygaard – 1-406-650-7410 Office Manager – Christy Albin 1-406-482-3513

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Cattle Sell Every Tuesday OWNERS: Chad Heezen 605-870-0697 Wade & Christina Christensen: 605-730-1801 Fieldmen: David Viereck: 605-680-0386 Lee Ness: 605-680-2778 Steve Chavez: 605-860-0016 Paul Munsen: 605-680-1450 kimballlivestockexchange.com • FAITH, SD

Regular Sales on Monday Tues. Sheep Sales in Season Phone 605-967-2200 Dace Harper 605-515-1535 Mason Dietterle 605-580-5878 Doug Dietterle 605-580-1362 Max Louglin 605-645-2583 Troy Wilcox 605-515-0121 Kaden Deal 605-515-4180 www.faithlivestock.com • TORRINGTON, WY

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Lex Madden 307-532-1580 Michael Schmitt 307-532-1776 Chuck Petersen 307-575-4015

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Regular Sale Every Monday

Marketing Cattle, Sheep, & Horses Harry Kerr, Mgr. 701-523-5922, 701-523-6711 (c) Wayne Miller Field Rep 701-523-6885 • RUSHVILLE, NE

Sheridan LiveStock auction co., inc. Regular Sales Wednesday Office (308) 327-2406

Horse Sales Every Month As Advertised Hogs Sell at 9:30 a.m. Weigh-ups & Bulls Sell at 11:00 a.m. Stock Cattle Sell at 1:00 p.m. Owners: Dan & Sherry Otte 308-362-2563 Kirk Otte 308-282-0282 Fieldmen: Wayde Bolden, Gilbert Grooms • Galen Voss • Chip Hartman • Travis Binger • HERREID, SD

HERREID LIVESTOCK MARKET Regular Cattle Sales Every Friday Special Sales by Appointment 605-437-2265

Owners/Managers Joe Vetter: 701-391-3479 J.R. Scott: 605-359-7358 Kent Fjeldhein: 605-848-3459

• THREE FORKS, MT

• BASSETT, NE

Bassett Livestock Auction, Inc. 402-684-2361

Cattle Sales every Monday Horse Sale as Announced Special Feeder & Stock Cow Sales in season Sheep Sales - see calendar

Getting the best price for producers 406-285-0502 25 Wheatland Rd, Three Forks MT, 59752 headwaterslivestock.com • MILES CITY, MT

MILES CITY LIVESTOCK COMMISSION Regular Cattle Sales Tuesday Special Feeder Sales In Season Horse Sales As Advertised Home of Frontier Stockyards Doug McLean, General Manager 406-853-6961

Regular and Special Feeder Cattle Sales on Wednesdays Owners: Jake Maurer • 402-822-0080 Shane Kaczor • 402-336-7011 • BILLINGS, MT

Combined Competitive Markets of Billings BLS & PAYS

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Cattle Monday, Wednesday,

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• CRAWFORD, NE

Thursday, Friday. -January thru SeptemberCattle Wednesday, Thursday -Horse sales 4th Saturday-Sheep Sales Monday’s as Announced-

Sales Every Friday Office: 308-665-2220 Fax: 308-665-2224 Toll Free: 866-665-2220 Horse Sales As Advertised Owners: Jack & Laurel Hunter: 308-665-1402 • Cell: 308-430-9108 RICH & ALICIA ROBERTSON 307-340-1165 www.crawfordlivestock.com e-mail: clm@crawfordlivestock.com • RAMSAY, MT

For Information or to Consign Call: 1-800-635-7364 Ty Thompson 406-698-4783 Bill Cook 406-670-0689 Joe Goggins 406-861-5664 Bob Cook 406-670-0078 Corey Schultz 406-690-1150

www.billingslivestock.com www.publicauctionyards.com • PLATTE, SD

Platte Livestock Market 1.800.337.2655 SALEBARN www.plattelivestockmarket.com

Sale Every Tuesday Special Sales Friday 100 Cattle Drive Ramsay, Montana 406-782-1884 montanalivestockauction.com

Owner, Marshall Ringling 605.680.1892 Owner, Scott Kirsch 605.680.1900 Field Rep, John Dean 605.680.1972 Field Rep & Auctioneer, Brad Veurink 605.680.1281 Auctioneer, Dan Clark 605.842.6075 Monday sales-Hog, Sheep and Goats Wednesday sales-Cattle 1st Monday of every month-Horse “Enough livestock to bring the buyers. Enough buyers to make’em bring top dollar.”

TRI-STATE LIVESTOCK NEWS

FALL CATTLE JOURNAL 2020

Bryan Reed said imported cattle are adding to the difficulty in achieving a robust market. “We have limited capacity and we’re filling it with outside livestock, which means we’re losing our feedlot capacity, and that trickles back to the cow-calf guy.” PHOTO BY JOSEPH L. MURPHY

FALL CATTLE JOURNAL 2020

TRI-STATE LIVESTOCK NEWS

Feeders, others say more packing, GIPSA enforcement, faster reporting the key to robust market

BY CARRIE STADHEIM

aising good quality calves that turn into good steers in the feedlot that wind up as good steaks on an American’s plate. That’s pretty much all Bryan Reed of south central Iowa wants out of life. Well, that and for the one bathroom in his house to keep functioning for his wife, himself and his three kids. But that’s probably an easier feat than achieving fair return on his cattle. Making his dream work from a financial standpoint is getting more difficult every year, and Reed believes there are several reasons for this. “We have to get competition back, and shackle space, and get paid fairly for the product we are producing,” he said. He doesn’t think there is any one “silver bullet” to the cattle industry’s current woes. “We didn’t get into this problem (lack of price discovery) overnight. It has been building for years,” he said. “A lot of people seem to think this was just a problem since the COVID hit in March. But that was just the event that put the spotlight on the problem,” he said.

TRI-STATE LIVESTOCK NEWS

FALL CATTLE JOURNAL 2020

Reed said first, current rules and laws need to be enforced that prohibit price fixing, price manipulation, monopolization and unfair control over the supply chain. “I guess the first big monster in the room, which nobody seems to want to address is, enforcing anti-trust laws, the Sherman Act, utilizing GIPSA. All of these things that were done 100 years ago to control the packer monopoly which wasn’t nearly as bad of a monopoly as we’re dealing with now,” he said.

Cowley, Wyoming, rancher and market analyst Brett Crosby said price discovery will require a better distribution of timely price information. PHOTO COURTESY BRETT CROSBY

Sufficient packer capacity is another problem the industry faces, he said. NCBA’s Policy Division chair Todd Wilkinson agrees that one of the industry’s biggest challenges is the limited amount of slaughter space available. “My concern is that until we get more packing capacity built and functional, I think we’re going to be continually facing this same dilemma as cattle inventory numbers cycle up and down,” said the eastern South Dakota attorney, cattle feeder, and cow-calf producer. Wilkinson said the closure of regional plants in recent years has taken its toll on the market by limiting shackle space. “All those old packing plants that have shut down over the years and haven’t been replaced. I can remember hauling cattle to Luverne, Minnesota. It doesn’t seem like that long ago. As

FALL CATTLE JOURNAL 2020

TRI-STATE LIVESTOCK NEWS

those plants have gone by the wayside, nobody is building new ones,” he said. Some of those former beef plants were transformed into hog processing facilities, he said. More independent packing plants could help solve the problem, said Wilkinson. “I don’t think you can expect to bust up the four majors (four big packers) like they did with Bell telephone company. That didn’t work particularly well,” he said. Legislation that supports financing of independent packing facilities should be supported, said Wilkinson. While he believes the cattle industry needs “some leverage,” he doesn’t believe that anti-trust enforcement regarding current packer pricing activity is the answer. “I hate to have that leverage come from anything other than capitalism in the market,” he said. Reed says he believes in mandatory country of origin labeling, but says that labeling and promotion of high quality northern-raised cattle is another tool the industry should consider. “We can talk about mCOOL, but if we can’t have that, let’s make our own label and be more restrictive,”

TRI-STATE LIVESTOCK NEWS

FALL CATTLE JOURNAL 2020

he said. Reed is talking about a “northern plains corn-fed beef ” label of sorts. “Basically we would be saying this is a quality product, and you know that it came from this part of the world.” Reed said that during the pandemic, many Americans panicked when faced with the possibility of feeding the family without that all-American staple: beef. “Quite honestly, when consumers see empty store shelves, they suddenly become concerned about where their food comes from and knowing that they are going to have food,” he said. “That’s why I think labeling, if we had that in the process right now, it would take off like a rocket,”

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Reed believes Grassley’s proposed 50-14 rule that would require packers to buy at least half of their weekly slaughter needs on the “cash market,” rather than through pre-arranged formula agreements, and also to take delivery on all purchased cattle within 14 days, would help return some level of market transparency. Wyoming cattle rancher and market analyst Brett Crosby said that for the cattle industry to achieve a robust market it will require more competition and better price discovery. He agrees that the building of more packing plants would be a boon.

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Bryan Reed keeps his own calves, backgrounding them and feeding them until they are market-ready. PHOTO BY JOSEPH L. MURPHY

“For a robust market to remain robust, we need true price discovery,” said Crosby, who also pointed that the treasury market—where the government raises money by the auctioning of bills, notes and bonds-- is a good example of an industry that enjoys robust price awareness. “The reason it is robust is that there is a very small spread between what people are willing to pay and what people are willing to take, or what people are willing to buy and sell at, which creates a lot of liquidity,” he said.

Sometimes a band-aid is needed, even on a gaping wound. “A shorter-term fix is making sure that packers have a limited amount of control over their supply and that they control supply through market-based channels, not negotiated agreements,” said Crosby.

And everyone has access to the same information.

“Rather than having committed feedlots (where the cattle in a particular feedlot are all dedicated to a particular packing plant, probably through a formula agreement) it would be better to eliminate the committed feedlot and have packers use a market-based method to manage supply.”

“The best thing to do is have more packing plants. But that’s a long-term fix,” he said.

Crosby said the feedlots without formula agreements are often left to wait for a bid until after the

TRI-STATE LIVESTOCK NEWS

FALL CATTLE JOURNAL 2020

cattle in the “committed feedlots” have already been slaughtered. “That backs up the yards that aren’t committed, that forces the price down during what would have been a period of short supply (therefore higher prices), now you have heavier cattle, so they take a discount for overfed animals because they couldn’t get a bid when the cattle were at the ideal weight,” he said.

Possibly an even bigger issue – or one more easily addressed – is price reporting, said Crosby.

This kind of activity isn’t necessarily illegal, but it prevents the market from being robust, he said.

“So formula traders are getting free information to create a base price that gives them maybe $40 more per head than the guys who are out there negotiating a cash price every week, and the guys who negotiated a cash price have to give their information away and they don’t get any timely information from the formula trades.”

“Right now, if you sell cattle on the cash market, you have to report that price within 48 hours. When you sell formula cattle, you report a base price but the net price doesn’t get reported until the cattle are gridded out and the premiums are calculated, which is usually about two weeks later,” he said.

A possible solution to deal with this would be to require formula traders to report their base price and grid structure including discounts, premiums, etc., at the time the cattle are sold or delivered. “This would be a better distribution of timely price information,” he said.

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FALL CATTLE JOURNAL 2020

TRI-STATE LIVESTOCK NEWS

Even those feeders or feedlots who sell via “negotiated cash trade” are rarely truly negotiating, said Crosby. “They are pretty much price takers and that becomes a problem,” he said. Reed agrees, saying that if cattle producers and feeders don’t achieve more leverage in the marketplace, the cattle industry will become just as

integrated as that of their hog and poultry friends. “I’m feeding and taking care of that animal for a year and a half to get it to market, and dealing with the genetics and so forth before that, and we’re not getting compensated for our investment both in time and quality, and the packers are reaping all the benefits for a short period of time that they own the animal just because they have limited our options on the packing side so much that they are in control; we’ve got to learn some lessons so we don’t become what hogs and chickens have,” he said. Reed disagrees with the naysayers who argue that beef animals can’t be integrated because the species requires so many more acres than a pig or chicken. “I’m going to say those people are wrong. The packer won’t have to own everything, they can just control packing like they are, put the squeeze on the independent feeder and break them – like they are – until we have nothing but large corporate feedyards,” he said. Reed said at that point, the cow-calf producer will be the one hoping for one bid on Friday afternoon, like the feeder is now. “Right now we still have a handful of independent feeders that are keeping the market honest but they are having a bloodbath. Many of them won’t be doing it anymore.”

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FALL CATTLE JOURNAL 2020

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PHOTOS BY RACHEL GABEL

Is formula pricing a boon or a bust for the beef industry?

BY RACHEL GABEL

he greatest advantage to marketing cattle to the packers based on a grid or formula agreement in Steve Gabelâ&#x20AC;&#x2122;s eyes is the ability to establish a value on each individual carcass. Steve Williams, head of cattle procurement at JBS, agrees. Gabel, who owns Magnum Feeders, Inc., near Wiggins, Colo., said the most significant factor to consider as it relates to a formula agreement is how the base is established. The base, he said, can be established based upon the USDA weighted average, the weighted average of a particular state, or on cash trade. Additionally, a feeder must consider the yield differences between plants. Historically, he said a 1500-pound

steer sent to Cargill will yield a 64 percent difference between the hot carcass weight (HCW) and live weight. In contrast, the same steer sent to JBS in Greeley typically yields a 62.5 percent difference that represents a 22.5-pound difference based on historical trends. To provide a buffer, Gabel said formulas can take the weighted price divided by the average plant yield to minimize particularly high or low yields. Once those bases are determined, the premiums and discounts for a particular agreement can be negotiated. Plants sort, he said, based on quality grade, yield grade, and the spread between choice and select carcasses. This spread, at $17.33, for example, would make a choice carcass worth $173.33 more than a select carcass. Plants

TRI-STATE LIVESTOCK NEWS

FALL CATTLE JOURNAL 2020

determine the average percent of carcasses that grade choice and prime, and some agreements pay a premium if a feeder’s cattle beat the plant average. Black-hided or Certified Angus Beef (CAB) cattle can also earn a premium, while cattle not meeting or exceeding the plant average on yield grade or falling within average hanging weight ranges can earn a discount. “All of these parameters together become a marketing agreement,” he said. “The main difference is establishing that value on each individual carcass.” On the plant side, he said, cattle purchased are procured to meet the needs and desires of export, food service, and retail markets. For packers, formula cattle meet the need for consistent, high quality carcasses, for feeders, it can spell a premium. Either way, though, he said it is dependent upon cash trade to help establish a base.

“We want a vibrant cash trade and we’re supporters of the fed cattle exchange, we’re supporters of the cash market, we’re supportive of the cash market in Texas, Colorado, Nebraska, the Dakotas and we buy cash cattle every week and have room to buy cash cattle every week.” STEVE WILLIAMS, HEAD OF CATTLE PROCUREMENT AT JBS

FALL CATTLE JOURNAL 2020

TRI-STATE LIVESTOCK NEWS

Gabel said the 50/14 model that is a source of industry discussion, is harmful to those who sell formula cattle who are looking at feeder cattle with the intent to purchase to maximize the return from marketing agreements. Williams said the 50/14 rule is a southern cattle feeder/northern cattle feeder conversation and, having sold their yards, JBS has no financial interest so that’s not a conversation they’re a part of. Whatever the feeders and ranchers agree upon, he said JBS will oblige but they have no opinion on the proposed rule.

Williams said a purchasing agreement with a feeder has many names- a captive supply, alternative marketing agreements, grids, formulas, value-based pricing- but he said at JBS, they don’t believe it has any effect on the price of cattle. “We are all for price discovery,” he said. “We buy cattle every week, at every plant, in the cash market so we have price discovery. We have these agreements to provide a consistent supply of high-quality cattle. That’s what we do.”

The industry, in general, he said, is based on weighted averages in whichever state the agreement is made. This being said, the cash trade remains important to those who market cattle this way. “That’s something we’re sticklers about,” he said. “We want a vibrant cash trade and we’re supporters of the fed cattle exchange, we’re supporters of the cash market, we’re supportive of the cash market in Texas, Colorado, Nebraska, the Dakotas and we buy cash cattle every week and have room to buy cash cattle every week.”

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A premium is paid, he said, on black hided, Angus-type cattle that are going to grade prime or choice, or will fit into the Certified Angus Beef program and are bound for the food service industry. These cattle, he said, are the genesis of JBS’s purchase agreements with feeders, including Gabel’s Magnum Feeders.

a carcass basis, as Gabel said, benefits everyone involved. From the Greeley JBS plant, Williams said they can send information on each individual including how it graded, what the yield grade was, which premiums were paid, giving data to the producers to use to influence genetic decisions. Individual animals can also be brought to the high 1500-pound range to take full advantage of each one’s genetic potential and will earn a premium for doing so.

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Williams said the advantage of establishing value on

TRI-STATE LIVESTOCK NEWS

FALL CATTLE JOURNAL 2020

PHOTO BY DEANNA NELSON LICKING

“Selling on buying agreements is tougher to manage but they get paid for it, as well,” he said. “It’s a risk/reward scenario but there’s still no such thing as a free lunch. If the cattle aren’t premium, they don’t get premium money.” Williams said the majority- about 75 to 80 percent- of cattle fed in the U.S. grade choice or above, allowing retail customers the same discerning taste available in high-end food service. The shift from food service to retail purchasing during COVID was reflected in the retailers’ purchases of choice and above cuts, he said. With a consistent supply of high-quality cattle, JBS can run plants five days a week with ample supply of cattle and allows them to confidently offer that beef to retailers and food service and fulfill orders that are months away. At JBS, the fed cattle business is separate from regional business, which is highly dependent upon dairy cows, beef cows, and

FALL CATTLE JOURNAL 2020

TRI-STATE LIVESTOCK NEWS

Holstein steers and this also allows a wide variety of retail and food service customers to receive the beef they want, be it a replacement-type dairy animal to a long fed Wagyu. He said there is no question that the industry is seeing more beef on dairy feeder cattle with few grading differences. Williams said 50 to 60 percent of the cattle that find shackle space at JBS are sold on the grid and feeders wanting to market on the grid can contact the JBS buyer in the area. The grid, he said, on 30 head is the same on 30,000 head and is based on quality and performance. “People want to talk about these grid agreements as a hinderance to the market but, in generalities, over time grid agreements don’t change the base price of cattle,” he said. “They could cause more volatility, making higher highs and lower lows, but the averages come out and that’s a real issue the industry is talking about.”

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Process Verified Programs Available to Ranchers

FALL CATTLE JOURNAL 2020

TRI-STATE LIVESTOCK NEWS

BY RUTH WIECHMANN

n a year when markets are even more volatile than ordinary, should cattle producers consider third party verifications programs to make their cattle eligible for Process Verified Programs through the USDA? Will it add value or just be one more hassle and expense in a year thatâ&#x20AC;&#x2122;s already been a wild ride?

Process Verified Programs (PVP) have been around for a couple of decades and they are not going away any time soon. Consumers, both domestic and abroad, want to know where their food comes from and that is driving a steady demand for NonHormone Treated Cattle (NHTC), Source and Age Verified (SAV) cattle, All Natural beef and cattle enrolled in other USDA certified programs.

TRI-STATE LIVESTOCK NEWS

FALL CATTLE JOURNAL 2020

For ranchers yet another set of forms to fill out can be daunting, but the verification process doesn’t have to be intimidating. Ann Marie Kepler of Shepperd Feeding at Mills, Nebraska, said that many producers find that they are already doing everything to meet the requirements for inclusion in these programs. “Most people keep track of the required data already,” she said. “The PVP audit can seem like one more thing but it’s not as difficult as it might appear. Ranchers keep calving records. If something gets doctored they write it down and keep track of that animal. The best thing for someone interested in participating in any of these programs to do is to ask questions. Call a feedlot that specializes in all natural cattle; call a rancher who already participates in a PVP; I welcome

calls all the time and we try to help anyone interested with the process as much as we can.” RaeMarie Knowles of Legacy Verified, a third-party auditor out of Elizabeth, Colorado concurred. “The record keeping required to meet PVP standards is not as overwhelming as it may seem,” she said. “We don’t need much above and beyond what most ranchers already do. We try to help make the process as streamlined as possible. It definitely brings more buyers to the table.” PVP premiums ebb and flow with the markets. The volatile fluctuations the cattle market has seen this year due to COVID-19 have brought changes to the PVP expectations, yet demand has remained strong in spite of the wild markets, slowed processing times and shipping and export difficulties.

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“NHTC cattle were projected to expect significant premiums,” Knowles said. “When COVID-19 hit and all travel was closed off to Europe they softened. We weren’t sending as much simply because we couldn’t, in spite of the fact that Europe had increased their quota for the year. Cattle backed up in feed yards because the packers slowed down and multiple plants shut down due to COVID. Feed yards are still scrambling to get the fat cattle moved out and some got severely backlogged. The saving grace for our customers was a rise in demand for Natural beef domestically in the retail sector.” USDA programs range from the basic Source and Age Verification to programs specific to certain countries’ import requirements. SAV has lost value since Japan no longer requires imported cattle to be under twenty months of age at slaughter, but it is still a

starting point and can help producers recoup some of their costs. The next step up would be Non Hormone Treated Cattle; cattle verified to have had no hormone implants nor fed anything containing beta-agonists non-hormonal compounds that redirect and reduce the metabolism fat. The next step up would be adding Natural certification; additional requirements include no antibiotics, no animal byproducts in the feed and no ionophores such as bovatec or rumensin in the feed. Electronic identification (EID) tags are also required before cattle leave the ranch of origin for all of the programs; certain programs necessitate selling on video auction rather than through a local sale barn. “European buyers pay a premium for NHTC verified cattle,” Knowles said. “The NHTC program was

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“As margins get tighter and tighter with both crops and livestock, (bankers) are wanting to track more things and see more information...” actually designed in collaboration with the European Union so they had a hand in making it exactly what they wanted. This premium works backward through the supply chain. They pay the packers, the packers pay the feedlots, the feedlots pay the ranchers. In a perfect world everybody gets a cut. It doesn’t always

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happen perfectly but it’s there. Some feed yards even pay for the PVP certification and audit for ranchers raising calves for them because they want certified cattle. “Data released from Superior Video Sales shows that as of July 31, SAV cattle are bringing as much as

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$2.50/cwt premium. NHTC is about $8/cwt and Verified Natural (PVP) cattle are at almost $18/cwt. So, the premiums are there.”

Shepperd set out eighteen years ago with the goal of an all Natural feedlot. He says the demand is strong for PVP cattle and he doesn’t see it decreasing any time soon.

“These programs may not be for everyone but they are definitely something everyone should look into,” said Doug Shepperd of Shepperd Feeding. “Maybe it doesn’t fit with your program and that’s fine. But if you’re already doing what you need to do to qualify it can add value to your cattle. Data from video sale companies such as Northern Livestock Video Auction and Superior Livestock shows that producers are getting a substantial premium if their calves are process verified by a third party.”

“Consumers want to know where their food comes from,” he said. “Traceability shows our customers that our product is better than most. My goal is to establish relationships with ranchers so that we know where our cattle are coming from. We are seeing things change and ‘Natural’ is the new buzzword. Other countries want EID tags for verification of traceability. Domestic consumers want to know how their food was raised and where it’s coming from and that it’s healthy. I think the future will see even more demand for verified cattle.”

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The meat shortage seen in the spring of 2020 has driven consumers to seek alternative buying options to the grocery store. Independent butchers with retail counters are struggling to keep ahead of the demand.

PHOTOS COURTESY OF 307 MEAT COMPANY

Consumers are creating a demand for quality protein and seeking a farm-to-table.

Custom processors overcome challenges to put meat on the table

BY DEANNA NELSON-LICKING

020 has proved to be an exceptionally busy year for independent meat processors. With the meat shortage due to COVID-19 and the closing of some of the major packing facilities, Americans became aware of how fragile our food supply is. With fat cattle and hogs unable to be slaughtered, people who had never before purchased meat in bulk began to buy animals and then were faced with the challenge of butchering.

Small processors usually are fairly busy, with many often six months out, but now they are booked solid for the next couple of years. Many animals have processing appointments before they are born. This has been tough on ranchers, the processorsâ&#x20AC;&#x2122; regular customers who were used to booking appointments when they started fattening their own freezer beef, but now canâ&#x20AC;&#x2122;t get slaughter dates. Labor is the biggest issue facing small packers. Slaughtering and processing meat is hard physical work and employers are unable to grow their business due to no one wanting to work.

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Specialty meat products offered in the 307 Meat Company retail store.

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Jensen’s Blue Ribbon Processing in Fowler, Colorado, is a USDA-inspected facility that is blessed with a good crew. When the meat crisis happened, they hired a couple more people, gave a raise to employees and opened up another day for slaughter, doubling their production. They don’t anticipate growing the company due to the age of the owners, which is a problem many butchers face as the skilled workers and owners near retirement age and the younger workforce shows little interest in the trade. “Everybody faces the labor problem. People don’t want to work or work a full day. It is a trade so they can make decent money,” said Kelcey Christensen, founder and president of 307 Meat Company, in Laramie, Wyoming, which employs 19 people.

Kelcey Christensen’s grandfather and father were butchers so he grew up around the business. After a career change in college, from veterinarian to working in the meat lab at the University of Wyoming, Christensen went into commercial banking before returning to manage the university’s meat lab for 11 years. Owning a processing facility has always been his goal, so after three and a half years of work, he opened 307 Meat Company on March 4, 2020. His primary focus is providing an opportunity for producers to sell direct to consumers. His plant is fully USDA-inspected and has a growing retail meat store. They slaughter four to five days a week, equaling twenty-four head of cattle a week, except when they do pigs at sixteen head a day. They also process lamb and goats. “We could do a lot more if we could

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find labor. The facility is designed for forty to fifty head a week,” Christensen said. His work in the university meat lab has helped him is this new venture; he used to train inspectors so he knew how to comply with the rules. He encourages plants to get inspected so they fully understand the food safety process. “We have seen how vulnerable and fragile our food system is. It scared a lot of people. I can’t produce food at the rate the big packers can but there is a place for both of us.” Christensen generated an investment group when he was building his plant and some of the investors are cattle ranchers, so he has agreements with them to buy cattle for the retail business. He also buys some from other producers. His store also offers local fresh eggs, ready-to-eat products and specialty meat products. He hopes to grow his retail business and the custom-label side of his processing. “It’s fun to make a customer happy when they see their label on their beef,” he said. “Before COVID hit, direct consumer demand had gained ground on both coasts and has been moving east and west. I saw it coming and built around that.” Integrity Meats in Belle Fourche, South Dakota has been swamped with processing and has faced the challenges of frequent cleaning and staying on top of employees’ health and having sick ones tested for COVID. “Ranchers are really making more money selling their cattle by the side,” said owner Larry Strickland. Strickland said they had a steady business with local ranchers before and he has already expanded as much as he can in his present location and with his current employees. “Business is good, I think it’s just like the toilet paper fiasco and everybody has over reacted. I feel like we need to live more practically, to slow down and be a little more thoughtful,” said a Nebraska butcher.

Kelcey Christensen breaking ground on his new packing plant in Wyoming. (Robert Carrier)

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Across the nation, locker plants are slammed, all butcher dates booked months in advance and held back from increased production by the shortage of labor.

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His business is 95 percent custom processing and he sells some boxed meat at his retail counter. His biggest challenge is finding help and dealing with the issues from his location. He has refused to book appointments too far in advance and is committed to being available to his long-time customers. His business also is one of the few that offers on-site slaughter for injured animals. â&#x20AC;&#x153;We grow every year by improving our equipment and facilities to be able to do more with the same or less labor. We see at least a ten percent growth every year and this year is way ahead of last year.â&#x20AC;?

From Wyoming to Nebraska and Colorado to South Dakota independent meat processors are extremely busy and

307 Meat Company, a brand new, fully inspected plant in Laramie, Wyoming

are confident that their businesses will stay strong. The rise in popularity of farm to plate food is part of the drive and with many ranchers turning to selling beef on the hoof to help profit margins; the outlook for small butchers is bright.

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Cutting out the Montana Branded Inc. beef are raised in northeast Montana on the JLM Ranch Inc. â&#x20AC;&#x201C; a fourth-generation family owned and operated ranch. The Johnsons believe in knowing where their food comes from and take pride in their consistency and quality of beef. PHOTO COURTESY MONTANA BRANDED INC.

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BY TAMARA CHOAT

ike the microbrew industry success path, craft beef has gradually built a following among foodies, locavores and people who simply appreciate good beef. However, following the COVID pandemic and national beef supply crunch,

direct marketing of ranch-toplate beef has gained a whole new level of traction. We visited with owners of three different ranch-raised beef companies to gain their perspective on what, why and how they do what they do.

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OPPOSITE PAGE TOP: Powder River Premium owners Bill Gaskill (l), Dan Gaskill and Tyler Gardner. MIDDLE: Powder River Premium owners are strong proponents of COOL, which helped drive their motivation to start their company. BOTTOM: The Gaskills and Gardner cows and calves are on grass in large pastures from May to October. They manage their grass by using pasture rotations and practicing the philosophy of take half the grass, leave half the grass. PHOTOS BY HORIZON MARKETING AGENCY

1. What prompted you to start this business?

POWDER RIVER PREMIUM: Last spring I (Tyler) was having lunch with Leo McDonnell (Columbus, Mont.) and we were discussing thinking outside of the box – how we can’t continue to do the norm if we want to progress in this industry. I got to visiting with Dan and Bill Gaskill and they got excited about the idea, so we decided to form a partnership. All of us are real believers in country of origin labeling. We believe the current labeling practices in the U.S. are very deceptive to the consumer. We wanted to be able to market a product to consumers they can be assured is U.S.-born and -raised beef. We all wanted to do that by taking our existing operations and enhancing what we already produce – great cattle and beef. RANCHERS REBELLION: U.S. ranchers produce the highest quality beef in the world. But as ranchers, we found we were working off-farm jobs and trying to keep the place going and missing weddings and funerals and vacations with friends because we run cattle. Yet we were still earning pennies on the dollar for our product. We had to sit down and have some serious conversations about why we were doing this. We decided instead of getting rid of them and having a normal life, we would try one more thing – we would create something more sustainable with our cattle and get rid of the highs and lows in pricing. There are days we have four generations working cattle together and it’s amazing to live this lifestyle. We want to do all we can to keep it a business.

MONTANA BRANDED INC.: It’s something we’ve always wanted to do. I guess every rancher kind of wants to do this. We were just crazy enough to take the next leap. A few years ago (Derek) came up for the fair and was thinking we could market our beef well in Florida. Down there when it says “Montana Beef ” on it it’s like buying Maine lobster or something. We have always sold quarters and halves off the ranch, and wanted to capture the extra value with retail cuts. So we started feeding cattle and started working at it. We learned as we went.

2. How do you manage pricing – ensuring you are covering your costs and getting paid for your time? POWDER RIVER PREMIUM: We’ve approached it by looking at our hard costs and cost to feed something, then working off a profit margin from there. We try to make it a number that works for us and also moves meat. We don’t need inventory built up. There is definitely a value to buying a quarter or a half. We sell retail by the meat weight, and sell our quarters and halves for a certain dollar amount. I don’t know what the premium level should be for grocery store beef versus premium beef, but there is a number to that. There’s no way we’ll ever compete with Tyson or Creekstone pricewise, so there’s no use in even trying. RANCHERS REBELLION: Everything is packaged, labeled and priced by the pound and goes to retail outlets. We measure what our input costs are. Typically we sell our calves in January as 600-900 pound calves. We look at the inputs: price of feed and energy to take them to finish and compare to a comparable market. I put in my inputs and where I needed to be to make it worth my time; that’s what I’ve been at. I’m open with my prices with other TRI-STATE LIVESTOCK NEWS

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producers – they can do with it as they wish. I have no idea what someone else’s costs are. During COVID when everyone was $10 a pound for ground beef I never changed, I was $4.75 the entire time. MONTANA BRANDED INC.: We’ve got a bit of a formula we’ve come up with and we run a regular breakeven. That’s part of the whole learning curve and having a few wrecks along the way. You figure out what margins you have to get off a certain cut. There are certain cuts of meat people will tell you are your bottlenecks. You figure out how to get rid of those and then figure out the cuts that carry your company. That’s how we’ve done it. Where we handle the whole supply chain we can manage our price of cattle, feed, etc., it makes it easier to control our costs a bit

Lacey Block owns Ranchers Rebellion Beef Company, based out of Havana, N.D., right on the South Dakota line. She runs the business with the help of her partner, Drew Smith, and sons, Dane, 12, and Reese, 4. PHOTOS COURTESY RANCHERS REBELLION BEEF COMPANY.

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more. Our disadvantage comes in not selling it in bulk the way other companies do. You realize what a low margin, high volume business beef is.

3. What is your vision for the future of your business? POWDER RIVER PREMIUM: The potential for growth in this business is so exciting to me. I think it can really be a game changer for our operations. Our goal is to feed out everything we raise on our two places. It seems like a lofty goal but I think it’s obtainable. Without vision we won’t accomplish anything. I’d love to see a cooperative processing facility that we are a part of, and also our own franchise meat store in a high traffic urban area. RANCHERS REBELLION: I would like to purchase a packing plant. I would also like to continue working with other producers and help them market

their product at a higher volume. I would like to see 1,000 ranchers using our label. I would also like to streamline my operations. When I started this business my goal was to work at it 20 hours a week. Right now I’m at 60-80 hours, but I am starting to get that turned around. MONTANA BRANDED INC.: One of our shortterm main goals is to be able to feed and process all our own calves, and an intermediate goal is to start buying more calves from our neighbors – help them get a better price for their calves. We said two years ago, if it’s still alive in a year, we’ll keep doing it. So I guess what we are doing seems to be working. We would like to grow into other communities around us (in Montana), and expand farther south. There is surprisingly a really strong market locally here in Montana, and we want to grow our customer base.

“Our first calf heifers this year were some of the best we’ve ever had.Two and coming three-year-olds had 1% open. I was super, super happy about that because you know those are a hard group to get bred. We make a cut off in our first calf-program; we 45-50 day breed them, then pull the bull. But if you are kept and have a calf at side, that is our first indicator that the program is working. Mineral-wise we are on a forward path of progression that is working with the VitaFerm® Concept•Aid®.”

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4. Do you worry that if more and more ranchers adopt the direct-to-consumer model, the market will become saturated? POWDER RIVER PREMIUM: I think there’s lots of room; I hope more people start thinking this way. The more people that get involved, the more it’s going to educate the consumers, and I think there’s going to be that much more demand for the product. I don’t see USDA making changes that are going to be favorable to us as producers any time soon. It’s been good, being from the cow-calf sector, to make connections with feeders and learn what they face. Our challenge is not between the cow-calf and feeder. We need to be more of a team and work more together. I don’t know what we do about the processing side. RANCHERS REBELLION: There are so many mouths to feed that I don’t feel it’s a competition with others who direct market. I actually consult and help other producers run their business the same way. They use our label with their location on it. It helps generate a great amount of brand recognition for a high quality product people trust. It’s been huge. In our area there are two of us who use the Ranchers Rebellion label. We are able to market for each other and encourage each other’s growth. This has spoken volumes for how much I feel we can change the marketplace. There is a plan for growth that doesn’t involved running yourself ragged. Without other people there is no way I could do what I do. MONTANA BRANDED INC.: It kind of depends on how you look at it. Right now there is plenty of room for more people to do this, but the biggest concerns are the processing capacity and the distribution network. We don’t have the population density on the Northern Plains to do this. You have to find a way to move that product into the population centers on the coasts and the south. Before we can do that, we have to figure out the processing side. We were lucky to get into it before this whole

TOP: Two brothers and their wives: Derek and Chelsea Johnson (l) and Josh and Maggie Johnson, founded Montana Branded Inc. in 2018 to market Montana beef in Florida. BOTTOM LEFT: Montana Branded Inc. beef is processed, individually packaged and flashfrozen in a USDAcertified facility. RIGHT: Montana Branded Inc. has grown their reputation on pasture raised, Montana grown, no added hormones, family-owned, dryaged beef to ensure consumer safety and satisfaction. PHOTOS COURTESY MONTANA BRANDED INC.

deal came to a head. Now it would be really

anyone wanting to start right now. When you

hard to get animals in anywhere to get killed.

get into the retail meat business instead of just

I’ve talked to ranchers who had to take slaugh-

the cattle business, there are so many things

ter-ready cattle to the sale barn because they

you never dreamed about that you run into.

couldn’t get them processed, and are just sick

It can get pretty discouraging really fast. But I

because then they had to go buy beef at the

can’t tell you what to do or not to do. Everyone

grocery store. I would really urge caution to

has to pee on the electric fence themselves. TRI-STATE LIVESTOCK NEWS

FALL CATTLE JOURNAL 2020

The Gaskills and Gardner cows and calves are on grass in large pastures from May to October. They manage their grass by using pasture rotations and practicing the philosophy of take half the grass, leave half the grass. PHOTO BY HORIZON MARKETING AGENCY

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Cutting out the middle man Powder River Premium Beef

Ranchers Rebellion Beef Company Lacey Block

Montana Branded Inc.

Owner(s):

Tyler Gardner, Dan and Bill Gaskill

Location:

Broadus, Mont.

Havana, N.D.

Westby, Mont. Naples, Fla.

Started business:

January 2020

December 2018

Product:

Grass fed, grain finished beef. Wholes, halves, quarters and individual retail cuts.

Pasture raised, corn finished yearlings. Retail cuts and bundles.

Grass raised, grain finished. Primarily retail; limited wholes, halves and quarters.

Quantity:

Gradually increasing; will kill 32 head this fall.

20-30 head/month

8-10 head/month

Processing facility:

Formerly Miles City, Mont. Now combination of several different USDA plants.

Oakes, N.D., Bath, S.D., and Elkton, S.D.

Formerly Miles City, Mont. Now Yellowstone River Beef USDA facility in Williston, N.D.

Distribution region/method:

Personal delivery to individual customers in Eastern Montana, Wyoming, South Dakota.

Restaurants and retail freezers in north central S.D. and south central N.D., packaged bundles in Fargo, N.D.

Retail store in Plentywood; grocery store in Florida; farmers markets in Mont. and Fla., some individual customer deliveries.

Phone:

406.670.9859

701.680.3976

406.385.7015

Maggie and Josh Johnson, Derek and Chelsea Johnson

Like the microbrew industry success path, craft beef has gradually built a following among foodies, locavores and people who simply appreciate good beef. However, following the COVID pandemic and national beef supply crunch, direct marketing of ranch-to-plate beef has gained a whole new level of traction. We visited with owners of three different ranch-raised beef companies to gain their perspective on what, why and how they do what they do.

D i a m o n d p e a k c at t l e 1. What prompted you to start this business?

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STORY AND PHOTOS BY RUTH WIECHMANN

t’s the smell of sagebrush on a frosty morning. It’s a mama cow licking off her newborn calf. It’s generations in the saddle caring for livestock and land. It’s keeping cattle fed through blizzards and drought. It’s the silhouette of the herd on the skyline against a flaming sunset.

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“WE ARE FOCUSED ON CREATING BRAND AWARENESS SO CONSUMERS UNDERSTAND THE LEVEL OF QUALITY THE PRODUCT PROVIDES AS WELL AS THE STORY BEHIND THE BRAND.” – AMARI SEIFERMAN, PRESIDENT & CEO OF CERTIFIED HEREFORD BEEF, LLC.

And it’s all wrapped up in a sizzling steak or juicy burger coming off the grill. Consumers want to know where their food is coming from and they want to know that they are bringing a quality meal to the table for their families. Opportunities abound for ranchers to share their story and their beef. Certified Angus Beef and Certified Hereford Beef are both branded programs that have been around for a while. Both have steady and increasing demand for the meat they market. Certified Angus Beef has been on the shelves for over forty years. Certified Hereford Beef celebrates twenty-five years in 2020. Both programs tie the story to the steak. “We are focused on creating brand awareness so consumers understand the level of quality the product provides as well as the story behind the brand,” said Amari Seiferman, president & CEO of Certified Hereford Beef, LLC. “The story itself

is a great testimony to the integrity of the breed as well as the hard work and dedication Hereford breeders have put into the live animal for decades.” “We have had a long string of years of growth,” said Paul Dykstra, assistant director of supply management and analysis for Certified Angus Beef, LLC. “This is our thirteenth straight year of record sales volume. We have benefited as a brand from the industry’s demand for quality. Demand is good; consumers both in the United States and abroad want a branded product. They expect consistency. Our carcass specifications have undergone only a few changes in forty-two years. Holding to this high standard is what guarantees our customers a satisfactory eating experience.” The story needs to resonate with the consumer but also with the retail and foodservice industries. All three need to understand what goes into bringing the beef to the table.

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FALL CATTLE JOURNAL 2020

“We are committed to servicing the retail and foodservice industry with marketing and promotional materials that tell the Hereford legacy,” Seiferman said. “We also supply educational information about the beef animal itself and the science behind beef production. We have firsthand experience that all three industry segments are fascinated by the farm story so we make sure to connect them to a local Hereford producer so they understand the land and animal management practices behind the

finished goods they buy or sell. They always leave with a passion for agriculture and a renewed sense of how they contribute to making a difference in the beef industry.” Quality and integrity, those traits that ranchers carry in their handshake, drive both the Certified Hereford and Certified Angus beef brands. Both were rancher-originated and continue to be rancher-owned and rancher-driven. While ranchers do not “enroll” their cattle in the programs, feedlots looking to sell to the packers that purchase cattle for these labels are going to pay a premium in the sale barns for a quality set of Angus- or Hereford-sired calves with the expectation that when they go to slaughter they will make the grade. It’s a steep grade; both programs have rigorous standards including obvious breed-specific phenotype, marbling, size, age and meat quality. Carcasses must pass the test to receive the USDA inspector’s stamp of approval to be cut and labeled as either Certified Hereford or Certified Angus beef. “Marbling drives the bus for us, although all ten of our carcass specs are important,” Dykstra said. “USDA Prime and the upper two-thirds of USDA Choice grade give us the marbling that is the main element that sets our product aside from others. People recognize our brand name in the marketplace; data shows that over ninety percent of shoppers are familiar with our brand. When folks are willing to extend their hard

FALL CATTLE JOURNAL 2020

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FALL CATTLE JOURNAL 2020

earned dollars and are satisfied with their purchase, this creates return business.”

started and with each passing year we are able to provide

“Consumers can expect a high-quality, consistent product from the Certified Hereford Beef label,” Seiferman said. “We offer a great beef flavor and resources to help in food preparation, cooking methods to ensure a great eating experience, plus resources to educate them about the different cuts that come from the beef animal. This year we are celebrating 25 years of delivering wholesome and high quality beef products to the retail and foodservice industries. Consumers are very aware of USDA quality grading and are more than ever interested in where their beef comes from and how it is handled. We’ve been telling the same story since we

successful and has a solid foundation to continue that

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more transparent information. The brand has been very success for generations.” Certified Angus Beef animals are North Americansourced but not limited to the United States. Canada and Mexico can also be a source of fed cattle going into the program, but Dykstra said that cattle from U.S. producers tend to have a higher acceptance level because of the genetic base behind them. With a high level of brand recognition throughout the supply chain, mCOOL did not cause a major spike or drop in their marketing.

“Canada is our number one export market,” he said. “We also have four licensed packing plants in Canada so it makes sense that mostly Canadian cattle are processed there. Our licensed partners export beef bearing our label to over fifty countries worldwide. The brand’s middle meats are in high demand internationally, and we’re also driving a lot of value through cuts that are less popular here at home.” Certified Hereford Beef is sourced only from cattle finished in the United States, so mCOOL only served to solidify their statement. “Our program will continue to be American beef regardless of mCOOL,” Seiferman said. “In addition, our packers are all in the USA.” Not everyone is lucky enough to live the ranch or farm life, but anyone can get a taste of it with Certified Angus or Certified Hereford Beef. Both brands are passionate about connecting the consumers with producers, sharing the story of America’s cowboy heritage and educating consumers on how ranchers and farmers raise their animals and steward land and natural resources. “As a brand that is owned by an alliance of Hereford farmers and ranchers, we have the unique ability to connect consumers to a farm or ranch family in their area,” Seiferman said. “Knowing that purchasing a Certified Hereford Beef branded product helps to give back to the community and support a local farm or ranch family, which makes a difference and provides a sense of brand loyalty.” Certified Angus Beef also has a Natural branded program that is third-party verified. Cattle can be enrolled through a process-verified program such as AngusLink and will be certified to never have

had any antibiotics, growth hormones or animal byproducts in their feed. These cattle are all processed at three specific packers and are traceable back to the place of their birth. “Marketing challenges are real for cattle producers,” Dykstra said. “It’s a steep hill to climb. But the premium is there in the market for a good set of well-raised Angus sired calves. 2020 has brought even more challenges thanks to COVID but as much as the loss of revenue from the drop in the food service industry has hurt markets, the increase on the retail side has helped to offset it.” Opportunity holds an open door for anyone willing to roll up their sleeves and get to work. “The opportunities within the beef industry for private label marketing are endless if you are willing to put in the time and effort to make it successful,” Seiferman said.

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PHOTO BY HEATHER MAUDE

beef check-off: PAST, PRESENT & FUTURE?

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BY RACHEL GABEL

“K

eep Beef King” was the motto in 1973 during the first attempt at establishing a beef checkoff. According to Building the Beef Industry, published by the National Cattlemen’s Foundation, the “value-added” checkoff was to be threetenths of one percent of the value of each animal sold and was expected to raise $40 million per year in its initial three years. State beef councils were slated to retain 10 percent of collections.

Producers want trade over aid

The move was opposed by consumer groups, but the Beef Research and Information Act passed Congress and was signed by then-President Gerald Ford in 1976. With extensive support from trade organizations on both the beef and dairy side, in addition to breed associations, beef councils, and state cattlemen’s associations, it was headed for a referendum. That came in July of 1977 amid confusing registration rules and a two-thirds majority requirement the Farm Bureau had insisted upon wasn’t met. The second try, known as the Beeferendum, came in 1980 on a simple majority. The “Take Charge” campaign seemed to have more support than the

previous attempt but only received 34.6 percent of the vote.

In the course of the debates and discussions surrounding the Agricultural Act of 1985, Jo Ann Smith of Florida, objected to the dairy termination buyout driven by Rep. Tony Coehlo, R-CA, whose family was in the dairy business. Coehlo told Smith, the National Cattlemen’s Association’s first female president, the votes to support the dairy buyout had already been secured in both the House and Senate, making it practically a done deal. He asked her what beef cattlemen would like in return. She retorted that a checkoff, and Coehlo’s support for it were what was wanted. The third “Beeferendum” vote earned a 79 percent vote and the Beef Checkoff was created. The following year, in the heat of the dairy buyout, the NCA sued the USDA for failure to follow orderly marketing and devastating the beef industry. The USDA had reached an agreement with 14,000 dairy farmers to slaughter 1.55 million dairy animals over the next 18 months on a $22.50 cwt maximum bid. By the first week of April, live cattle futures had declined $5.67, the biggest one-week loss recorded that cost producers nearly $25 million. The NCA was joined by 43 state associations as plaintiffs in the lawsuit. A federal judge ruled in favor of the NCA and a handshake agreement between NCA

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FALL CATTLE JOURNAL 2020

Hanson believes in a five-year referendum system as a tool for checks and balances to ensure producer support.

“Economic Returns from the Beef Checkoff ” was published in 1996 and revealed that a $5.70 return was gained from each dollar collected since the program began. The National Cattlemen’s Beef Association was created in 2000, separate from the Beef Board.

In reference to advertising beef to consumers, Hanson draws a notable distinction between beef and cattle, the latter being what producers sell. In the same way steel companies don’t advertise cars, cattlemen sell the raw product and the packers make it available in a usable form to the end user. The companies producing beef, he said, should fund advertising campaigns rather than producers shouldering the expense.

An online petition was introduced by Bryan Hanson on July 6, 2020, to collect the ten percent of producer signatures to prompt a referendum that would allow for a vote to terminate the checkoff. According to census numbers, 88,269 eligible signatures would represent ten percent of the nation’s 882,692 cattle producers. Hanson, Fort Pierre Livestock owner and president of the South Dakota Livestock Association said he rarely speaks to producers who are in favor of the checkoff and he wants it repealed. One of his major concerns with the program is the lack of differentiation between imported and domestic beef, another is the NCBA’s stance against mandatory Country of Origin Labeling and Grassley’s proposed 50/14 rule, although they are major check off contractors. Had producers known these things would materialize when they voted for the checkoff, he said, it wouldn’t have passed. “An organization that is handling our checkoff dollars has basically stood in the door of things that could actually help cattlemen,” he said. “I’m of the opinion we need to get rid of the checkoff, I don’t think it’s doing what it was intended to do when it was put in place.”

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“The checkoff touts that they add value and create demand for beef, and I don’t doubt that,” he said. “The problem is that the prices realized on higher value cuts of beef don’t trickle back to the producer. Over the past four and a half years, we have seen record high or near record high prices for beef at the counter, yet our fat cattle prices have fallen back to the prices we saw over ten years ago.” The higher demand for beef, he said, allows imports to be utilized, skewing the supply and demand model and meeting demand by using lower priced imported beef. “I raise US beef and I want to promote US product and they won’t do that, it’s just beef is beef,” he said. “The NCBA has been very vocal about beef is beef whether it’s from Australia, New Zealand, Mazatlán, Manitoba, or Montana. I don’t believe that, our beef is superior.” Signatures on the referendum petition are due in July of 2021. It can be found at weneedabeefcheckoffvote.com.

PHOTO BY HEATHER MAUDE

president Don Butler and Agriculture Secretary Dick Lyng was reached to offset the impact of meat purchases by the USDA.

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Despite efforts, a gap remains between what consumers want from producers, and what producers are delivering BY RACHEL GABEL

riter’s Note: I asked for volunteers from my circle of friends and acquaintances to have a conversation with me about their food choices. I was looking for people who are the main grocery/food decision makers in their households and I was looking for people removed from production agriculture.

Talk show host Ellen Degeneres took time on her daytime show to encourage her viewers to “be neat and eat less meat,” a few moments on air that were met with rebuttals from a number of individuals and groups. Comments appeared on social media, amidst discussions and arguments about the current state of the beef industry, low prices and who bears the blame. Away from the unrest within the industry, Colorado consumers like Patricia Billinger and Christy Ledgerwood are Front Range consumers. Both women grew up in the Castle Rock area and, now in their early 40s, live in Denver and Monument, respectively. Ledgerwood, a nurse who said she saw the results of what she called poor life and healthcare choices while working in cardiac intensive care, is married and has two elementary-aged children. Her husband and children are vegetarians, giving her a unique perspective.

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Ledgerwood does eat meat, though she respects her children’s request to not eat it in front of them. Her husband has chosen a vegetarian diet off and on through their marriage, influenced by documentaries about agriculture. They have chosen to purchase grassfed, locally-raised meats in the past to get away from what she calls industrial farming. The family does enjoy dairy and eggs. Her she eats meat on average twice per week, typically chicken on a salad. Having recently hit the 50 pounds lost milestone, Ledgerwood is participating in a nutrition program, which includes beef. Her interest in conserving water and protecting the environment play a role in choosing chicken over beef, she said, as well as being conscious of methane production. Though she recognizes the negative

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connotations many of her Front Range peers associate with oil and gas production, she said she doubts they understand the importance of oil and gas to the state’s economy as she does. Ledgerwood said she recognizes that being a part of rural America is ingrained in those who take pride in their rural roots and lives. “I think there are a lot of hurt feelings and feelings to be hurt in the argument because it hits very close to home for so many people,” she said. “There is a lot of opportunity for growth in market share that once you get over the ‘this is personal, you’re doing this to me’ mindset, there’s that potential out there to capitalize on but definitely it’s a shift in culture and identity for a huge portion of America that identifies as ag or identifies as rural or identifies as farming.”

TAKE EMOTION OUT If emotion could be excluded, she said a higher level of conversation could take place.

Colorado ag industry but that isn’t the dialogue she hears. She is interested in supporting producers as they grow and adapt to current consumers’ needs and wants.

Ledgerwood followed The Fence Post’s coverage With a healthcare background, Ledgerwood of Colorado Gov. Jared Polis’ comments about the Impossible Whopper and said his message was lost said she questions the trend of marketing protein but admits the beef industry’s response appeared from animals that have never received antibiotics. to be angry and defensive, though understandable, Knowing meat is antibiotic-free at harvest, she said she said it wasn’t likely a positive reflection of the it is humane to treat sick animals if antibiotics are industry to consumers. She said for people who are the proper course of treatment. shying away from meat, moves by the ag industry to veil transparency are damaging. She citToughest Spreaders on Earth ed the banning of video camerNow With Trailer Extension / Silage Sides Multi-Task With Your Spreader Year Round We Can Retro-Fit Your as at feedlots as something that Current Unit Or Ask About Our In-Stock Units! breeds suspicion. IT’LL UNLOAD 45 TONS OF UH, ANY“The way to have trust is through transparency and I think there’s a lot of mistrust that has been built by these documentaries that are out there,” she said. Conversely, she said she questions messages from trade organizations, knowing protection of their respective industry is their job. Knowing the group has an angle, she said, makes trusting the message difficult. “What I would like to see is independent voices asking for support of farmers and ranchers because they’re a huge part of our economy,” she said. “They are the driving force of the Colorado economy and they are disenfranchised by Denver/Boulder suburbia and they are our economy.” It doesn’t serve consumers well, she said, to implode the

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“If my kid has an infection, I’m going to treat it,” she said. “I’m not going to let her suffer. There’s so much confusion about the vocabulary that’s out there and I think there’s a lot of manipulation on all sides.” Confusing labels, she said, are a source of frustration, playing on what she said is people’s lack of engagement. She said she recognizes there is a large percentage of families in America who are strug-

“There are so many people who just want to be able to feed their kids,” she said. “There is so much of a hunger issue and there is so much quality out there beyond a dollar burger.” Ledgerwood said she supports programs like one out of state she is familiar with that allows a food bank to receive bruised produce for distribution. The program fights hunger and food waste, two things she recognizes as major issues.

gling just to get by.

Ledgerwood said her diet regularly includes plant-based proteins because she likes it and said she has the impression it carries a smaller footprint on the environment. However, she reads labels to ensure that the protein content is high.

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“Just because it’s fake meat, doesn’t mean it’s good for you,” she said. She said she finds lab-produced meat interesting but admits it “grosses her out a little” and questions how cost-effective it can be in large-scale production. She said she does not need plantbased options to look, taste, feel, and smell like meat, especially with the questions surrounding the soy leghemoglobin, added to Impossible Burgers to impart a bloody appearance. “I’m not trying to substitute for beef,” she said. “I’m trying to get protein and use it in recipes that are palatable and taste good.”

HEATH AND PRICE Patricia Billinger said her food choices are the result of her cost-conscious values and her desire to be healthy and supportive of environmental health. Billinger, works as a public information officer, and her husband also works full time, making convenience a weeknight consideration, though they eat few pre-packaged foods, preferring to make quick meals from scratch. She said she often chooses chicken for the health benefits and the smaller environmental footprint. Like Ledgerwood, she is conscious of her weight and health and works to maintain them through diet and exercise. Red meat is on the menu about every 10 days and is beef, buffalo, or lamb. The week often begins with fish and evolves, by week’s end, into leftovers and vegetarian dishes as the weekly grocery store haul is consumed. Ground beef or buffalo, lamb kabobs, and steaks are all favorites, though she admits choosing a good steak at the meat cooler can be intimidating. Sale items and Costco finds also appeal to her,

allowing her to take advantage of lower prices and build a menu around the item. “I try to eat less meat because of the environmental impact, the price, and the health but I’m not ever going to give up dairy,” she said. Her concerns about the environmental impact of meat production center around total energy usage to produce protein including water, land, and feed consumed. She said she also tries to purchase humanely raised but said it’s difficult to know exactly the definition behind the label. Billinger previously worked for the American Red Cross and was dispatched to the aftermath of a tornado. She still recalls the sights and smells of a chicken farm that had sustained serious damage in the storm and had experienced livestock losses, an experience that shaped her decisions as a consumer and her impression of what she calls industrial-level farming. Living in Argentina also influenced her preference for grass fed beef, though beef of a similar quality here she said is more expensive and difficult to justify for a cost-conscious consumer.

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In our unofficial survey of a handful people who are claim to be “removed from agriculture,” here are their concerns with the beef industry, and the things that influence their meat-buying decisions. Most consumers who responded mentioned more than one of these factors, and many of these were mentioned by several consumers. -ENVIRONMENTAL IMPACT -NEGATIVE HEALTH EFFECTS -COST -BSE/SAFETY -PROCESSING CLEANLINESS -ANIMAL WELFARE -”INDUSTRIAL AGRICULTURE” -LACK OF TRANSPARENCY FROM BEEF PRODUCERS, PERCEIVED “UNTRUSTWORTHY” MESSAGING

“Beef is my favorite meat. But I feel guilty eating it, so I try not to eat it too much. I associate beef with climate issues. With the production of gasses that contribute to global warming. Whenever someone asks me could I eat this if I have to kill it, I would say no. But I enjoy eating it anyway. We are so removed from the farm and the people and the actual process that I worry that I don’t actually know what’s going on in the industry. If I could buy my beef every year from the county fair and put it in the freezer I’d feel a lot better about it. Or from someone I know. It’s the many layers of obscurity between us and the product that make me worry. About how the animal has been treated and how clean it might be.” -LAURA MCNEAL, 53, SAN DIEGO, CALIFORNIA

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Like Ledgerwood, she eats plantbased proteins but said she carefully selects them, knowing lean meat is often a better option for her as she works to maintain her weight loss. She said the plant-based products are often high in protein but are also high in carbohydrates, making some consumers opt for other proteins. Though she said her interest is piqued by lab-produced protein, there is an “inherently creepy factor” to it. She said she tried a fake

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meat product that was marketed to imitate beef and said she didn’t care for the vegetable made to taste like and be bloody like beef. “I’m not their demographic,” she said. “If I’m going to have a vegetarian burger, I would rather have a portobello mushroom burger than an Impossible Burger.” She said the trend toward vegetarian and vegan choices is generational, with her generation having grown up

“I think there needs to be a bridge between the ag community and people who have no association with the ag community. What they do, and what their job and life is. There are a lot of misconceptions about agriculture. If there was more of an effort to get people to understand how agriculture works, how hard people work and how much people do for their animals.” “Also maybe have those conversations about why American beef is different. We see a lot of ads about it’s American made, it’s better. We need to see the physical side, how it’s different than beef from elsewhere. Connecting it to how it’s supporting literally family farms. I think that connects to people, more than just an industrial complex. “ REBECCA, 24, LINCOLN, NEBRASKA

eating and enjoying meat and younger generations being more likely to move away from meat. She said she recognizes the challenges of keeping Colorado’s cattle-heavy economy booming as consumer preferences change over time. Billinger, who studied journalism in college, said she carefully selects her sources of research and information, depending upon vetted sources. She said the beef industry’s responses to criticism have been well played

“What I would like to see is independent voices asking for support of farmers and ranchers because they’re a huge part of our economy.”

“What I would like to see is independent voices asking for support of farmers and ranchers because they’re a huge part of our economy,” she said. “They are the driving force of the Colorado economy and they are disenfranchised by Denver/ Boulder suburbia and they are our economy.” CHRISTY LEDGERWOOD, 40S, MONUMENT, COLORADO

Several respondents in urban areas trust Costco beef more than other retailers. For information about beef, they tend to go online or read mainstream media (Atlantic Monthly, Wall Street Journal, New Yorker).

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by the public relations voices involved. She said the points and questions have been reasonable and fair, including how meat is defined in labels. If anything could be better addressed by the industry, she said it is the concerns of millennials who see climate change as an existential threat. Sara Place is a foremost expert on sustainability as the National Cattlemen’s Beef Association’s senior director of Sustainable Beef Production Research. She said different plant-based products certainly

have different footprints but support of the beef industry is an investment in the ecosystems, wildlife, and the environment that are made better through cattle production. She said the addition of other proteins can be seen by the industry as an affront but is often an addition rather than a replacement for traditional proteins. Younger generations are also, she said, more likely to try the products though she said she hasn’t seen a sharp rise in the number of vegetarians or vegans.

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Place said all of plant and animal agriculture, according to the Environmental Protection Agency, is responsible only for 9 percent of all U.S. emissions. A study several years ago found that if the entire country were vegan and livestock production ended completely, the greenhouse gas emissions would be reduced by 2.6 percent. Food, though, remains a personal choice and is a way to exercise some control over factors important to individuals, whether that is climate change or weight loss and, she said, gives people something they can act upon. “That’s our challenge as the beef industry,” she said. “We have to give people a reason to believe that when they’re buying beef, they’re supporting good environmental outcomes and should feel good about that.”

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BY TAMARA CHOAT

hey say Jack Sprat could eat no fat (and we respectfully won’t repeat what the wife eats) but betwixt the two of them, they kept the platter clean.

U.S. consumers love their ground beef, consuming 26 pounds per capita, which is about 45 percent of total beef consumption. The beef industry requires a mix of fattened and lean beef to meet this demand. Particularly, lean beef from cull cows and bulls is required to mix with fattened trim from finished animals. With nothing normal in the world right now, and charts of 2020 cattle markets and beef prices looking like a child’s scribbling – the lean cattle market is one thing that has remained relatively stable and continues to be promising despite the normal seasonal low approaching in late fall. Although the food service sector is nowhere near back to normal post-COVID, fast-food chains have done very well and their demand for ground beef is strong along with grocery coolers. “The cull market – which is driven by the ground beef market – has held strong compared to a year ago,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. This is mostly due to the backup in the fed cattle market in April and May, which caused a lot of very heavy, over-finished cattle that generated a lot of extra fatty trimmings. “The way you turn that fatty trim into a salable product is to mix it with a lot of lean, so there is increased demand in the cull cow and bull market.”

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Cattle producers often tend to look at cull cattle as a necessary evil, instead of an opportunity for profit, experts say.

Every 85 pounds of fat trim, usually at 55 percent lean, needs somewhere between 275 to 500 pounds of lean trim, around 90 percent lean, to make around an 85 percent ground beef mix. That’s a lot of culls. “The market seems to be pretty stable right now irrespective of lean point,” says Dale Woerner, professor of animal science and meat and food industry consultant at Texas Tech. “The signal that sends is that it’s a weight-driven market right now – simply putting pounds of gain on cows is going to drive home more dollars to the producer.” USDA market news service categorizes cull cows into four categories based on body condition score. Breaking Utility, or “breaking” are the fattest, with BCS 7 or higher. Boning Utility, or “boning” have

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a BCS of 5-7. Leans and Lights are thinner, smaller, less desirable cattle. Normally there is a bigger price gap per pound between boning and breaking cows, with a price incentive for leaner cows to be paid more on a per pound basis, even if fatter cows gross more dollars, says Woerner. “The real signal now is that heavier cows are going to return more dollars – not only in gross dollar per animal, but on a per pound basis.” Peel says for a typical cow-calf operation, cull cows and bulls make up about 15-20 percent of their revenue. “That’s not an insignificant number – they probably deserve some additional marketing attention,” he says.

Several studies by the Noble Research Center, South Dakota State University and other researchers have looked at the value of adding pounds to a cull animal and selling in the off season and most agree it is advantageous to hold the cattle and add pounds if possible. “A lot of people treat their cull cows and bulls as something to get rid of as fast as possible – sort ’em off and get them the heck out of here. And some operations aren’t set up to keep them, but if there is that option to hold and feed them, it’s worth taking a pencil to,” says Peel. The cull market is entering the seasonal lows of October and November, due to a lot of cows dumped on the market this time of year. But this also creates opportunity for value later in the year. “Everyone culls at the same time – but if producers have the ability to hold these cows and feed them for a few months, they can not only add pounds but also get closer to the peak market of April and May,” says Peel. As producers look at beef prices and the myriad of value-added programs for finished beef, it’s natural to wonder if there are ways to add dollars by product differentiation – as well as the role imports play in affecting cull prices.

See uus r for yo

and graded in-house to distributing company and food service specs, not USDA grades. “Most cow plants don’t employ a USDA grader, as it is an optional, paid for service,” says Woerner. There are some Angus-based ground beef programs, but those are “post-buy” incentives, not live value-added programs, with the packer or distributor capturing the value margin. Woerner says some organic dairies are able to market organic beef with added value, but there are very few organic beef cattle producers to fill that niche. Imports also play a significant role in the lean beef industry. The U.S. does not produce nearly enough lean trimmings to support domestic ground beef demand. “In general we need lean trimmings in our industry – the U.S. runs a continual shortage,” says Woerner. “What we don’t produce in the cow/bull market we have to import, as we are a net negative producer of lean trimmings.”

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An industry-wide study showed 100 percent of cow plants do not do a straight grind, but utilized some form of whole muscle cuts that go into steaks, roasts or other products in foodservice or low-cost buffet restaurants. Despite this, Woerner says marketing does not play a huge role in the value of lean beef. Most is sold commodity

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Peel says ground beef production represents a little over 30 percent of total U.S. beef production, and imported beef makes up 26 percent of that amount. If we were to eliminate beef imports, which consist of 70 to 75 percent lean trimmings, there would be several possible outcomes. “We could decrease ground beef production by 45 percent, grind more muscle cuts and sell as lower valued ground beef, or raise 10-15 percent of yearlings as range beef and sell like cull cows,” says Peel. “All alternatives would result in lower value for U.S. cattle industry.” Despite an up market year and banner ground beef demand, many ranchers still question the process of what ends up being an open trailer gate and taking a seat and a price at the sale barn. Jess Peterson, senior policy analyst for the U.S. Cattlemen’s Association, says cull cows are an important cash flow aspect of most ranches – they aren’t just a “bonus,” and pricing matters. He says it’s great that consumer demand for ground beef continues, but we need to look closely at who is making the margin off that grind, and how we are bolstering the supply. “You talk to any meat packer and they’ll tell you all day long they make their money off of ground beef. And although I certainly agree we need trade – we don’t need to just slam that door shut – it just makes me curious, if the packers are making good money why WOULDN’T they want to import more of their bread and butter product at lower prices? And how is this impacting our domestic cull prices?” While no one can be faulted for making a profit, Peterson questions at what point a win just means game over. Why do ranchers struggle to make money off of culls? The difference between a cull cow selling for $700-$800 and $1,000 is the difference to many of breaking even or making a profit.

“Think about what a difference $200 a head makes to an operation. I just wonder at what cost do we put our cow calf people out of business? What if we lose those producers for just $200 a head to ship in cheaper product, what have we gained?” Cull, sell, feed, cuss and discuss – the lean industry may represent an untapped opportunity for cattle producers if we keep an open mind and not just an open trailer gate.

U.S. consumers have a voracious appetite for ground beef, consuming 26 pounds per capita in 2019.

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It’s looking bullish – these pens of culls on feed represent potential opportunity for cattle feeders to add margin to a commodity product. 114

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As COVID-19 hit the ag industry, and the weaknesses in our supply chain became gaps, TSLN delved into the issues in the cattle industry with a series of interviews to talk about those problems. Here is a selection of those interviews. Find more online at www.fair-cattle-markets.com.

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June 16, 2020

Q: What are your thoughts on the backlog of cattle that the industry is facing? Some people say those cattle aren’t out there, but they are definitely there. Even if we don’t have as many to slaughter, that won’t matter as the cattle we do have backed up are going to have tremendous weights. Going forward, it will be incredibly difficult to work through these cattle and hold the markets together.

Q: What are your thoughts on the direct Q: What are the major issues standing in the government payments producers will be receiving due to the coronavirus pandemic? way of fair cattle markets? The packer level is where we find the issues in our cattle industry. We don’t have enough shackle space and there isn’t enough competition between packers. Because of this, negotiated cash trade at the live cattle level is basically non-existent.

The theory of these payments is great; however the specific time period they set in place to distribute these payments could’ve been structured better. The important thing is that producers are receiving something to help them through these tough times.

Q: What are your thoughts on President Our packing sector continues to make substantial profit Trump’s statement regarding the termination margins, while cattle producers continue to lose money. of trade deals where the U.S. imports cattle? This situation can’t continue if we want to keep our industry alive and healthy.

Cattle imports aren’t quite as important as considering the beef imported into our country. President Trump most likely misworded that statement.

Q: What are your thoughts on increased manCanada and Mexico are both great trading partners, dated negotiated cash trade? Not sure how this proposal will play out in the end, but one thing is for sure, we can’t continue down the path we’re on right now. We have to implement some kind of change in hopes of seeing these cattle markets turn around.

but the U.S. doesn’t need to trade with just anyone. Many countries don’t have the same safety and quality standards with their beef as we do with our domestic product. When you consider beef exports, we can’t completely cut off imports, we need to do a little business with other countries to keep the balance.

Q: In one sentence, what does the cattle industry need most right now? We need more competition within our packing sector.

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June 29, 2020 Currently, it would be beneficial to assess our imports when we’re dealing with a significant backlog of cattle due to COVID-19.

Q: When do you think carcass weights will become an issue due to cattle being held back? Carcass weights are most likely already an issue. Quite a few feeders have had to wait weeks for a bid; because of this carcass weights have increased substantially.

Q: What are the major issues standing in the Q: Why do you think we haven’t seen any reway of fair cattle markets? sults from the investigation into the Tyson The rules are slanted within our markets, and they’re plant fire in Holcomb, KS? slanted towards an entity that didn’t need the help to start with, the packers. These rules have caused our playing field to be unfair. This has enabled the packing industry to make substantial profits while the independent producer struggles to survive.

Q: What changes need to be made so fair cattle markets can be achieved? MCOOL would greatly benefit our independent cattle producers. U.S. cow calf producers are held certain standards with specific regulations; foreign countries don’t have these standards and regulations. Even though U.S. producers market the best quality beef in the world, they aren’t able to differentiate their product from foreign products.

The Holcomb plant shutting down and causing the market effects that it did was a complete joke. There was never a shortage of beef or lack of shackle space to kill cattle, however the marketplace was manipulated to look like that was the case. As we all know, this manipulation caused a sharp drop in the market. The current DOJ investigation is gaining traction; packers’ actions and correspondences are actually being looked into. If illegal activity is discovered, the repercussions need to be harsh; a fine isn’t going to do anything, there needs to be fundamental change.

Q: Any closing statements?

Q: What are your thoughts on President Trump’s statement about terminating trade deals where the U.S. imports cattle? What are your overall thoughts on beef/cattle trade?

Country of origin labeling allowed our cattle producers to differentiate their product in the marketplace and charge more for it. Since MCOOL has been repealed, U.S. cattle producers are just a generic producer like everybody else.

Importing and exporting is part of our cattle industry. Imports are needed, but its wrong that imported cattle aren’t differentiated from our domestic cattle.

The current environment within our cattle markets make it extremely tough for any young man or woman wanting to get into the cattle industry.

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cattle market, the price of boxed beef is still extremely disconnected from cattle prices. Ever since the repeal of country of origin labeling, we’ve seen a massive spread between boxed beef and cattle prices. They still move together in similar fashion, however the gap between them has grown drastically.

As an industry, we need to be vocal about our struggles and tell our story.

Q: What do you think are the major issues standing in the way of fair cattle markets? The concentration of our packing industry is a major issue that has allowed packers to import cattle and market them as a product of the USA. Packers have the ability to buy cheaper product from 22 other countries and mislead the consumer with false labeling. Packers are able to import an unlimited supply of cheaper product that they use to offset any shortages in supply. This causes U.S. cattle markets to become depressed.

Back during the Holcomb fire, we saw packer profits soar to $700-$800/hd. for fat cattle. At the same time, cattle feeders were losing a significant amount of money. Now, with COVID-19, the packers have made the Holcomb fire look like child’s play as their profit margins exceed record levels.

Q: Can you elaborate on South Dakota Livestock Auction Market Association’s push for a beef checkoff referendum? Demand for beef is high, but cattle producers aren’t seeing the benefits of this. Producers pay the checkoff dollar, but that money is benefiting the packer and leaving the producer sitting by the wayside. We need to have checks and balances in all our checkoff programs.

Q: What are your thoughts on increased Q: What do you see happening to the cattle industry if substantial change isn’t negotiated cash trade? implemented? When packers participate in the open market it allows the independent feeder who isn’t under contract to market their fat cattle. An open market also produces a transparent market. Sale barns across the country have auctions with true price discovery that is fair to both sides and establishes a true market. Our fat cattle market doesn’t have this type of price discovery; instead it is controlled by formula contracts and captive supply.

Q: When do you see this backlog of cattle really taking a toll on the cattle markets? We are already seeing the negative effects of backlogged cattle. Even though we’ve seen a bump in the

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We saw vertical integration in both the hog and chicken industries. If we don’t turn things around within the cattle industry we’ll see the same thing happen.

Q: Do you see these tough cattle markets affecting your area? The best stimulus package is to give the agriculture producer a fair market. Whether you’re a corn farmer, a fat cattle feeder, or a cow calf operator, if you’re making money you’re going to spend it. That money helps local businesses thrive and in turn rural communities thrive.

If American agriculture continues to be sold off to other countries we’ll find that national security will be a thing of the past. If COVID-19 has shown us anything, it’s that food safety should be the number one priority here in the U.S.

Q: In one sentence, what does the cattle industry need most today? The cattle industry needs the government to step in and get a handle on the cattle markets. If we aren’t careful, cattle producers will become the next vertically integrated industry, just like chicken and hogs.

Q: What do you feel are the major issues standing in the way of fair cattle markets? Q: What’s your outlook for calves this fall? The biggest issue facing the cattle markets is packer concentration that has led to market manipulation through formula cattle and packers owning their own cattle.

Q: What solutions do you think could be implemented to solve these issues? The U.S. government needs to get a handle on big corporate packing plants. There are laws in place that should be enforced to avoid the situation we’re currently in, but it seems as if the government is too scared to enforce them.

The feeders have lost money, the backgrounders have lost money, the yearling producers have lost money, and the cow calf producers have lost money. There’s only one sector making any money, the packers. While the packers are making record profits, all those other sectors continue to lose money. This equation will make it difficult for calves to sell as high as we’ve seen in past years.

Q: What are your thoughts regarding the DOJ investigation into the four major beef processors? Market manipulation by the packers has been bla-

Q: What are your thoughts on Senator tant over the last year. It started with the fire at the Grassley’s 50/14 legislation to increase ne- Tyson plant in Holcomb, KS and it has been obvigotiated cash trade? ous all throughout the COVID-19 pandemic. There The 50/14 legislation is a great idea, however there is the concern that this legislation will be put into place and not enforced as we have seen with the Packers and Stockyards Act.

Q: What do you see happening to the American cattle producer if our cattle markets aren’t stabilized?

shouldn’t have to be an investigation to see what the packers have been doing.

Q: Any closing statements? Both producers and consumers need to make their voices heard by contacting their congressmen. It is vital that our elected officials be made aware of the cattle industry’s current situation.

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Q: What are your thoughts on beef and cattle imports? Importing beef from Brazil has been and continues to be a concern. Currently, it makes no sense that we are importing beef into a market that is depressed. In the long run, giving the consumers a choice with country of origin labeling would fix the issue of imported beef.

Q: What are you hearing from your constituents that are dealing with these lop-sided Q: What do you think are the major issues cattle markets? standing in the way of fair cattle markets? Our consolidated meatpacking industry is the main issue standing in the way of fair cattle markets. If packer consolidation isn’t addressed, the way we produce beef in the U.S. will be forever changed. Trade is also a significant issue facing the industry.

The concern among cattle producers started with trade, then COVID-19, and now the investigations into the meatpacking industry. Cattle producers across the board are experiencing significant losses while the packers continue to see fat profit margins; this concerns all cattle producers.

Q: What solutions are needed to solve the Q: Do you think there is a chance we could price ourselves out of a product at the reissue of packer consolidation? tail level? The Attorney General needs to do an investigation into the meatpacking sector to take a closer look at their practices and determine if any illegal activity has and/or is currently occurring.

As of today, our cattle markets are easily manipulated because of the low percentage of cash trade. The 50/14 bill would increase this number and bring competition back to the markets.

Cow calf producers and feeders are going broke, meatpackers are making record profits, and the consumer is being gouged at the meat counter; there is clearly something wrong with this system. If you allow a system to work with capitalistic standards, the consumer is going to benefit and we aren’t seeing that.

Q: In one sentence, what does the cattle inDiversifying state meat packing facilities would dustry need most right now? open up large markets of retail customers to these smaller facilities. Long term this could somewhat help diversify the market. Country of origin labeling is essential in our industry because if customers are given the choice to buy meat from the U.S. or from a foreign country, they’re going to choose the highest quality product, U.S. beef.

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The cattle industry needs fairness in the marketplace. Those in agriculture know they aren’t ever going to be rich; they just want to make a living.

Q: Any closing statements? The concern of vertical integration is very real. All the products raised in agriculture are in danger of going down this path.

The cattle markets are below the point of breaking even to keep a cow for a year, and if we pound these markets down further, it will have a devastating effect on ranch operations.

Q: In one statement, what does the cattle industry need most today? Profit.

Q: Any closing statements? Q: What are the major issues standing in the These are very frustrating times. Hopefully we’ve seen the worst and it’s going to turn for the better. We’ve had huge way of fair cattle markets? Captive supply and lack of negotiated trade within our fed cattle business are inhibiting fair cattle markets.

losses in almost all sectors of the cattle industry within the last three years. When packers continue to gain more control and aren’t

Q: What solutions can be put in place to solve willing to give a fair price for live cattle, the losses are going these issues? A certain level of weekly negotiated trade needs to be required.

to filter down to the feeders, backgrounders, and cow/calf producers. We need profit; the losses have to be stopped.

Also, packers should not be allowed in the cattle feeding business, however it’s tough to get them out. They often go about this under different names. Why would they bother feeding cattle when we do it as cheap as possible for them?

Q: Do you feel a true Department of Justice investigation will occur now that President Trump has made the request? A true Department of Justice Investigation needs to happen. However, we’ve seen this how many times before? It seems like once we start investigating the price comes up a little bit and everyone gets happier, we forget about the problems and go back about our business. During Teddy Roosevelt’s time we had more packers that controlled less percentage of the meat trade, and at that time we called it anti-trust and broke them up.

Q: How are these poor cattle markets impacting your rural area?

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Q: Why do you think the cattle industry has turned a blind eye to the major industry issues throughout the years? Follow the money; congressmen and senators have money thrown at them by agricultural organizations that don’t necessarily have cattle producer’s best interest in mind.

Hermosa, SD

Q: What do you feel are the major issues standing in the way of fair cattle markets? MCOOL and imports of cattle and beef into the U.S. are the major issues standing in the way of fair cattle markets. Imports of beef and cattle make it tough for American producers to be profitable. All too often our industry is flooded with foreign product. These imports make it tough to be profitable.

Our industry has regulations that are prohibitive to producers and custom packinghouses. Beef must be federally or state inspected in order to be sold to a retailer. On top of that, beef can’t be sold across state lines unless it is federally inspected. There are small grocery stores in western South Dakota that can’t get meat on their shelves and cattle surround them. This shouldn’t be an issue. Like Iowa, state inspected beef plants should be able to ship across state lines. If we eased these regulations our custom slaughter plants would be able to help alleviate problems on the local level.

Q: If you could sum it up in one sentence, what does the cattle industry need most industry. Currently, there are numerous feeders who right now? Another issue is concentration of our meatpacking can’t even get a bid, let alone receive a fair price for their cattle.

The cattle industry needs MCOOL and we need to limit imports of cattle and beef into this country until we can get our U.S. producers’ livestock sold.

Q: What are your thoughts on a mandated level of negotiated cash trade? Q: Any closing statements? Fifty-percent negotiated cash trade or more is ideal. There is no need to give the packers a 70% captive supply. Cow calf and yearling operators sell their cattle in an open market and this results in a transparent, competitive market. The fat cattle market is manipulated with formulated deals that go on behind the scenes. We saw this occur in the hog industry, and as a result that industry is vertically integrated.

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USDA is trying to force EID (electronic identification) on cattle producers and producers don’t have the money to pay for this. The USDA is doing their best to require EID without a comment period. This is an exercise of futility. If cattle producers continue to go broke, no one is going to care if cattle have identification.

Q: Do you think our industry is in danger of becoming vertically integrated? No, the structure of the U.S. cattle industry is a function of forage availability. This structure is very different than that of the poultry and pork industries. The incentive and motivation to incorporate the cattle industry into a vertical model isn’t there.

Q: How many head of backlogged cattle do you think the industry is facing and how Q: What issues are standing in the way of tough will they be to work through? fair cattle markets? Fair is a relative term. A fair cattle market to one cattle producer probably doesn’t hold the same definition for what the next cattle producer considers fair. Producers need to capitalize on premium programs to set their cattle apart; they need to create extra value and capitalize on that value.

The cattle industry is facing right around 500,000 head of backlogged cattle. Most likely, we’ll be working through these cattle through August. This high number of backlogged cattle is an issue, but a bigger issue is the weights. We came into the year well above year ago weights on a weekly basis. When the plant shutdowns occurred, cattle got bigger on a weight that was already too big.

Q: What are your thoughts on Senator Grassley’s 50/14 legislation? Q: What are your thoughts on fake meat alternatives? A government mandate requiring a certain percentage of cattle to be purchased through negotiated cash trade is a concerning concept. Getting the government involved within our markets is a poor idea.

Q: What are your thoughts on imports of beef and cattle? Trade is a two way street, you must have imports and exports to make trade agreements work. The key to successful trade is a negotiated agreement that is understandable and well thought out.

Q: What are your thoughts on the DOJ investigation into the big four beef processors?

Fake meat alternatives need to be on everyone’s radar, they’ve seemed to pick up some steam since the COVID-19 outbreak because of prices. Going forward, our industry needs to keep demand strong, both domestic and international. That means we have to have both sides of the equation: exports and imports.

Q: Any closing statements? Ranchers have to tell their story. Until COVID-19, the general public had no idea where their food came from. People need to truly understand where their food comes.

This is an ongoing saga that’s been unending for a hundred years. The packing industry is a tough business to be in. Economies of scale drive the industry because of the high cost involved. Even if you did break up the packers, in five years we would most likely be right back where we are today.

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EVENTS

PHOTOS BY SCOTT DIRK

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FALL/WINTER 2020

Have an event coming up?

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2-3

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Ladies of the Beartooth Female Sale, Billings, MT

2-3

ND Stockmens Assn. All Breeds Cattle Tour, Minot, ND

Huskerland Quarter Horse Production Sale, Kearney, NE

NILE Gold Buckle Select Horse Sale, Millers Horse Palace, Billings, MT

Fawcett’s Elm Creek Ranch Annual Female Sale, Ree Heights, SD

Ray-Mar Dispersal Sale, Ogallala, NE

Jensen Bros. Hereford Female Sale, Louisburg, KS

7-10

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Bobcat Angus Online Embryo Sale, Galata, MT

Jamison Ranch Quarter Horse Sale, Quinter, KS

New Direction Simmental Sale, Seward, NE

Pieper Red Angus Fall Run Production Sale, at the ranch, Hay Springs, NE

Rust Mountain View Ranch Female Sale, Mercer, ND

J & L Livestock Montana Angus Female Bonanza, PAYS Livestock, Billings, MT

Fink Beef Genetics Sale, Manhattan, KS

Micheli Ranch Bull Sale, Ft. Bridger, WY

10-11 Farmers & Ranchers Livestock Fall Classic Catalog Horse Sale & Futurity, Salinas, KS

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Coleman Angus Ranch Female Sale, Charlo, MT

Udell Cattle Female Sale, Sioux City, IA

NILE Angus Female Sale, Billings Livestock, Billings, MT

FALL CATTLE JOURNAL 2020

TRI-STATE LIVESTOCK NEWS

Triangle J Ranch “Harvest Select” Simmental Female Sale, Miller, NE

K2 Red Angus Commercial Female Sale, Wheatland, WY

5 L Red Angus Profit Seeker Bull & Female Sale, Sheridan, MT

WMR Livestock Sale, Whitehall, MT

5-7

South Dakota Stockgrowers Convention, Rapid City, SD

Green Mtn. Angus Ranch Bull Sale, at the ranch, Rygate, MT

Milk Creek Reds Female Sale, Plevna, MT

Poss Angus Female Sale, Scotia, NE

Hilltop Simmentals Dakota Ladies Female Sale, Worthing, SD

Amdahl Angus & Hereford Bull & Female Sale, Rapid City, SD

Wyoming Angus Assn Select Female Sale, Casper, WY

Baldridge/Tiedeman Angus & Guests Sale, North Platte, NE

Jamison Herefords Female Production Sale, at the ranch, Quinter, KS

Diamond Peak Angus Female Sale, Loma, CO

Mohican West Polled Hereford Bull Sale, Laurel, MT

Redland Angus Bull Sale, Buffalo, WY

Heart K Ranch Production Sale, at the ranch, Lewistown, MT

Nebraska Hereford Assn. Cornhusker Classic Sale, Grand Island, NE

Mill Creek Ranch Sale, Alma, KS

Connealy Angus Fall Bull Sale, at the ranch, Whitman, NE

Bieber Fever Fall Production Sale, at the ranch, Leola, SD

R-Math Angus Bull Sale, Glascoe, MT

Diamond D Angus Sale, Valier, MT

Bear Mt. Angus Female Sale, Palisade, NE

Paint Rock Angus Ranch Bull Sale, at the ranch, Hyattville, WY

Leachman Cattle of Colorado Fall Harvest Sale, Ft. Collins, CO

Montana Ranch Sale, Bigfork, MT

Vin-Mar Angus Spring Calving Cow Herd Dispersal, Rushville, NE

Reds at Sunset Red Angus Sale, Brookings, SD

Weller Angus Annual Production Sale, Philip Livestock, Philip, SD

Reds on the Prairie Red Angus Sale, Brookings, SD

Chestnut Angus Female Sale, Pipestone, MN

SK Cattle Complete Simmental Dispersal Sale, Aberdeen, SD

Hague Angus Ranch Bull Sale, Crawford, NE

South Dakota Hereford Assn. Excellence Sale, Brookings, SD

Pearls of the Prairie Angus sale, Mandan, ND

Wilken Angus” Black Angus Friday” Fall Production Sale, at the ranch, Meadow, SD

16-18 Montana Stockgrowers Assn. Convention & Trade Show, Billings, MT

Sonderup Charolais Ranch Inc. Female Sale, at the ranch, Fullerton, NE

B & D Hereford & Angus Sale, Claflin, KS

Vermilion Angus Ranch sale, Billings, MT

Spruce Hill Ranch Bull Sale, Ludlow, SD

Stevenson’s Diamond Dot Angus Sale, Hobson, MT

ZumBrunnen Angus Female Sale, Lusk, WY

Spickler Ranch North Bull Sale, Glenfield, ND

Eagle Pass Ranch Total & Complete Gelbvieh-Balancer Cowherd Dispersal, at the ranch, Highmore, SD

Largent & Sons Herefords Desert Mart Bull Sale, at the ranch, Kaycee, WY

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FALL/WINTER 2020

Have an event coming up?

Sales Shows

Call 877-347-9100 to list it here free–or email editorial@tsln-fre.com

Ingalls Centennial Angus Cowherd Dispersal, Belle Fourche Livestock, Belle Fourche, SD

North Dakota Hereford Assn. North Star Classic Sale, Valley City, ND

Stevenson Angus Bull Sale, Hobson, MT

Pyramid Beef Angus & Hereford Sale, Spearfish, SD

1-2

South Dakota Cattlemen’s Assn. Convention, Rapid City, SD

SEGA Gelbvieh Sale, Parker, CO

Big Country Breeders Sale, Columbus, MT

Sonstegard Red Angus, Montevideo, MN

Big Sky Elite Red Angus, Logan, MT

T Heart Ranch Female Sale, LaGarita, CO

Sitz Angus Sale, Harrison, MT

Inderland Angus Bull Sale, Big Timber, MT

Evans Cattle Co. Red Angus Production Sale, Cozad, NE

TK Angus Bull Sale, Valentine, NE

Harmon Angus Annual Production Sale, at the ranch, Lavina, MT

Rivers Edge Cattle Co. Annual Bull Sale, Hay Springs, NE

8-9

PAYS Blue Ribbon Stock Cow Sale, Billings, MT

4 4 5 5

KG Angus Bull Sale, Three Forks, MT

9 Schurrtop Ranch Charolais & Angus Bull Sale, McCook, NE 9 Altenburg Simmental “Super Baldy” Sale, Ft. Collins, CO 9 Currant Creek Angus Bull Sale, Roundup, MT

Lane/Sundling Commercial Female Sale, Three Forks, MT

Lonesome River Ranch Sale, Anselmo, NE

Montana’s Choice Simmental Sale, Billings, MT

Nebraska Angus Banquet, Kearney, NE

“Swing Them Doors” GREG GOGGINS 406-200-1880 4612 Hoskins Rd Billings, MT 59105

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TRI-STATE LIVESTOCK NEWS

Armstrong Angus Ranch Bull Sale, Cardwell, MT Gill Red Angus Bull Sale, at the ranch, Timber Lake, SD Shipwheel Cattle Co. Sale, Chinook, MT

Bowman Cattle Angus Bull Sale, Gering, NE

Richard Angus Ranch Sale, at the ranch, Belfield, ND

Gaugler Angus Bull Sale, Judith Gap, MT

Hartman Cattle Co. Sale, Tecumseh, NE

Laubach Red Angus Sale, Big Timber, MT

Minnesota Hereford Assn. “Gopher Sale” Hutchison, MN

ND Red Angus Red Select Sale, Mandan, ND

ND Simmental Select State Sale, Mandan, ND

Trauernicht Simmental Sale, Beatrice, NE

Cross Diamond Cattle Co. Red Angus Sale, Bertrand, NE

Hunt Creek Angus Bull & Replacement Heifer Sale, Miles City, MT

Cane Creek Cattle Co./Dakota Border Cattle Co Hereford Sale, Mobridge, SD

Griswold Classic Female Sale, Stillwater, OK

Bruhn Incredible Female Sale, Dunlap, IA

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FAIR CATTLE MARKET CONVERSATIONS K E E P I N G P R O D U C E R S I N B U S I N E S S : U . S . C AT T L E M A R K E T S U N C O V E R E D

It is our goal to ensure every bull, calf, cull cow, lamb and horse sells for a fair price. Your profitability is our focus. Through our initiative introduced in May 2020, we hope to help the industry learn, connect and make informed decisions that will establish market clarity, price discovery – and ultimately, long term financial stability for America’s livestock producers and feeders. We believe this investigative series, which will provide unique perspectives from the industry’s top leaders, will help find the answers we need.

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VISIT OUR WEBSITE DAILY: Roundup of daily headlines concerning fair markets for cattle and all livestock Audio and video from our interviews Sign up for our weekday newsletter Lear Learn what you can do to help bring change locally and nationally Order Fair Cattle Market Conversations merchandise

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FAIR CATTLE MARKET

CONVERSATIONS K E E P I N G P R O D U C E R S I N B U S I N E S S : U . S . C AT T L E M A R K E T S U N C O V E R E D

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Fair Cattle Markets

Glossary of Terms

BASE PRICE Price paid for livestock before application of any premiums or discounts, expressed in dollars per hundredweight. BASIS LEVEL The agreed upon adjustment to a futures price to establish the final price paid for livestock; the difference between cash price and futures price. More specifically, it is the difference between today’s local cash price and today’s futures price of the futures contract with maturity closest to the present time. CATTLE COMMITTED Cattle that are scheduled to be delivered to the packer. CATTLE CYCLE A period of time in which the number of beef cattle in the Nation is alternately expanded and reduced for several consecutive years in response to perceived changes in the profitability of beef production.

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CATTLE ON FEED Steers and heifers being fed a ration of grain, silage, hay and/or protein supplement for slaughter market that are expected to produce a carcass that will grade select or better. It excludes cattle being “backgrounded only” for later sale as feeders or later placement in another feedlot. DELIVERED Price of a trade including freight overages; seller pays the freight to the destination. DISCOUNT Adjustment, expressed in dollars per hundred weight, subtracted from the base price due to weight, quality characteristics, yield characteristics, livestock class, dark cutting, breed, dressing percentage, or other factors. FEEDER SUPPLY The combined total of calves under 500 pounds and other heifers and steers over 500 pounds not in a feedlot.

TRI-STATE LIVESTOCK NEWS

FEEDLOT CAPACITY The maximum number of cattle that an operator can feed at any one time during the year. Feedlot capacity is the common terminology used by commercial and custom feedlots. FOB “FREE ON BOARD” OR “FREIGHT ON BOARD” refers to the physical place at which ownership (title) of livestock or goods passes to the buyer. The buyer is responsible for the shipping and its cost from this location. FORMULA MARKETING ARRANGEMENT Advance commitment of cattle for slaughter using a method for calculating price. For slaughter cattle the base price is not negotiated but is based on some other price (such as plant average or weighted average price) or value determining mechanism that may or may not be known at the time the deal is struck. The final net price is determined after application of premiums and discounts.

FORWARD CONTRACT An agreement for the purchase of cattle, executed in advance of slaughter, under which the base price is established by reference to prices quoted on the Chicago Mercantile Exchange. In regards to slaughter cattle, premiums and discounts may be applied to the forward contract base price in order to determine the final net price. MARKETINGS Steers and heifers shipped out of feedlots to a slaughter market. NEGOTIATED Cash or spot market purchase by a producer of livestock to a packer under which the price for the livestock is determined by seller-buyer interaction. The livestock are usually scheduled for delivery to the packer not more than 14 days after the date on which the livestock are committed to a packer. However for slaughter cattle, delivery can be extended up to 30 days.

NEGOTIATED GRID Agreement under which the base price for the livestock is determined by buyer-seller interaction. The livestock are usually scheduled for delivery within 14 days. The final net price will be determined after application of premiums and discounts to the net price. NET PLACEMENTS Placements minus other disappearance. This gives a true indication of actual placements into feedlots for the month. NET PRICE Price paid for livestock after application of any premiums or discounts, expressed in dollars per hundred weight. OTHER DISAPPEARANCE Includes death loss, movement from feedlots to pasture, and shipments to other feedlots for further feeding.

PACKER OWNED Cattle that a packer owns for at least 14 days immediately before slaughter. PLACEMENTS Steers and heifers put into a feedlot, fed a ration which will produce a carcass that will grade select or better, and are intended for the slaughter market. STOCKERS AND FEEDERS Young steers or heifers, weighing approximately 400-800 pounds. These animals may be on pasture and/or a maintenance or warm-up ration until being put on full feed for slaughter market or being selected as herd replacement stock. However, if these stocker/feeders are being fed to be marketed directly to slaughter from a particular feedlot, they should be included as cattle on feed.

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Advertiser Index Agri-Best Feeds ...............................................Back Cover Alltech South Dakota .......................... Inside Back Cover Amdahl Angus .............................................................. 102 Bear Mountain Angus Ranch ........................................17 Bejot Feed Lots ...............................................................68 Bieber Red Angus ............................................................. 1 Black Hills Stock Show.................................................. 127 Bobcat Angus .................................................................... 8 Butte Co Equipment.............................................. 48 & 49 Brooks Chalky Butte Ranch ........................................ 142 Callicrate Banders............................................................61 Cammack Ranch Supply ................................................46 Chase Brothers Properties ............................................13 Common Sense Mfg. ......................................................80 Cowbos/Penny Newman................................................96 Cross Diamond Cattle Co ........................................... 106 Darren Boyle Sales ..........................................................38 Diamond Peak Cattle Co ...............................................83 Dinklage Enterprises LLC...............................................68 Farm Credit Services ........................................................ 4 Fawcett’S Elm Creek Ranch ............................................. 3 Gill Red Angus .............................................................. 141 Greg Goggins ............................................................... 132 Heartland Tanks & Supply .............................................91 Hewitt Land Company ................................................ 140 High Plains Genetics .......................................................63 Iseman Homes..................................................................82 JC Heiken Angus ............................... Inside Front Cover Jenner Equipment ................................................ 24 & 25 K R Rauch Co. ..................................................................55 K2 Red Angus ............................................................... 126 Kennedy Implement ............................................. 58 & 59 Kyle Shobe .................................................................... 130 Fair-Cattle-Markets.............................................134 & 135

Liechty Homes ................................................................53 Lindskov Implement............................................. 48 & 49 Livestock Market Directory.................................. 40 & 41 Lone Creek Cattle Co. ...................................................70 Long Pines Land & Livestock .......................................35 Lynn Weishaar ................................................................26 Matt Lowery ....................................................................36 Meyerink Farm Service ................................................101 MH Equipment & Truck Repair Inc. ...........................111 Mount Rushmore Angus ................................................. 7 Nebraska Land Brokers ...............................................133 New Direction Media ....................................................31 Nutralix ...........................................................................115 Orwig’s Tubs, Inc. ...........................................................73 Pharmco-Platte ...............................................................27 Pieper Red Angus ............................................................ 2 Poss Angus ......................................................................97 Premier Equipment.........................................................59 Rafter T Angus ................................................................10 Rancher’s Choice............................................................... 5 Ranchers Livestock Equipment ..................................116 Raven Angus Ranch ......................................................... 6 Red Angus Assoc Of America ....................................143 Repro Scan ......................................................................26 Rowse Rakes Inc ...........................................................116 Seth Weishaar................................................................123 Saint Onge Livestock Co ..............................................67 Spickler Ranch North ...................................................144 Stuart Concrete ............................................................115 Tri-State Livestock News....................................... 72, 138 Vitaferm ...........................................................................79 Waldo Realty ...................................................................80 Wilken Angus .................................................................... 9 Zumbrunnen Angus .......................................................88

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