AgriTalk: R-CALF CEO Discusses Cattle Industry During Pandemic

04:09PM May 19, 2020
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One of the most critical needs of the cattle industry is to get slaughter back to pre-COVID-19 levels, says Bill Bullard, CEO of R-CALF USA.

“We have a backlog of cattle, estimates range anywhere from half a million to a million fed cattle, that should have already been harvested but cannot because we have slowed down and or closed our current slaughter capacity. So, we need to figure out how to use whatever available resources we have in order to harvest as many fed animals as we possibly can,” Bullard tells AgriTalk’s Chip Flory.

That’s why the group is supporting the Prime Act, to allow custom processors to harvest and sell beef, calling for the removal of “red tape” from state inspected meat plants so they can ship beef across state lines, and asking the USDA to open up the 24 million acres of land in the CRP program for to have more grass to hold cattle back on.

But, when asked about another proposed aid to the backlog—the fed cattle set aside program—Bullard says there’s a better way to handle the situation.

“We think that the better way would be to not bring those cattle into the feedlot as early until we have eased the bottleneck on the packer side. I've looked at that set aside program, and it seems to be another request for a government bailout,” Bullard says. “Our organization staunchly opposes government bailouts until things get so terribly bad that we have no choice if we're going to maintain the level of cattle producers in this country and they need an infusion of cash, and there's no way no other place for it to come from right now, except for the government.

“And that's because we've allowed our market structure to fail to become skeletonized to become incapable of meeting the national food security needs of this nation. So, we have a lot of work to do to rebuild. What we now know is an absolutely fundamentally broken system,” he says.

As for the Prime Act, which the group does support, Bullard says it will expand capacity to harvest more animals.

“Right now, a custom processor can only process an animal that's owned by the customer and then has to give the meat back to the customer. The Prime Act would allow the small custom processors to actually sell beef after it is harvested within their smaller facilities and sell beef within that state and let the state direct the regulatory aspects of commerce,” he says.

One question consumers have had in this time is about the food supply chain, why aren’t they able to get something processed at a local locker until the end of the year, Flory notes, and could removing that red tape help more butchers open up shop?

“It would be ideal if we had more local processors and packers that can help to alleviate this bottleneck. What we've allowed to happen over the past 20 years is we've allowed our entire food supply chain to become centralized and highly concentrated,” Bullard says. “We've now seen the vulnerabilities of that system first in August during the Holcolmb, Kansas fire that closed one plant temporarily, and it caused disruptions all the way through the live cattle supply chain. Now the COVID disruptions caused another factor, and it caused consumers who go to the grocery Store who couldn't find the food that they wanted to buy for their families? This is serious.”

As Flory notes, pre-COVID-19, 50% of the demand was at the restaurant and food service level. And that disappeared overnight, essentially.

“We had to shift the distribution of the food, but it should not have taken that long. And if we had a more localized system, a disaggregated system, we could have been more resilient. And we would have had some redundancy built into the system. But we simply didn't have that,” Bullard says. “So you disrupted the relatively few big plants. And it caused consumers to go to the grocery store without being able to buy beef. And that caused the consumer to ask the fundamental question, where's their beef coming from?”

This led R-CALF starting a petition for both consumers and producers to sign calling on Congress and President Trump to immediately reinstate mandatory Country of Origin Labeling (COOL) for beef, pork and dairy products. This petition has more than 385,000 signatures in less than 30 days, Bullard says.

COOL has been challenged many times by the WTO, and ruled as an illegal trade barrier, Flory says. So what’s wrong with voluntary COOL, he asks?

“Voluntary COOL, number one, doesn't require any imported product to be labeled all the way to the consumer. So you’ve got beef coming in from Costa Rica, Nicaragua, Uruguay, Mexico, Canada. That being put on grocery store shelves, and a voluntary labeling regime does not require that to be labeled at all. In fact, their voluntary relationship, or voluntary labeling regime doesn't require anyone to label anything,” Bullard says.

“We had a voluntary system from 2002 to 2008. And that system reserved the USA label only for animals born, raised and slaughtered in the United States of America. But it didn't work. Nobody labeled anything. And that's why Congress in 2008 amended the 2008 farm bill to require the country of origin labeling law to be implemented as a mandatory program,” he continues. “It's simply too profitable for the importers and the packers to continue sourcing cheaper beef from these 20 different countries we import from and then selling it to unsuspecting consumers.”

Now, what about the 50/14 proposal from Senators Grassley and Tester, what does R-CALF think about that proposal?

“It's the absolute minimum of what we need. We know that our marketplace is broken, since 2015 we've seen retail beef prices that consumers pay are escalating. At the same time, we see cattle prices on a downward spiral and so there's been a complete disconnect between the value of cattle and the value of beef. We need to restore that connection between these similar commodities. The only ingredient in beef is cattle, and that they should be tracking each other in the marketplace, but they don't,” Bullard says.

“So we know that the marketplace is broken, the competitive forces aren't working, we must restore that the best way to do that is to protect our price discovery market, that is the cash market in the fed cattle industry. Over the years the meat packers have been shifting large volumes of cattle out of the cash market, putting them into their formula contracts or their captive supplies, giving them tremendous leverage in the marketplace.

“We need to preserve and protect the cash market because it's the holy grail of our price discovery ability in our industry. And the way to do that is to require those packers to purchase 50% of the marketplace, and anything less would give them too much tap to supply ability in order to continue leveraging down the prices. So 50% is essential as a starting point,” he continues.


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