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Guebert: ‘Harvested cattle, slaughtered markets’

Now, one market, cattle, is so near death that both the Senate and House Ag committees recently held widely publicized hearings to push ideas on how to resuscitate it.

Alan Guebert
Alan Guebert
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You don’t need to be a vegan to know that livestock and poultry aren’t “Harvested,” the squeaky clean verb that’s become fashionable among farm and ranch groups to minimize the end — as in The End — of most animals their members grow.

Soybeans are harvested; pigs are slaughtered. Wheat is harvested; cattle are slaughtered.

It’s not a minor point, insists C. Robert Taylor, Eminent Scholar of Agricultural Economics and Public Policy at Auburn University, in his recently released treatise on today’s badly broken cattle markets. Taylor telegraphs the paper’s theme through its title, “Harvested Cattle, Slaughtered Markets?”

The semantic sarcasm isn’t accidental: While U.S. farm and commodity groups spent decades polishing meant’s image (“harvesting”) global agbiz spent their time and resources buying up, then dominating — ahem, slaughtering — farm and food sectors like seed, cattle, poultry and grocery retailing.

Now, one market, cattle, is so near death that both the Senate and House Ag committees recently held widely publicized hearings to push ideas on how to resuscitate it. Two plans were showcased. The first “would create a new U.S. Department of Agriculture (USDA) office to monitor for anti-competitive practices in the meat and poultry industries,” reported the Washington Post April 27.

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The second, labeled “The Cattle Price Discovery and Transparency Act,” hopes to establish “minimums for negotiated sales and require clear reporting of marketing contracts to ensure ranchers are getting a fair shake in a highly consolidated cattle market,” it continued.

Either or both ideas may have had merit 20 years ago when it was already evident that major meatpackers were tightening their grip on cattle markets. Today, however, both plans are window dressing from late-to-the-party politicians. Neither will have a nickel’s worth of impact on prices paid by packers for cattle or for altering any “anti-competitive practices in the meat and poultry industries,” says Taylor.

Why? Because as his readable, 49-page report makes clear, major packers long ago learned how to minimize competition in the live cattle market while maximizing confusion over today’s USDA maze of reporting requirements. The data bears witness to their ever-growing prowess at the expense of both cattle growers and consumers.

Over the last two decades, Taylor writes, “Retail Beef prices in constant (deflated) dollars have trended strongly upward… from about $500 per cwt (per one hundred pounds) to over $700 per cwt… Grocery store profitability has also trended upward, about doubling in the last three decades…”

“Profitability of independent cattle feeding has trended downward… from an average profit of $50 per head to an average loss of $50 per head.”

Moreover, these “Sustained financial losses for independent feeders like explain, in part or in whole, the loss of 83,000 feedlots with a thousand or fewer head capacity in 25 years and 48,000 in the last decade” alone.

These feedlots’ get-out-while-you-can math was pretty simple, offers Taylor. The $50-per-head loss they faced in just the past decade alone would have totaled a devastating $1.5 million-per-feeder had they stayed.

Somehow, though, the uber-big feeders escaped similar losses and a similar fate: The number of feedlots with over 50,000 head capacity actually increased from 45 in the 1990 to 77 today. How?

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“Sweetheart deals with large captive feeders” — independent feedlots contractually-tied to one of the big four packers — “may explain, in part or in whole, how they survived and even (grew) in the last decade… Publicly available data on costs or returns for giant feedlots are not available to address this question.”

If neither Congressional effort holds little to no hope to even partially repair today’s broken cattle market, what might? Taylor offers four “options for further discussion.” All hold some merit, he explains in a May 9 telephone interview, but also, all require a level of government intervention that hasn’t been seen in most ag markets for decades.

“The bottom line,” Taylor admits, “is that after decades of watching cattle markets become more integrated with meatpackers and meat retailers, I don’t have a good solution that’s politically workable.”

Bottom line? If the experts say it’s slaughter, it’s slaughter.

Related Topics: AGRICULTURECATTLEBUSINESS
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