Livestock and poultry producers discuss industry challenges at Senate hearing
In a full Senate committee hearing Wednesday entitled Perspectives on the Livestock and Poultry Sectors, witnesses testified before the committee about issues facing the industries Senate Agriculture Committee Chairman Pat Roberts, R-Kan., called the backbone of American agriculture.
Jennifer Houston, president of National Cattleman’s Beef Association, expressed the NCBA’s appreciation of Agriculture Secretary Sonny Perdue and said they look forward to the results of the U.S. Department of Agriculture investigation of prices following the fire at the Holcomb, Kan., Tyson plant. She urged the committee to equip agencies with the regulatory tools to deal with real time issues. She urged the committee to continue its work toward a Commodity Future Trading Commission reauthorization and a timely Mandatory Price Reporting reauthorization. Houston also said the future success of the beef industry relies on competitive market access to the growing consumer base in Asia. With $8 billion of U.S. beef sold in 2018 to Asia with a quarter of those sales to Japan, the challenge is remaining competitive in amidst high tariffs. That being said, the announcement of a trade deal with Japan came shortly after the hearing. According to the Wall Street Journal, Trump said tariffs would be reduced or eliminated on beef, pork, wheat, cheese, corn, wine, and other products to the tune of about $7 billion in U.S. ag products.
She said a ratification of the U.S. Mexico Canada trade agreement will send a message to the rest of the world that the U.S. is open for business. She also expressed support for the foot and mouth disease (FMD) vaccination bank funded by the farm bill and the voluntary conservation programs. She cited avian predation on livestock as an ongoing concern for producers with the 4.6 million black vultures, protected by the Migratory Bird Treaty Act, causing losses to producers who, even with depredation permits, don’t have the flexibility to protect their cattle.
Ron Kardel, an Iowa turkey, corn and soybean farmer representing the National Turkey Federation and West Liberty Foods, gave an overview of the turkey industry and said policies from Washington must be common sense and allow business to thrive. He strongly urged Congress to vote on the USMCA agreement to preserve access to Mexican markets and open additional markets to Canada. In regard to labor, he said guest worker programs target only seasonal on-farm labor while many operations, including turkey production, require year-round labor.
Jayson Lusk, distinguished professor and department head of agriculture economics at Purdue University, said access to consumers outside of the U.S. is becoming more important as population and income drive demand. He also said had agriculture production not innovated since 1970, meeting consumer demand last year would have required an additional 11 million feedlot cattle, 30 million market hogs, and 8 million broilers. He said health, environment, and animal welfare criticisms and emerging plant and lab-based alternatives to meat are all headwinds facing the industry. He said the U.S. is a net exporter of beef and poultry and the cuts and types of meats commonly exported differ from those imported. He said the call for the reintroduction of mandatory Country of Origin Labeling is an opportunity for private entities to answer the demand. He said discussion about packer concentration was renewed following the Tyson plant fire, although he said the reduced capacity then reduced demand and depressed prices while the additional Saturday labor required drove up the price for boxed beef.
“While these price dynamics, while detrimental to producers, are not surprising and are not inconsistent with the model competitive outcomes and the fundamental workings of supply and demand,” he said.
Continued attention, he said, should be paid to disease outbreak prevention as a domestic outbreak of African swine fever would likely cause U.S. producers losses of about $7 billion per year.
Burton Pfliger, past president of the American Sheep Industry Association and Roselawn Legacy Hampshires said the sheep industry is growing in the U.S. and with exports to Mexico and Canada pacing 50 percent above last year’s volume, the USMCA signing is urgent. China, he said, has traditionally been the largest market for pelts and wool with 72 percent of pelts and 80 percent of wool being imported by China. Now, packers are charging a pelt disposal fee making, he said, what was once an asset into a liability. He expressed his appreciation to the committee for working with stakeholders prior to the reauthorization of Mandatory Price Reporting, important as federal lamb price insurance products, LRP-Lamb, rely on UDSA price reports as lamb and wool are not traded on the commodity markets. Lost previously due to packer consolidation and lack of reporting, he said the industry is constantly at risk to lose it again. Pfliger also said coyotes, mountain lions, wolves and bears kill calves and lambs, causing $232 million in losses to producers. He said the M-44 devices for predator control are under increased direction from wildlife service but remain under attack from those he said who are opposed to all predator control without acknowledging the science behind it.
Trent Thiele, president of the Iowa Pork Producers Association, also urged ratification of the USMCA for trade certainty for pork producers who, last year, sent 40 percent of exports to Canada and Mexico. He called disease prevention a top priority and called for appropriation funding for 600 additional Customs and Border Patrol agricultural inspectors at the U.S. borders. He asked for the committee’s support in moving gene editing oversight from the FDA to the USDA.
TRUTH IN LABELING
Shane Eaton, United States Cattlemen’s Association and Eaton Charolais, said when ranch families are successful, everyone benefits. He said ranchers are facing unprecedented challenges with distorted markets and a lack of competition and true price discovery. He said Congress can and should implement a truth in labeling program for meat as he said confusion at the meat counter undercuts producers and consumers alike. He asked the committee to find a livestock transportation hours of service solution. He referenced the Tyson fire and asked the committee to consider the formation of a CME cattle working group for improving the operations linked to the CME cattle contract, link the CME live cattle contract to the USDA weekly Choice spread quality percentages, and allow the CME to utilize real time data for calculation of the feeder index, and install a time delay to level the playing field for traders.
“We need a new division for non-native live cattle in Mandatory Price Reporting, which would instantly bring the need for price discovery to live cattle trading,” he said. “Non-native feeder cattle imported in the United States today are reported as domestic, not as imported. Notably, these cattle do not meet the CME contract specifications for live cattle delivery and for calculating the feeder index. Most egregiously, Mr. Chairman, these cattle can negatively influence the live cattle cash trade, the base price for formula cattle, and the futures market.”
Following testimony, committee chair Roberts asked Lusk about the economic importance of Livestock Mandatory Price Reporting. Lusk said the data helps facilitate market convergence but also provides a level of trust in price reporting and provides better price discovery than in the past.
Senate Agriculture Committee ranking member Debbie Stabenow, D-Mich., asked about voluntary conservation practices. Eaton said ranchers and farmers are front line environmentalists and cost share programs are a tool for producers to utilize but the income reduction they face is a concern, leaving them less able to invest more slowly in repairs.
Sen. Joni Ernst, R-Iowa, asked the panel to speak to the importance of trade and Houston said among the reasons trade is vital is the value exported products are given in other markets whereas the value in the U.S. would be significantly lower. Kardel said the U.S. poultry trade remains blocked from China, making USMCA more important to poultry producers. Pfliger said the lamb industry has was excluded from the Japan market in 2003 and has been deeply affected by the China trade barriers, especially for wool. Thiele said pork producers have lost $8 per head to trade uncertainty.
Sen. Tina Smith, DFL-Minn., said Brazil has been filling China’s demand for pork, moving their market share from 4 percent in 2017 to 13 percent in 2018. She asked Lusk about concentration’s affect on the declining farm income.
Lusk said there is no doubt concentration has increased at the packer level and the debate lies in the effects of the concentration. He cautioned against relying on the farmer’s share of the retail dollar as a measurement since marketing, transportation, and other stops in the production chain exist now that did to a lesser degree in years previous.
Lusk told Sen. Deb, R-Neb., the increased margin for packers is the incentive for increased capacity, whether that is Saturday slaughter or the conversion of plants that process cows to process steers and heifers. The heightened margins, he said, will incentivize the eventual addition of capacity.
In regard to the packer margin, Houston said it is the feeders being affected the most negatively and the effect is trickling down to the cow calf operators already strained by weather challenges. Eaton said the maintained packer margin is causing severe frustration with producers.
Sen. Dick Durbin, D-Ill., referenced labor and immigration policy. In response, Kardel explained that much of poultry production includes automation but it is expensive and a slow process, making an immediate solution to the labor shortage important.
Durbin asked the panel about environmental concerns and Houston said beef producers are not only not part of the problem of climate change but are part of the solution. She referenced the existence of the U.S. Roundtable for Sustainable Beef and the efficiency of beef production, especially in utilizing land unsuitable for crop production to produce high quality protein.
Sen. John Thune, R-S.D., said conditions have been difficult this year for producers and he said producers have communicated to him their concern about the integrity of the market following the Tyson fire and the volatility it caused. He said transparency is important as Mandatory Livestock Price Reporting is considered. Houston said she has faith in the USDA investigation and that it will find the facts about the price drop. Eaton said waiting for the findings is important but suggested they also look at the lack of transparency following the fire that negatively influenced the cash trade.
Sen. Mike Braun, R-Ind., asked the panel about diversification of operations. Lusk said it often makes sense, but the increased sophistication of the different sectors often dictates specialization in the production of one or a few commodities. Kardel said the number of U.S. farmers has been shrinking and he said it’s not a bad thing as it frees up citizens to fill other occupations though the number of farmers cannot go to zero.
Sen. Chuck, R-Iowa, asked what changes to CFTC the panel recommends to fairly regulate transactions for all producers. Houston said she couldn’t speak to specific changes but values CFTC for the market oversight.
Sen. John Hoeven, R-N.D., asked Pfliger about publication of the lamb formula purchases and whether a comprehensive report would be helpful. Pfliger said he supports that as well as a lowering of the threshold or an arrears in the publication of the data to avoid influencing the market. He reiterated the importance of M-44 for predator control that damage and kill livestock. Hoeven said it is important for producers to come to agreement about transparency at Houston’s insistence that cattle producers are independent and may not always agree. Eaton said some differences within the industry are rooted in whether the producer is in a Schedule F situation, invested entirely in agriculture, or in a W-2 situation. He said there is tremendous frustration with those who rely on the cattle market as their livelihood.
Sen. John Boozman, R-Ark., asked about opportunities for producers. Lusk said trade in areas with increasing population and increasing income are opportunities. He said sub-Saharan Africa is home to much population growth but lacks the income to support growth in high value protein consumption. Competing on quality is another solution, Lusk said, through niche marketing.
In terms of predatory bird control, Houston told Boozman additional flexibility in permitting for predatory birds is necessary to allow producers to protect livestock during vulnerable times as, she said, paperwork will not save calves.
Sens. Amy Klobuchar, D-Minn., Patrick Leahy, D-Vt., Mitch McConnell, R-Ky., and David Perdue, R-Ga., were absent from the hearing. Kirsten Gillibrand, D-N.Y. Michael Bennet, D-Colo., and Sherrod Brown, D-Ohio, checked in but were absent for questioning.
-Gabel is an assistant editor and reporter for The Fence Post. She can be reached at email@example.com or (970) 392-4410.