Wall: protect cattle industry against vertical integration
“What’s the price of hogs today?”
Corbitt Wall asked the participants at the cattlemen’s Rally to Stop the Stealin’ held in Omaha, Neb., on Oct. 2 in the Ramada Inn ballroom.
The room was silent until Wall answered his own rhetorical question. “Who gives a sh##?”
“We’re eventually going to get there, guys,” Wall told a group of over 400 cattle ranchers and feeders gathered in Omaha at a rally aimed at turning President Trump’s attention to the current cattle market situation.
Wall, a Canyon, Texas, commercial cattle manager and livestock market analyst for DV Auction, was the first speaker of the day.
He told the group that because so few fat cattle sell in a negotiated or cash market situation, cattle feeders have very little leverage or control over the value of their cattle.
“I want to show people where we are going to head if we don’t start getting some more negotiated trade and start getting some competition for those selling fat cattle,” he said. “When I started with USDA, I traveled around the country, a lot of people raised hogs. It helped pay the bills, it was something they could do to diversify,” he said.
“Who can survive on 8 cents per pound for a hog when it costs about 30 cents to produce them? Nobody can. They all went broke.” he said.
In the late 1990s, the pork processing industry “had this kind of hold on the hog industry,” he said. “Now they are basically totally integrated to where now you have nothing, nobody cares what the hog market is anymore. You have people who contract to raise the hogs but basically they just work for the pork processors.”
Wall thinks the beef processors — particularly the “big four” desire for the cattle industry to integrate in the same way.
“If they get it their way, there will be no room for commission men, sale barns, video auctions, they will take it all,” he said. “The only reason the cattle industry hasn’t gone completely that way already is because it takes a lot of country to run cows. People have lived on their ranches forever. Someone has to keep these places up, someone has to be the steward of the land.”
The quality of the end product will suffer greatly by taking the independent rancher out of the equation, he thinks.
While some say “bigger is better,” that vertical integration is the way of the future and those who refuse to get on board will be left behind, Wall said corporate owned equates to an “industrialized” and probably tasteless product.
“Whenever you take people out of the equation so there is no pride in what they are doing anymore, you lose that quality where they want to see the fruits of their labor and feel a sense of ownership in it,” he said.
Some industry spokesmen and economists think that eliminating the commission paid to a sale barn, just means more dollars in the cattleman’s pocket.
But the formula pricing in the fed cattle market has served as an example to help the cow-calf producer see that, without a significant number of cattle sold on an open, bidding, atmosphere, the value of the cattle will not be fully realized.
“The reason we need competition is to keep the price of cattle high enough at every level where people can afford to raise them. I don’t want to live in a world where all the ranches are owned by big government or big corporations. It will dry your little towns up. Basically rural life in these small communities ceases to exist, and you wake up one day and we’re living like the Chinese, stacked on top of each other and riding bikes everywhere we go.”
Wall said that if corporations begin to own cattle ranches, in the same way that the larger cattle feedlots and hog confinement operations are owned and managed, “We’ve lost that rural community that has … been the cornerstone of America,” he said. “It’s a way of life that we’re trying to preserve.”
It was about 30 years ago that Wall, fresh out of college at West Texas A&M, took an internship with USDA that led to an 18 year career with the government’s Ag Marketing Service.
He served as a market reporting supervisor and livestock grader, overseeing the Missouri market news program and grading service. One of his responsibilities was grading cattle being delivered on Chicago Mercantile Exchange contracts. In addition, he put together a weekly feeder and stocker cattle summary.
“I had a pretty extensive commentary section that was well published — and it got more popular and then eventually I was asked to do a video by one of our users who had a popular industry website,” Wall said.
Then, in 2014, he took a job with DV Auctions, where he records a daily video — the “Feeder Flash” — where he reports daily market information and shares commentary on the current livestock market environment. He said some of the data and information for his daily report comes from National Beef Wire, USDA’s price reporting information, but most of it comes from friends and acqaintances within the industry.
“I get most of that information from contacts I’ve established over the years. People send me messages or text me sales where they’ve sold fat or feeder cattle throughout the day, and I just use whatever I’ve got,” he said. Most of the reported sales that he incorporates into his analysis are cash sales or negotiated grid sales, he said.
In his daily reports, Wall has spent considerable time educating his viewers regarding the value of a feeder animal and a fat animal. He has also discussed the profit margins the rancher or feeder has experienced in recent years, compared to the packer profit margins, which have grown to over $500 per head in recent weeks.
He said we’re not just fighting for a bigger share of the retail beef dollar, we’re fighting for our farm and ranch communities and rural ag life in general. “I tell you what, if these ranches out here and cattle farms … if they are not sustainable, if they cannot make a living doing that, they will have to give it up, so we have bigger outfits buying them up — less people in our communities and more … of our little rural towns, drying up.” ❖