It’s not complicated
President, R-CALF USA
A few weeks ago a study/report came out of Texas A&M with chapters authored by ag economists from several land grant universities. A general consensus of those “educated” findings is that our current cattle marketing system is not broken; and, in fact it represents an evolution of our cattle markets that have resulted in “organic efficiencies;” that current conditions are still a function of supply and demand; and that to overreact and attempt to remedy this marketing system could have unintended consequences and affect the overall scheme of domestic and global beef price marketing.
Well, I don’t have a doctorate in ag economics or ag business but this was nothing but a snow job by these fellows to influence the House Ag Committee hearings that were held two days after the release of the report. Coincidence? I think not!
The economists pushed out their conclusions notwithstanding that their analysis centered on data from 2003-2005, when the market was remarkably different. Indeed Stephen Koontz, of the Department of Agricultural and Resource Economics at Colorado State University, qualified the force of his conclusions himself: “extending these results to the current time period is the most questionable part of this process: taking results from the early 2000s and interpreting in light of market conditions in early 2020s.”
Independent cow-calf, stocker operators and feeders realize that we operate in a beef marketing system controlled by on oligopoly of four multi-national beef processors that control about 85% of all beef harvested in the U.S. These firms control access to the market, a choke point. With their captive supply feedlot arrangements, their AMAs, their access to imported beef and cattle, and the lack of competitive bidding for free independent cattle; independent producers find their share of the retail beef dollar growing ever smaller. The danger is that we are fast approaching a vertically integrated beef system akin to what has happened in the chicken and hog industries.
No, Derrell Peel, the Charles Breedlove professor of agribusiness in the Department of Agricultural Economics at Oklahoma State University, Koontz, et al, it is not complicated, it is about market concentration and manipulative and abusive control of our slaughter cattle markets that has resulted in the demise of rural America and also resulted in higher beef prices for the consumer. I am offended by your inference that those seeking to save the beef business from vertical integration are simplistic and emotional.
In a capitalistic free market model if there are not legislative or judicial corrections over time market power ultimately prevails against the independent producers who have no leverage against the “bullies.” Senate Bill-949 and Senate Bill-2716 are not silver bullets but are an attempt to correct what ails the broken cattle marketing system.
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