Randy Blach had pretty much all good news at the 100th anniversary annual meeting for the National Livestock Producers Association (NLPA) in Whitefish, MT. Blach’s good news fell on receptive ears, for these folks market cattle all over the country and most of the board members have done it personally for many years.
I just wish Sens. Chuck Grassley (R-IA) and Deb Fischer (R-NE) had been there to hear Blach. Because all too often, the congressional Cavalry arrives when it’s too late to do anything, but surely not too late to make the situation worse. And this could be the same old, same old.
It depends on whether Congress listens to the free market advocates that testified at three different recent hearings or listen to those who think that politicians and big government can fix anything.
A recent editorial pointed out a well-tested, familiar example of why the “government should never take over a private business.” And make no mistake, letting the government take de facto control of cattle marketing away from cattlemen and packers, plus hanging all kinds of other “reforms” and requirements all over the beef industry would be ceding control to the feds.
“Congress nationalized passenger rail in 1970, and a half century of experience” shows why government can’t run a private business. Congress dictated Amtrak’s business model, from the routes and personnel decisions to obstructing the best business practices business executives tried to install. The upshot is that Amtrak has never recorded a profit—its routes are dictated by the politicians’ needs for votes and operations are hampered by labor unions’ work rules and job protection (“Amtrak’s $66 Billion Ticket,” Wall Street Journal, Aug. 7, 2021).
Governments don’t run businesses. They run vote-manufacturing machines that they continually expand to garner more votes.
If anyone thinks the industry can get a bill through Congress and get just what “they” want, with a cast of characters in Congress like Sens. Cory Booker (D-NJ) and Elizabeth Warren (D-MA), and Rep. Alexandria Ocasio-Cortez (D-NY-14) running amok, they’re pretty naпve—whoever “they” are.
Now, not all government action is bad. Government has a role. In this case, market information is a neutral, useful and essential part of aiding the market without interfering with it. USDA made a tremendous step recently, and not only did they do something virtually everyone has been asking for, they did it pronto in cowboy style, not plodding along in usual government fashion.
By the time you read this, USDA’s Agricultural Marketing Service will already have begun reporting base prices for all alternative marketing agreements (AMAs) and in a separate report, listing the volumes of all types of AMAs and contracts. Bravo! The free market operates best when there are rules, we know the rules and everyone has access to critical information.
But the last thing we need is for Congress to step in when the stampede has gone by. Blach said fed prices have hit their trough for the year and better prices are coming between now and year’s end. Packers are working their way through the backlog. The drought will hurt certain areas in the far West, but overall cattle numbers should not be impacted enough to throw things off.
Leverage will gradually improve for feeders. Today’s 14,000-head/week-surplus cattle supply should shrink to 5,000 by 2022 and flip in 2023.
The NLPA was founded by co-ops in 1921 in response to the control packers had then. Packers controlled the railroads used to ship cattle, owned the commission agencies cattlemen were required to use at central livestock markets, owned the refrigerated cars for shipping beef and also owned the packing houses. The retail sector was the only one the courts kept them out of. NLPA these days has people marketing cattle from the east to California. They also provide financing for member co-ops.
The news is leaking out that California’s restauranteurs are worried about their menus featuring pork. Most pork producers cannot meet the new Proposition 12 restrictive animal welfare standards effective Jan. 1. Iowa is a big supplier of pork to California and it’s estimated only 4 percent of its producers will be able to ship into the state.
The best news is that the 9th Circuit did not allow R-CALF to cripple or destroy the Beef Checkoff, an important tool in building what Blach said is the best beef demand in 33 years. Please, Mr. and Mrs. Members of Congress, give us all the data through Livestock Mandatory Reporting—and AMS, you can gather, but leave our marketing channels alone. — Steve Dittmer,WLJ columnist
(Steve Dittmer is the author of the Agribusiness Freedom Foundation newsletter. Views in the column do not necessarily represent the views or opinions ofWLJ or its editorial staff.)
