I understand that folks are still getting the COVID-19 virus and dying. But now it seems that a lot of folks are worried about the economic damage we’ve incurred by keeping a lid on our economy. What is the greater social damage, poverty or death? Sounds like a Revolutionary War cry: Give me liberty or give me death. It’s for real.
It appears to me that there two schools of thought to get through this crisis, social and economic. You take the social route you continue to kill the economy. You take the economic route you may kill more people. These are tough questions.
You all have by now heard the famous phrase from President Barack Obama’s former Chief of Staff, Rahm Emanuel, “Don’t let a good crisis go to waste.” COVID-19 doesn’t seem like it’s as much of a crisis to me any longer. We have all started to learn to live with it. We wear our custom cloth face masks when we go into stores. We keep our social distance when visiting people. We are slowly learning a new way of life. Urban areas have a greater challenge than rural areas.
As for the cattle and beef business, which are indeed two distinctly different industries, we have realized some vulnerabilities in the packing and distribution side of our industry. I don’t know how many ads I’ve seen that say, “We’re in this together” referring to COVID-19. Same goes for the cattle and beef industry; cattlemen need packers and packers need cattleman.
Some cattle groups are using this crisis to make major changes in our industry. We all want a better price for our products. But how we get there has been filled with conflict. Some think it is mandatory country-of-origin labeling (mCOOL). We tried it, and it created bigger problems. We can’t bring it back the same way and expect different results. If we do anything, let’s place the labeling responsibility on the importer. But then ground beef has always been exempt from mCOOL. Bring a new idea to the table.
Some folks want stronger cash markets on fed cattle with the 50/14 idea. Packers will be mandated to buy 50 percent of their cattle for delivery inside of 14 days on the negotiated cash market. We all know that feeders south of Interstate 70 don’t sell many cattle on the cash market. Some say this would kill the incentive to produce better cattle and get paid for it through formulas and grids. Perhaps Southern Plains feeders should commit more cattle to the negotiated cash market and fix their price discovery problem.
Some want to kill live cattle imports, essentially Canadian and Mexican cattle. It’s American cattlemen who bring those cattle into the states for growing or processing. Then we send the beef back to them, which are our two biggest export customers. Again, they all are in this together.
Then there is the camp that wants to have USDA meat inspection equivalency for state-inspected meat processors to sell product out of state. I believe Iowa took those steps last week. But the idea that, collectively, all the meat locker operations could be an insurance policy if another major packing plant goes down isn’t going to happen. Not enough volume. Besides federal inspection isn’t difficult to get.
We have experienced two dramatic market swings inside of eight months. Nobody intended that a fire at Tysons Holcomb, KS plant or the COVID-19 virus would slow down beef production. But some in the cattle business want to see some blood on the floor. Cattle groups are getting populous congressmen and senators from cattle-producing states to carry these bills. These politicians have no choice but to take all this market-reforming legislation through the system; they all have done it before. The main thing is that they want to get reelected, and if they don’t take your 50/14 bill or mCOOL bill to the committee, you won’t vote for them. It’s politics, which usually don’t produce good solutions.
Dramatic times generally produce dramatic ideas and unintended consequences. I’ll go along with an investigation of the big four packers. We all want to get through this market mess. You all need to understand each other better and quit making assumptions about one another’s role in the supply chain. I urge cattle producers to learn about the packing business and the meat business, and the packing business to learn more about cattle producers. We’re all in this together and antagonistic comments don’t help fix problems. — PETE CROW