Op-Ed: Focus Needed on Cattle Pricing Investigations
By Larry Schnell, Stockmen’s Livestock Exchange, for the Livestock Marketing Association
May 3, 2020
To say times are tough in cattle country would be an understatement. Livestock Marketing Association (LMA) member livestock auction owners and their producer customers are speaking up with significant concerns about volatility, the futures market, and especially, livestock producers not getting their fair share of the beef dollar. While COVID-19 and the Holcomb, Kan. packing plant fire last August are bringing these issues further to the forefront, they are illustrations of long-standing concerns regarding pricing and competition.
Livestock auction markets are an integral part of the process of price discovery, but our value is totally dependent on the success and profitability of the cow-calf producer, and the cattle feeder.
LMA supports the ongoing efforts by livestock organizations and individuals to bring about a pricing mechanism that would better serve the cattle feeder, and thereby the cattle producer. Our businesses are rooted in achieving competitive prices for cattle producers, and we want to see this occur throughout the beef supply chain.
To help bring that about, LMA is focusing on the investigations of the differential between the wholesale price of beef and the price that cattle feeders are receiving for their cattle. Beyond encouraging these investigations, LMA is conducting independent research and having additional discussions to pinpoint specific areas of concern for the U.S. Department of Agriculture, the Department of Justice, and hopefully, the Commodity Futures Trading Commission. This includes looking at futures market issues in addition to issues with fed cattle pricing.
The cattle industry needs answers regarding what is behind the dramatic spread between live cattle and boxed beef prices, and these investigations are critical in answering these questions. Our goal is long-term solutions that will address problems within finished cattle marketing, and a pricing mechanism that results in profitability for all segments of the industry.
These are uncertain times, and this is a difficult task. But with every challenge also comes opportunity. Consumer attention is on the fundamentals of life – and ready access to high-quality protein is one of them. Congresspeople are hearing from their cattle country constituents, and they want to help.
At LMA, we are dedicated to working with our legislative and industry allies for the betterment of the livestock industry and our consumer customers. If we focus on this, and we are successful, we’ll be setting up cattle producers to enjoy the good times and weather the tough ones for generations to come.
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