Jon AngellFrom the Publisher ... Jon Angell

In this issue, the Coronavirus originating out of China, along with its related impact, seems to be the latest and most impactful event to rock the cattle market. Not too long ago, the beef industry was looking to China as our next big opportunity, me included. I’m beginning to believe that for us, China is filled with bad juju. They need our beef and pork, seem to want it, but now due to sickness and quarantine efforts, its movement is hampered, which is backing up supplies and depressing prices.

It seems as if there is a never ending stream of misfortunate circumstances that keep blocking the path of any significant pricing benefit from reaching back to cattle producers and feeders. This is a time of year when seasonably we should see fed cattle prices increasing, yet the legs to our markets have once again been taken away, as the cattle and stock markets react to fears of significant reduction in economic activity.

Cattle and beef prices seem to mirror the general economy. So with that said, an economic slowdown, no matter the cause, is a big and legit concern for cattle producers.

In the face of these supply chain disruptions and falling prices, the USDA is now allowing fresh Brazilian and African beef to be imported. I have a couple of issues with this, and as cattle producers I think you might be concerned too.

Here we go importing more foreign raised beef to compete with our domestic producers. I have heard arguments on both sides of mandatory country of origin labeling (MCOOL). I have heard Bill Bullard with R-CALF USA compellingly advocate with some supporting evidence for the need of MCOOL. Bullard is fond of showing a cattle price chart that spikes up with MCOOL implementation and its fall at its repeal.

I also have heard an excellent talk at the MO Cattlemen’s Annual Convention from DVAuction analyst Corbitt Wall. He said that the benefit to the cattle price when MCOOL was implemented was actually the result of the work done by the cattle futures broker and speculative trader Charles McVean.

Mr. Wall went on to portray “Memphis Charlie” as a modern cowboy hero that should be held right up there with Clint Eastwood and John Wayne. This recognition of McVean’s contribution to the American cattleman in their marketing struggle I have no argument with.

I believe that both Wall and Bullard have valid points and reasonable views. Could it be, like I believe both benefited cattlemen at the same time? Markets and price determinations are dynamic and have all kinds of forces working at the same time all the time. I think both views can be credited for the profitable cattle prices achieved during that 2013 through to 2015 timeframe.

Furthermore, I don’t believe labeling true USA origin beef as such, hurts the U.S. live cattle industry a bit, nor would it hurt the American consumer. It sure looks to me as any savings from selling this cheaper meat in the domestic market flows to the profit line of the major packers in two ways.

This foreign beef is either undifferentiated or maybe even blended, or even worse, repackaged as a “Product of the USA.” This seems like an institutionalized legalized fraud to me… but my ethical and legal opinion doesn’t hold much weight.
This imported foreign beef allows for the basic economic principle of substitution. This is a perfectly fine and valid conservative capitalistic principle. Let’s think how this might play out.

The U.S. Department of Agriculture’s (USDA’s) Foreign Agricultural Service (FAS) recently reported that the government of Brazil subsidizes Brazilian cattle production to the tune of about $1.2 billion in U.S. dollars. The reported purpose of the government subsidy is to “increase Brazilian cattle raising productivity, its herd quality, and its acquisition of high-quality seed stock.” Well isn’t that nice.

“That will pit America’s family cattle farmers and ranchers against Brazil’s $1.2 billion in subsidies to its cattle industry,” R-CALF USA CEO Bill Bullard said adding, “That means our family farmers and ranchers will be competing against the Brazilian government’s treasury.”

The packer lobby, with the help of the legislators and regulators, has conspired to reserve that economic principle of substitution largely for themselves. This benefit of beef substitution right now takes place primarily at the beef processors level and denying the consumer that option by hiding the fact that substitution is taking place. The result is the consumer being deceived and the independent cattle producer and feeder is systematically and wrongly disadvantaged in this beef substitution scheme. It is culminating in devastating results for both cattlemen and the rural communities where they live and work.

Another issue associated here is that Brazil, Africa and many other parts of the world have a problem that flares up every so often with foot-and-mouth disease. Although they may have made inroads in some control of it, it is endemic to their environment. Many of these countries have always had it, likely always will to some extent. This is one of many reasons why their beef might be priced cheaper… it carries an added risk.

The absolute last thing we need in the U.S. Cattle industry is an instance of foot-and-mouth to pop up. This puts domestic cattle at risk with no benefit. Even if the probability of that happening would be low, the consequence of such an event has such disastrous potential this is a risk as U.S. cattlemen we don’t want to take!

Have we not learned the consequences of decades of exporting manufacturing, mining, textile, pharmaceutical jobs and other supply chains out of the country? In the reality of “world trade”, our food and its supply chains have and continue to rapidly change. How that evolves needs a healthy look as well as debate on what we should do. Where our food comes from matters; not only economically, but from a national security issue. When it comes specifically to cattlemen, the risk from foot-and-mouth disease to systematic price pressures of importing beef, we have got problems.

Highlights In Other Columns
This month, Alan Guebert on page 5 has some interesting thoughts on getting green and a cautionary warning on not getting green.

Doc Martin was very ambitious in his writing. The column that appears on page 8 is a fairly broad and inclusive overview of heifer replacement thoughts. This article might be a good one to read and put back to review and refresh latter.

Doc Baxter Black page 11 gives testimonials for Duct Tape while Doc Kerns page 17 gives a tribute to Rush Limbaugh. Trent Loos on page 14 touts the benefits of good nutrition in maintaining health.

Overall, even though there seems to be all kinds of bad juju in the news… I think this paper will at least be a very interesting. Thanks for reading.