Jon AngellFrom the Publisher ... Jon Angell

Up front this month is a story focusing on the soil and grasslands. For a long time, I have felt that the grasslands have been underappreciated for their contributions. The Noble Research Farm has done some interesting studies over the years and remains a key resource for those of us
interested in grazing/grass farming. I don’t buy into a lot of the green movement and the coocoo proclamations being constantly promoted… but coocoo or not, grasslands and soil health have wide-ranging benefits to all of us.

One news item that happened June 23 was a Senate Committee hearing “Examining Markets, Transparency, and Prices from Cattle Producer to Consumer.” As of this printing, I didn’t find anything that covered this important event to my liking. Since the issues have been decades in the making, I will push this one back to August for better coverage. I will post on our webpage a link to the complete meeting, which is short of three hours.

However, I did come across a press release from the R-CALF USA people that I thought summarized the issue at hand that the Senate hearing was looking to address. It’s an interesting commentary that I’m willing to sacrifice my space to see that it gets in this issue.

•••••••••••••••••••••••••••••••••••••••••••••••••
Is This America’s Biggest Blunder?
By Bill Bullard of R-CALF USA

If you were to tell someone that ensuring a reliable, affordable and safe food supply is one of the United States most important roles, they’d probably ask you to tell them something they don’t already know. So, what do we make of this urgent effort to transform America’s food system? The President wants to rebuild America’s food supply chains and he’s tasked his Agriculture Secretary to come up with a plan. The Secretary sent out a notice asking for comments on how best to transform our domestic food system in a way that strengthens domestic supply chains to make them more durable and resilient. This includes the supply chains for cattle and for beef.

So that’s government speak: Which doesn’t explain why there’s an urgent need to do this at all. It doesn’t say this effort is an unprecedented effort. And, it doesn’t admit that things have gone so terribly wrong that there are now unprecedented numbers of private lawsuits and official congressional calls for investigations regarding the condition of the U.S. cattle market and conduct of the biggest beef packers.

So let’s start there: Why is this transformation of domestic cattle and beef supply chains needed? Well, it’s needed because together the two supply chains were incapable of withstanding the shock of the COVID-19 pandemic. And, it’s needed because a competitive live cattle supply chain no longer exits. Yes, the supply chain is still there, but competition has been purged from all its important transaction points and segments.

We know this is true because cattle prices and beef prices have been trending in opposite directions for years, even though the only ingredient in beef is cattle. This transformation is needed because actual events have demonstrated the current cattle and beef supply chains do not work to meet our food security needs and because the outcome of these two inadequate supply chains is high prices for consumers and low prices for cattle producers.

So what went wrong? After all, America once had resilient and dependable cattle and beef production and distribution supply chains.

What went wrong is that a few decades ago the United States fundamentally changed course. Rather than support America’s family farm system of agriculture and the high level of competition needed to keep it vibrant and viable, policy makers focused instead on a new goal, and that new goal was efficiency. So long as the loss of competition was replaced with something deemed to be efficient, efficiency won out every time.

That’s what fueled what the USDA coined “merger mania” in the 1980s. Competition was systematically purged from throughout the cattle supply chain and replaced with “largeness of scale,” based on the misguided belief that large firms could do everything that competitive market forces could do, but they could do it even better because they were “efficient.” What was left was a highly concentrated beef packing industry.

So once all the not-large-enough firms, businesses, farms and ranches were pushed out, the United States made its second fundamental course change. The United States surrendered to the highly concentrated and now extremely powerful beef packing lobby that wanted access to cheaper input supply chains, which of course were in foreign countries. And, that was the dawning of the globalization of input supply chains that began in the 1990s. Now the globalization of input supply chains did and still does do exactly what its designers intended. It allows multinational beef packers to bypass domestic supply chains and instead source their inputs from lower production-cost countries, as well as to use those lower-cost imports to leverage down domestic input prices.

And so it is that today’s food crisis is merely a symptom of two fundamental changes in America’s course that occurred decades ago, that of facilitating the concentration of the beef packing industry and globalization of input supply chains. So how do we fix this?

First, you don’t fix something that is this systemically broken by making minor tweaks. You fix this by undoing all the past policy changes that ushered in both concentrated beef packers and globalized input supply chains. If we don’t do that, and don’t do it fast, history may prove that this is a two-part, fundamental change in America’s course is one of America’s greatest and most consequential blunders. And that’s because there will soon be too few cattle farmers and ranchers left in the industry to form the critical mass of producer-numbers necessary to sustain a truly competitive industry. We have our work cut out for us.

Please go to our Website at www.r-calfusa.com to get more information, and to become a supporting member so together we can restore the lost competition in your U.S. cattle markets.
•••••••••••••••••••••••••••••••••••••••••••••••••

Well, what do you think? I find Bill Bullard’s commentary on the state of the industry and its concentration problems interesting. I hope to sit through the testimony of the Senate Hearing and report back in detail next issue. What interesting times we live in….

This issue is packed with plenty for everyone… thanks for reading and your continued support of our efforts!