R-Calf USA Chief: Low Prices May Sink Some Producers

Monday, January 30, 2017 By Linda Wuebben P&D Correspondent

O’NEILL, Neb. — The downward spiral in the cattle industry is alarming to all cattle producers, but R-Calf USA CEO Bill Bullard sees the recent low prices as a death toll for the independent cattle industry.

Bullard believes the liquidation of the competitive cattle market began its downward trend in 1996. At that time there were 112,000 feedlots but today only 27,000 feedlots are operating. The concentration of the cattle numbers in the hands of a few large producers has killed competitive pricing.

Most cattle producers agree and won’t argue the point.

As Bullard spoke recently to a group of producers at O’Neill Livestock Market, he outlined the shrinking numbers, herds and lost revenue with graphs and power points. The R-Calf USA organization has been diligently presenting facts and filing complaints and lawsuits to gain attention to the loss of competitive marketing in the US by conversations with the Department of Agriculture and the Department of Justice.

This past fall, Bullard decided to take the bull by the horns so to speak and contact the US Senate Judiciary Committee and recently spent time with the new president’s staff to enlist support from the Trump administration.

“Our new president’s goal is to buy American and hire American, and restoring the U.S. Cattle Industry certainly should be on his list,” Bullard said.

He asked for a 15-minute session with Trump and knows he will have to talk really fast. But it is important to him because he sees the death of an industry just around the corner.

Bullard has a three-pronged plan: to restore Country of Origin Labeling (COOL); level the playing field, which was the goal of the Stockyards and Packers Act in 1921; and lastly, dust off and enforce the anti-trust laws which would stop the growth of the four major packers who have created not a monopoly but a monopsony in the cattle industry.

Empowering US consumers to be able to read the labels on meat products would strengthen the position of the competitive market because they have indicated in the past they will purchase US beef if given the choice, Bullard said. When the US Congress decided to remove the COOL labeling law back in 2015 under pressure from the World Trade Organization, it allowed the packers to import foreign meat products, mix it with US beef, bring down the price and garner a USDA-inspected label.

The process started in the 1980s when merger mania whipped through the Ag industry. In the 1990s, the meat packers began to refine their practices to control supply and, by the turn of the century, saw control of captive supplies grow which allowed them to influence market pricing by flooding the market with large numbers in order to drive down profits for the few independent cattle producers remaining.

By 2016, packers controlled 85 percent of the cattle marketed in the US. Just 15 percent of the cattle industry is in the hands of about 25,000 independent cattle producers, and in 2015, the small producer reaped only 47 cents of every dollar for livestock sales — a drop of 9 cents from 2014.

Bullard spoke at several locations in northeast Nebraska this week including Norfolk.

“We can watch our competitive cattle market go the way of the poultry industry and then the hog industry, or we can try to change it,” Bullard said. “It’s urgent, or else it’s game over.”