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“This is why producers need R-CALF

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HAY MAKER

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Cattle producers from across the country gathered here recently for the fourth R-CALF USA regional meeting conducted this year. A full house listened to R-CALF USA President and Co-Founder Leo McDonnell and R-CALF USA CEO Bill Bullard speak about matters such as captive cattle supplies, Country-of-Origin Labeling (COOL), the National Animal Identification System (NAIS), and international trade, among other important issues that U.S. cattle producers face today.



R-CALF USA Region VIII Director Gene Barber hosted the event, which R-CALF USA Volunteer Dave Hutchins of West Mansfield, Ohio, helped to organize. After a brief introduction, Barber gave reasons why cattle producers need to support R-CALF USA.



“The captive supply issue we have to deal with in the cattle business is really serious,” he said.



Barber expressed his concern about captive supplies and how about 20 years ago the problem began to impact the once flourishing hog industry, and how, all of a sudden, there was no longer a cash market for hogs. Hog producers had more dollars going into their pigs than what their pigs were selling for in the open market, while at that same time, packers were busy building farrowing barns and finishing pens for hogs.



“So, they (meatpackers) got rid of the private, independent hog feeders completely,” noted Barber. “That same thing can happen to our cattle business with captive supply, and I’m worried to death about it.”



McDonnell then spoke on how R-CALF USA was founded.



“We formed R-CALF USA in 1998 and filed the largest trade case in the history of this country,” he said, referring to both the live cattle and anti-dumping case against Canada and Mexico, and a countervailing duty case against Canada.



“Commerce (U.S. Department of Commerce) found that Canada was dumping and placed tariffs on them,” continued McDonnell. “We had more U.S. Senators testify at the U.S. Senate hearing on this cattle case than in any other case in this country’s history.”



He explained that these particular cases revealed a significant level of opposition against the interests of U.S. cattle producers, and because of this opposition, R-CALF USA was transformed into a membership organization.



Then, McDonnell began a discussion on the history of Mandatory Country-of-Origin Labeling (M-COOL), a law passed in the 2002 Farm Bill, which required a label on all domestic and imported beef products sold at the retail level to take effect Sept. 30, 2004.



“R-CALF USA formed the largest coalition in the history of this country to pass mandatory country-of-origin labeling legislation and did it through the right process,” McDonnell said.



Opponents of M-COOL soon were successful in delaying M-COOL until Sept. 30, 2006. And a more recent effort by the FY06 Agriculture Appropriations Conference Committee – without any public debate or vote – delayed implementation until September 2008. McDonnell emphasized that R-CALF USA will continue to work on behalf of producers for the timely implementation of Mandatory COOL.



McDonnell then went on to discuss the National Animal Identification System (NAIS), a program proposed by the U.S. Department of Agriculture (USDA) with a scheduled implementation date of 2009.



“I think electronic identification’s a great thing, but I don’t think you should mandate it,” he said “The little guys can’t afford it so they will get out of the business, and we need all those little guys. That’s what makes competition.”



McDonnell wrapped up his talk with comments about the beef checkoff.



“You’ll find me criticizing it,” he acknowledged. “That doesn’t mean that I’m against it. It means I’m critical of certain aspects just like we criticize our own business.



“We criticize our own children, our families, our churches, our school system and we criticize them in a manner to make them better, don’t we,” he asked the crowd.



“We’re going to start a check-off committee in R-CALF – not to get rid of it, but to put the control back in the producer’s hands – to make it better,” McDonnell continued. “So we can actually promote country-of-origin labeling, because under the act and order of the check-off, you are forbidden from promoting U.S. products.”



Bullard then spoke after McDonnell and soon had the audience seriously examining the multi-segmented beef supply chain they are involved – but from meatpacker’s perspective, explaining that, “Sometimes, it’s helpful for us to better understand our industry by taking a step back from our own particular industry segment.”



He said that in order to determine what live cattle producers need to do to advance their interests, producers need to understand the goals of major meatpackers. He explained that one of their goals is to minimize the financial risk associated with the cyclical U.S. cattle industry and that when U.S. supplies tighten, cattle prices increase, which in turn increases meatpackers’ risk and reduces profits.



“An effective strategy to reduce this risk is for meatpackers to expand their supplies of cattle beyond their immediate needs,” Bullard said. “They can do this by melding together the herds of Canada, the United States and Mexico into one seamless herd.”



Packers also want to downwardly harmonize the animal health and food safety standards of the United States to match the lower standards in other countries, such as the standards in Canada and Mexico, Bullard outlined. The reason, he said, is that meatpackers don’t want consumers to perceive any difference in beef, no matter what country the cattle come from. Thus, you have meatpackers’ consistent, and expensive, efforts to integrate the cattle of the U.S., Canada and Mexico into one giant North American herd.



The third goal of the packers, Bullard explained, is to label their products with a house brand, but they certainly do not want those products marked with a country-of-origin label because that would defeat the packers’ first two objectives. Packers want consumers to seek out products with their house label, regardless of where the cattle originated to produce those beef products.



The final step of the packers’ strategy is to lobby Congress to restrict producer access to trade-remedy laws because packers do not want independent cattle producers to restrict or otherwise interfere with their access to their newfound inventories that are less costly than U.S. cattle, commented Bullard.



These past three years, producers have received historically high cattle prices, triggered not only by tight supplies, but also increased demand, a reduction in imports, and the packers’ reduced access to their captive-supply cattle held in Canada, Bullard continued. The dramatic increase in prices revealed that packers were not keeping their promise to pass profits back to U.S. producers when beef demand increased. Bullard also emphasized that beef demand had actually been on the rise for a full six years before live cattle prices were finally able to respond without the interferences from Canadian captive supplies and Canadian imports.



“What if we competed to obtain our fair share of the available profits within the beef supply chain, all of which are generated at the end of the supply chain and determined by how much beef consumers purchase and at what price they are willing to pay?” Bullard asked the audience.



Bullard said that producers are involved in a highly competitive, profitable, and multi-segmented beef supply chain and that the U.S. live-cattle segment is annually a $48 billion industry – the single largest segment of American agriculture.



“Only live cattle producers share the desire to maximize the profitability of the live-cattle segment of our industry,” Bullard said. “If producers won’t step up to compete to maximize their profitability, no one else in the industry will either.



“This is why producers need R-CALF – the only national organization that represents only the interests of independent cattle producers,” he concluded.
 

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