Cuero auction raises funds for R-CALF USA
MARSHA MOULDER
Farm & Ranch News
Sunday, June 12, 2005
CUERO - Following a talk by R-CALF USA CEO Bill Bullard at a gathering of about 200 people last week in Cuero, an auction to raise money to support the organization's litigation efforts brought in $10,055 on 21 items that included three heifers.
On March 2, in U.S. District Court for the District of Montana, R-CALF was granted a request for a preliminary injunction to prevent the Canadian border from reopening to live cattle and additional beef products on March 7, as scheduled by the USDA in its Final Rule issued on Dec. 29, 2004. The border was closed after Canada's May 2003 case of Bovine Spongiform Encephalopathy (BSE).
For R-CALF, keeping the Canadian border closed is not only a matter of maintaining safety standards for the U.S. cattle industry, it's a matter of maintaining the record high calf prices producers have been enjoying.
During his talk in Cuero, Bullard said for years, the "downstream" segments - packers - of the beef supply chain reaped the profits while the independent cow-calf man struggled.
Bullard said, "Downstream segments meet on a regular basis and ask what challenges will affect the profitability of our business in 11 years. What will they have in place to meet that challenge?"
He challenged his audience to think like a packer. "If you're a packer, what will you do today to affect your business 11 years from now?
Putting himself in the packer's place, Bullard said, "This is a cyclical industry. When supplies are tight, I have to pay more. When the U.S. herd shrinks, we have to pay more. Let's not limit ourselves to U.S. cattle. If we expand the supply, we reduce volatility. It would be in our best interest to integrate herds from the U.S. with herds from Canada and Mexico."
If the herds are integrated, "We don't want consumers to think cattle in one country is superior to cattle in any other country. Let's set safety standards at a level everyone can meet," Bullard said as he played the packer.
Bullard said Cargill and IBP opposed country-of-origin labeling because these packers want to brand their products. They want consumers to buy their products based on their brand, not where the cattle from which the products were derived come from.
But the independent cattle producers are in business to make money too, Bullard said.
He offered a recent history of cattle prices in the U.S.
In 1990, fed cattle in Nebraska brought $77 per hundredweight. "Your calf prices are tied to that," he said.
In 1996, due to drought, U.S. herds were liquidated from 103 million head to 95 million head. That year, the Canadian adult cattle herd numbered 5.5 million head, Bullard said.
In 1998, there was a marked increase in demand for beef. So after extensive liquidation of herds and years of strengthening demand for beef, "You're reward was you lost $10 (per hundredweight)," he said.
In 1998, calf prices averaged $2.77 per hundredweight.
In 2001, calf prices hit a record $3.38.
Bullard told his audience that in 1994 ranchers received a record 56 cents for every consumer beef dollar. In 2000, the rancher's share fell to 49 cents, in 2002 to 44 cents.
"One hundred eight thousand beef producers exited the industry. That's what hollowed out the rural towns," Bullard said.
That was why R-CALF was formed, Bullard said. "We could no longer follow the direction of the downstream segments."
He said R-CALF has a four-point plan:
1. To put in your hands the tools you need to compete in the largest consumer market in the world and the international market. To have the ability to differentiate your product from other countries' product.
2. To take from the hands of the downstream segments the tools they use to interfere with the free market. This includes controlling the supply of cattle, grid pricing and formula pricing.
3. Maintaining meaningful safeguards. Bullard said the downstream segments say when the supply of cattle increases by 10 percent, the price of live cattle decreases by 15 to 20 percent. "Well, it works the other way around, too," he said.
4. Your ability to provide consumers with gold standard assurance that they are purchasing the highest standard of safety when they buy meat.
Bullard said in the first quarter of 2001, after a four-year increase in beef demand, fed cattle prices reached $79 a hundredweight.
"You knew you were going to be rewarded. In the spring of 2001, you were still marketing your cattle under 18 months of depressed prices. You asked the traditional cattle organizations, 'Why aren't we benefiting from these good economic indicators?' They said you're producing too much beef, your cattle are too heavy. They said if we pay $1 more for your cattle, the hog and poultry industry will eat your lunch.
"Where were they in 2003-2004 when you were receiving historically high prices? They said it was too complex for you to understand. They said exports are the driving force behind live cattle prices.
"In the spring of 2003, before the case of BSE in Canada in May, your cattle prices were struggling to respond to favorable economic indicators," Bullard said.
Following the close of the Canadian border, U.S. cow-calf producers were finally rewarded "because of a change in the fundamental market," Bullard said. When the border closed, that shut off 8 to 9 percent of the beef that used to come into the U.S as live cattle from Canada, he said.
"When the border closed in May 2003, you cut off the axis that the packers had to captive supply in Canada to suppress a price rally.
"Then Japan said, if you can't guarantee the beef you're sending us is not from Canada, we're closing our borders to U.S. beef.
"On May 20, 2003, when we closed the border to Canadian cattle, we demonstrated to consumers world over that the U.S. is serious about producing the best beef under the safest conditions. And you're being rewarded with the best functioning market you've seen in the last 20 years."
MARSHA MOULDER
Farm & Ranch News
Sunday, June 12, 2005
CUERO - Following a talk by R-CALF USA CEO Bill Bullard at a gathering of about 200 people last week in Cuero, an auction to raise money to support the organization's litigation efforts brought in $10,055 on 21 items that included three heifers.
On March 2, in U.S. District Court for the District of Montana, R-CALF was granted a request for a preliminary injunction to prevent the Canadian border from reopening to live cattle and additional beef products on March 7, as scheduled by the USDA in its Final Rule issued on Dec. 29, 2004. The border was closed after Canada's May 2003 case of Bovine Spongiform Encephalopathy (BSE).
For R-CALF, keeping the Canadian border closed is not only a matter of maintaining safety standards for the U.S. cattle industry, it's a matter of maintaining the record high calf prices producers have been enjoying.
During his talk in Cuero, Bullard said for years, the "downstream" segments - packers - of the beef supply chain reaped the profits while the independent cow-calf man struggled.
Bullard said, "Downstream segments meet on a regular basis and ask what challenges will affect the profitability of our business in 11 years. What will they have in place to meet that challenge?"
He challenged his audience to think like a packer. "If you're a packer, what will you do today to affect your business 11 years from now?
Putting himself in the packer's place, Bullard said, "This is a cyclical industry. When supplies are tight, I have to pay more. When the U.S. herd shrinks, we have to pay more. Let's not limit ourselves to U.S. cattle. If we expand the supply, we reduce volatility. It would be in our best interest to integrate herds from the U.S. with herds from Canada and Mexico."
If the herds are integrated, "We don't want consumers to think cattle in one country is superior to cattle in any other country. Let's set safety standards at a level everyone can meet," Bullard said as he played the packer.
Bullard said Cargill and IBP opposed country-of-origin labeling because these packers want to brand their products. They want consumers to buy their products based on their brand, not where the cattle from which the products were derived come from.
But the independent cattle producers are in business to make money too, Bullard said.
He offered a recent history of cattle prices in the U.S.
In 1990, fed cattle in Nebraska brought $77 per hundredweight. "Your calf prices are tied to that," he said.
In 1996, due to drought, U.S. herds were liquidated from 103 million head to 95 million head. That year, the Canadian adult cattle herd numbered 5.5 million head, Bullard said.
In 1998, there was a marked increase in demand for beef. So after extensive liquidation of herds and years of strengthening demand for beef, "You're reward was you lost $10 (per hundredweight)," he said.
In 1998, calf prices averaged $2.77 per hundredweight.
In 2001, calf prices hit a record $3.38.
Bullard told his audience that in 1994 ranchers received a record 56 cents for every consumer beef dollar. In 2000, the rancher's share fell to 49 cents, in 2002 to 44 cents.
"One hundred eight thousand beef producers exited the industry. That's what hollowed out the rural towns," Bullard said.
That was why R-CALF was formed, Bullard said. "We could no longer follow the direction of the downstream segments."
He said R-CALF has a four-point plan:
1. To put in your hands the tools you need to compete in the largest consumer market in the world and the international market. To have the ability to differentiate your product from other countries' product.
2. To take from the hands of the downstream segments the tools they use to interfere with the free market. This includes controlling the supply of cattle, grid pricing and formula pricing.
3. Maintaining meaningful safeguards. Bullard said the downstream segments say when the supply of cattle increases by 10 percent, the price of live cattle decreases by 15 to 20 percent. "Well, it works the other way around, too," he said.
4. Your ability to provide consumers with gold standard assurance that they are purchasing the highest standard of safety when they buy meat.
Bullard said in the first quarter of 2001, after a four-year increase in beef demand, fed cattle prices reached $79 a hundredweight.
"You knew you were going to be rewarded. In the spring of 2001, you were still marketing your cattle under 18 months of depressed prices. You asked the traditional cattle organizations, 'Why aren't we benefiting from these good economic indicators?' They said you're producing too much beef, your cattle are too heavy. They said if we pay $1 more for your cattle, the hog and poultry industry will eat your lunch.
"Where were they in 2003-2004 when you were receiving historically high prices? They said it was too complex for you to understand. They said exports are the driving force behind live cattle prices.
"In the spring of 2003, before the case of BSE in Canada in May, your cattle prices were struggling to respond to favorable economic indicators," Bullard said.
Following the close of the Canadian border, U.S. cow-calf producers were finally rewarded "because of a change in the fundamental market," Bullard said. When the border closed, that shut off 8 to 9 percent of the beef that used to come into the U.S as live cattle from Canada, he said.
"When the border closed in May 2003, you cut off the axis that the packers had to captive supply in Canada to suppress a price rally.
"Then Japan said, if you can't guarantee the beef you're sending us is not from Canada, we're closing our borders to U.S. beef.
"On May 20, 2003, when we closed the border to Canadian cattle, we demonstrated to consumers world over that the U.S. is serious about producing the best beef under the safest conditions. And you're being rewarded with the best functioning market you've seen in the last 20 years."
