A
Anonymous
Guest
Posted on Mon, Jun. 20, 2005
All eyes on R-CALF
Upstart organization makes big waves
By Mikkel Pates
Agweek Staff Writer
BILLINGS, Mont. - In a few months, Leo McDonnell will step aside from leading R-CALF, a national phenomenon among farm and ranch organizations.
McDonnell, a rancher from Columbus, Mont., helped create a grass-roots organization that has inserted itself into trade policy issues and legal matters at the highest level, even stopping the powerful U.S. Department of Agriculture from reopening the Canadian border to live cattle.
In 2000, the group had an annual budget of $350,000. This year's budget will run about $2.3 million.
Town to country
McDonnell, 53, lives in Columbus, about 40 miles west of the Billings, Mont., area, where he grew up. He was second among six children. His father ran a farm and feedlot east of town. His dad was one of the pioneers in the concept of performance testing bulls - measuring them for genetic traits based on economic value to the ranchers "vs. giving it the 'old eye,'" McDonnell says with a chuckle.
Back then, a lot of ranchers were in Herefords. His family had Herefords, Angus and Red Angus. But his father wasn't popular with the seedstock producers in the 1960s, concentrating on such things as birthweight, weaning weight, carcass, maternal ability and fertility rather than hair color.
"For all of the criticism he absorbed, performance testing became the standard for all purebred breeders," McDonnell says.
McDonnell graduated from high school in 1970 and went to Texas Tech to study feedlot nutrition and biochemistry and to the University of Wyoming. Texas Tech was in the heart of the new cattle feeding area in the Texas panhandle.
"If you want to learn something, you go to where the hot spots are," he says.
Back home on the ranch in 1975, McDonnell would operate a bull test that went from 700 to 800 a year to about 1,800 head today.
"Today, we are, I believe, the No. 1 or No. 2 supplier of breeding bulls in North America," McDonnell says of his Midland Bull Test.
McDonnell and his wife, Debra "Sam" McDonnell, bought their first ranch in the mid-1980s and traded around. They bought a place in the North Dakota badlands. They run about 400 cows there and another 200 in the Columbus area. They have other cattle in two other states, but McDonnell declines to say where.
A turning point occurred in 1993, when McDonnell's father died. He made his son promise "to get more involved with national cattle organizations."
Didn't enjoy meetings
McDonnell didn't like sitting in meetings when he had four kids and ranch operations at home.
"I was very proud of being able to be a part of the state organization here in Montana," he recalls. "When I got to the national level, I probably didn't find it quite as rewarding.
"I saw a group that I didn't think represented the U.S. cattle industry very well. I thought they were representing - I'll just flat tell you - marketing issues. I thought they represented more of a socialistic model, which I did not agree with."
A socialistic model, he says, is marked by a high level of integration and "focuses only on one profit center." "And very seldom is that profit center the production end," he says.
"Pure capitalism is to keep the government out, let the strong ones survive and the weak ones fall out," he says. "It allows for anti-competitive practices to take place and migrates the industry to a more concentrated industry."
He found himself on the trade committee for the National Cattlemen's Beef Association, where McDonnell heard the mantra, "you have to give access to gain access." He calls that "foolishness."
"You should work for harmonized trade practices," he says. "You don't sacrifice part of your membership to gain access. They were saying you have to give access to imports in hopes that somewhere down the road, someday, your exports open up. It hasn't worked that way for any other industry in the past and it hasn't for cattlemen."
In 1998, at the NCBA annual meeting, McDonnell and others floated a motion that the industry should do a thorough economic analysis on the impact of cattle and beef imports on the value of U.S. cattle.
"We voted it down, which told me these people weren't looking for all of the information," McDonnell says. "They were looking for just one side. That's suicidal for any business."
McDonnell decided he couldn't work within the NCBA to change it.
"Their model, for addressing trade liberalization, was destructive to the U.S. rancher," he says. "So why would you stay with them?"
During the same time, McDonnell had read NCBA testimony to Congress in which the group said U.S. beef production had increased by 1.5 billion pounds from 1986 to 1996.
"What they failed to say was that during the same period, the increase in live imports had affected the U.S. beef production by 1.44 billion pounds, according to research out of Colorado," McDonnell says. "They were blaming the increase on U.S. ranchers when the biggest impact on the increase in supply was an increase in livestock imports."
In the 1980s and 1990s, the U.S. industry went from about 8 percent imports to about 18 percent imports of live cattle and beef.
R-CALF stirrings
McDonnell was focused on the economic well-being of the cattle industry and was becoming increasingly concerned about the flow of Canadian beef and cattle into the United States.
McDonnell and co-founder Herman Schumacher of Herried, S.D., started studying producer options and made a discovery that trade laws are different than others enforced by the federal government. The difference: It's the industry's responsibility to initiate corrective action, not the government's.
In 1998, the two decided to assume the responsibility of protecting their industry. They created the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America, and filed a trade case through the U.S. Department of Commerce to confirm their suspicions that Canada was unfairly dumping cattle in the United States.
They used volunteers to crisscross the country and solicit contributions from independent cattle producers, local bankers, feed stores, trucking firms and the like. It was a $1 million case and is described as the largest case in number of participants of any in the agency's history. The U.S. Senate shut down, temporarily, because so many members wanted to attend the hearings.
In 1999, the Commerce Department ruled, after a series of hearings, that Canada indeed was dumping. The department implemented temporary tariffs to mitigate the harm.
The trade case had two parts - fact finding and action. Later, the International Trade Commission acknowledged that the dumping was occurring but found the damage to the U.S. cattle industry was too insignificant to warrant permanent tariffs. The tariffs were lifted. Many thought R-CALF was over.
A new realization
The way McDonnell and Bill Bullard, R-CALF's chief executive officer, tell it, producers who would frequent Washington congressional offices at the time of the trade case came away somewhat shocked.
"They were surprised that Congress didn't understand that there was any problem in the cattle production economy in the U.S. In fact, (congressional members) were saying they'd been hearing everything was fine - 'So why are you cowboys in my office.'
"It brought out the realization that the cattle industry was, essentially, following the vision and strategy of the nation's meatpackers," Bullard says, noting that NCBA had lined up against the R-CALF position on the trade case against Canada.
"Further, there was a misplaced belief that what was good for the meatpackers was inherently good for the cattle producers," Bullard says. "That realization is what caused the original founders to reorganize R-CALF as a membership-based organization, to become the exclusive voice of the independent cattle producers of the United States."
R-CALF was reorganized in 1999. The founders created 10 board directorships, representing 10 regions in the country. North Dakota, South Dakota and Nebraska are in one region. Montana, Wyoming, Idaho, Washington and Oregon are in another. Directors serve three-year staggered terms. Elections are held in conjunction with an annual convention, held in late January. All directors are elected by mail-in ballot.
The first convention was held in Rapid City, S.D., but subsequent ones have been held in Billings; Kansas City, Mo.; and Denver.
Keeping local control
The idea was to keep control local. The group was membership-based, adopting a one-member, one-vote policy. Voting members must own cattle. Annual membership was set at $50, making the organization affordable to people with herds of five to 5,000 animals, Bullard says. Local and state cattle associations can "align themselves" with R-CALF with an annual $500 fee.
R-CALF had 3,500 members by the end of 2000 and today has 16,700 members, along with 60 affiliated groups. The membership is primarily cow-calf producers, stockers and feeders, or "backgrounders," as well as independent feeders - pretty much everybody on the production side, except the largest of cattle feeders who have contractual agreements with packers.
"What we're finding is that producers are becoming increasingly frustrated with the traditional state associations, who are closely aligned with the NCBA, and at odds with issues we're pursuing," Bullard says. "As a result, new organizations are being formed so producers have more say in the outcome on these important issues."
Three years ago, some R-CALF members began to donate calves at auctions, with proceeds directed toward R-CALF.
"These calf sales have been growing like wildfire," Bullard says. "They'll resell that calf over and over and over again. Sales of those since the first of the year are $1.6 million."
Most of the money is earmarked for ongoing litigation, but some goes to the legislation and public relations campaign that R-CALF says is necessary to protect U.S. producers from the introduction of mad cow.
"It's very costly," Bullard says.
Seats at the table
One of the first turning points for R-CALF came when the group obtained official seats at the business forum of the Free Trade Area of the Americas talks. R-CALF sent representatives to Argentina, imparting a different message from the meat processing and packing industry.
"We were the only cattle producer organization representing the United States," Bullard recalls of his first meetings. "We were surprised that the NCBA wasn't there."
R-CALF sought recognition that the cattle industry produced a perishable and cyclical product that is highly sensitive to changes in supply.
"As a result, we wanted to implement safeguards that recognized these unique characteristics so we could be protected from surges or other contingencies that may arrive in a deregulated arena," Bullard says.
R-CALF also obtained a seat on the Agricultural Trade Advisory Committee of the U.S. Trade Representative Office. While NCBA initially disregarded R-CALF, the larger group soon was represented at some of the trade meetings.
In 2004, R-CALF challenged the USDA rule that would have reopened the border after the bovine spongiform encephalopathy incidents.
"We caught the USDA allowing unlawful products in from Canada. We sought a restraining order against the agency in Billings and effectively protected our industry from commodities deemed too risky."
The court took action to block that. Now, R-CALF is girding itself for a
$1 million bill in a fight against a USDA rule that permanently would relax America's import restrictions against Canada. The rule was published Jan. 4 and the effective opening date was to have been March 7. R-CALF filed suit Jan. 10, challenging the rule. On March 2, a district judge in Billings agreed with R-CALF and granted the preliminary injunction to block the rule from being implemented. A trial on the merits of that issue will be held July 27 in Billings.
Meanwhile, USDA and the meatpacking industry have appealed the decision to temporarily block the rule. That will be held July 11 to 15 in the 9th Circuit Court of Appeals in Seattle.
In a heated battle
"We are in a heated battle with the USDA, the National Cattlemen's Beef Association, the American Farm Bureau, the American Meat Institute, the National Meat Association, the Canadian government and the Canadian Cattlemen's Association."
All of those groups support the effort to immediately reopen the border, Bullard says. "It's entirely premature" to reopen the border to "a country that, under a limited testing program, has already discovered multiple cases of BSE."
R-CALF has its allies. Some 67 organizations, including the National Farmers Union, have recently filed friend-of-the-court briefs, supporting the R-CALF position. The group also has the attorneys general of several states, including North Dakota and Montana.
"For the past three months, I've been conducting daily strategy sessions with our team of lawyers, public relations consultants and congressional lobbyists," Bullard says. "We have been working aggressively to advance this BSE matter."
Besides BSE, the group has been bird-dogging the funding of country-of-origin labeling and studying the effect of the Central American Free Trade Agreement.
"We are very concerned CAFTA will harm the U.S. cattle industry," Bullard says. "We've been working with sugar because we share a common interest."
He says the theory of these agreements is that when the United States opens up its markets, it will increase their profitability in producing raw products and, over time, this profit will allow them to become moresophisticated customers.
Testing the theories
"What you find is that once you open up these markets, U.S. companies move down and take advantage of cheaper production costs and turn around and export to the U.S., without a benefit to the country itself. R-CALF believes that the North American Free Trade Agreement was oversold to cattlemen, based on theoretical notions, many of which have not been true."
Curiously, R-CALF has sidestepped the issue of checkoffs.
"We support the producers' right to a periodic vote," Bullard says. "We simply monitor this as other industry participants."
As a result of the border closure, R-CALF learned that it was the live cattle coming across the border that were having the biggest impact on live cattle prices in this country.
"The live cattle (coming in) were the 'captive supply cattle,'" Bullard says. "Whenever we had a price rally in the United States, these would come in and satisfy the demand and drive down the price rally. Then they'd return to the domestic supply."
Since the closure, U.S. producers have seen historically high cattle prices. U.S. producers began an unprecedented liquidation phase in 1996. The U.S. herd size today is the lowest since the 1950s.
"Rather than focus on maintaining production capacity in the United States, we've been allowing imports to supplant production."
Bullard says the public relations program has been aggressive on the part of USDA. Secretary of Agriculture Mike Johannns declared that the current ban already is letting in enough boxed beef to satisfy demand. Johanns says he's worried that Canadian killing and processing will develop, putting U.S. producers at a disadvantage.
But Bullard says it's hard to trust the system. Bullard says Canadian boneless beef from animals younger than 30 months are "subjected to some of the most severe risk management measures that scientists recommend" for minimizing BSE risk. Among other things, it's required that this beef be processed in segregated kill/processing plants in Canada. USDA's rule would have eliminated those safeguards, he says.
"There is comfort in knowing that the beef presently coming across is subject to the most severe measures," Bullard says. "The final rule would relax even those measures."
Bullard notes that Canada "happens to be the 23rd country" whose beef was prohibited from entering U.S. markets because of the threat of BSE. The United States is the only major importer accepting Canadian beef. There still are more than 30 countries that ban beef or cattle from Canada.
"We're the only reason Canada is able to sustain this overproduction situation they've brought upon themselves," Bullard says.
The BSE issue has demonstrated "how uncertain the global market really is." He says it should "cause countries to rethink their global strategy."
"Clearly this issue has devastated the Canadian industry," he says, noting that the industry is simply hanging on with "tremendous subsidies, maintaining the industry at levels prior to BSE."
"Unfortunately, it's the first country where the U.S. has attempted to relax its standards, and have done so without the required rule-making."
As for the threat of Canada building its processing capacity, Bullard says that's overstated.
"The U.S. slaughters 35 million animals a year," Bullard says. "Prior to BSE, Canada slaughtered 3.2 million. It's simply not reasonable that the packers will abandon the huge market in the U.S. in favor of the smaller market in Canada."
The U.S. packers who will be hurt are those that had become dependent on live cows and bulls from Canada, he says. It's significant that these older animals wouldn't be affected by the USDA rule, which would allow in only Canadian animals younger than 30 months.
Much of the increase in Canadian processing is for cow and bull slaughter. A University of Florida researcher, who has looked at the topic in detail, has determined that the primary impact of the rule is on facility expansions for cattle that would not be affected by the rule.
There is only one major expansion being planted at the Moose Jaw, Saskatchewan, Excel plant. The rest are for cows and bulls. Bullard says the dominant packers in the United States also are the dominant ones in Canada - Cargill and IBP.
"There's no question they've made windfall profits off of the Canadian cattle industry, buying at depressed prices and selling boneless beef, undifferentiated, into the U.S. As profitable as that is, it would still be more profitable for the packers to resume their position of being able to import captive Canadian cattle to control the price of cattle in the U.S.," Bullard says.
Soon, all of this activity will have a new leader.
Letting it go
"Over half of my time is spent with R-CALF issues," McDonnell says. "Basically, we just get up a little earlier in the morning to do it, and go to bed a little later in the day."
The way McDonnell describes it, a new president or vice president will be elected from existing board members this fall or winter. New director candidates will be nominated at the annual convention in January. The ballots will be mailed out by March 1. Outgoing directors are founding members McDonnell, Kathleen Kelley of Colorado and Herman Schumaker from Herreid, S.D.
McDonnell says R-CALF has a good supply of young leaders. "I hope we've built an organization, with strong enough values and structure, that the incoming people and existing leadership can carry on," McDonnell says.
McDonnell says his only regret has been the awareness of "hate campaigns" that have been launched against him, across the years, including an e-mail campaign. He hints that some of these might be connected to national beef organizations and that he's still considering legal action about them.
"I think it's time for me to step down, let the next generation take over," he says.
"Every person in R-CALF is superior to me, in one way or another," McDonnell says. "I have no remorse about getting out of the way. I don't claim to be the sharpest guy in the world, but I'm just smart enough to know if you surround yourself with people better than you, anyway."
All eyes on R-CALF
Upstart organization makes big waves
By Mikkel Pates
Agweek Staff Writer
BILLINGS, Mont. - In a few months, Leo McDonnell will step aside from leading R-CALF, a national phenomenon among farm and ranch organizations.
McDonnell, a rancher from Columbus, Mont., helped create a grass-roots organization that has inserted itself into trade policy issues and legal matters at the highest level, even stopping the powerful U.S. Department of Agriculture from reopening the Canadian border to live cattle.
In 2000, the group had an annual budget of $350,000. This year's budget will run about $2.3 million.
Town to country
McDonnell, 53, lives in Columbus, about 40 miles west of the Billings, Mont., area, where he grew up. He was second among six children. His father ran a farm and feedlot east of town. His dad was one of the pioneers in the concept of performance testing bulls - measuring them for genetic traits based on economic value to the ranchers "vs. giving it the 'old eye,'" McDonnell says with a chuckle.
Back then, a lot of ranchers were in Herefords. His family had Herefords, Angus and Red Angus. But his father wasn't popular with the seedstock producers in the 1960s, concentrating on such things as birthweight, weaning weight, carcass, maternal ability and fertility rather than hair color.
"For all of the criticism he absorbed, performance testing became the standard for all purebred breeders," McDonnell says.
McDonnell graduated from high school in 1970 and went to Texas Tech to study feedlot nutrition and biochemistry and to the University of Wyoming. Texas Tech was in the heart of the new cattle feeding area in the Texas panhandle.
"If you want to learn something, you go to where the hot spots are," he says.
Back home on the ranch in 1975, McDonnell would operate a bull test that went from 700 to 800 a year to about 1,800 head today.
"Today, we are, I believe, the No. 1 or No. 2 supplier of breeding bulls in North America," McDonnell says of his Midland Bull Test.
McDonnell and his wife, Debra "Sam" McDonnell, bought their first ranch in the mid-1980s and traded around. They bought a place in the North Dakota badlands. They run about 400 cows there and another 200 in the Columbus area. They have other cattle in two other states, but McDonnell declines to say where.
A turning point occurred in 1993, when McDonnell's father died. He made his son promise "to get more involved with national cattle organizations."
Didn't enjoy meetings
McDonnell didn't like sitting in meetings when he had four kids and ranch operations at home.
"I was very proud of being able to be a part of the state organization here in Montana," he recalls. "When I got to the national level, I probably didn't find it quite as rewarding.
"I saw a group that I didn't think represented the U.S. cattle industry very well. I thought they were representing - I'll just flat tell you - marketing issues. I thought they represented more of a socialistic model, which I did not agree with."
A socialistic model, he says, is marked by a high level of integration and "focuses only on one profit center." "And very seldom is that profit center the production end," he says.
"Pure capitalism is to keep the government out, let the strong ones survive and the weak ones fall out," he says. "It allows for anti-competitive practices to take place and migrates the industry to a more concentrated industry."
He found himself on the trade committee for the National Cattlemen's Beef Association, where McDonnell heard the mantra, "you have to give access to gain access." He calls that "foolishness."
"You should work for harmonized trade practices," he says. "You don't sacrifice part of your membership to gain access. They were saying you have to give access to imports in hopes that somewhere down the road, someday, your exports open up. It hasn't worked that way for any other industry in the past and it hasn't for cattlemen."
In 1998, at the NCBA annual meeting, McDonnell and others floated a motion that the industry should do a thorough economic analysis on the impact of cattle and beef imports on the value of U.S. cattle.
"We voted it down, which told me these people weren't looking for all of the information," McDonnell says. "They were looking for just one side. That's suicidal for any business."
McDonnell decided he couldn't work within the NCBA to change it.
"Their model, for addressing trade liberalization, was destructive to the U.S. rancher," he says. "So why would you stay with them?"
During the same time, McDonnell had read NCBA testimony to Congress in which the group said U.S. beef production had increased by 1.5 billion pounds from 1986 to 1996.
"What they failed to say was that during the same period, the increase in live imports had affected the U.S. beef production by 1.44 billion pounds, according to research out of Colorado," McDonnell says. "They were blaming the increase on U.S. ranchers when the biggest impact on the increase in supply was an increase in livestock imports."
In the 1980s and 1990s, the U.S. industry went from about 8 percent imports to about 18 percent imports of live cattle and beef.
R-CALF stirrings
McDonnell was focused on the economic well-being of the cattle industry and was becoming increasingly concerned about the flow of Canadian beef and cattle into the United States.
McDonnell and co-founder Herman Schumacher of Herried, S.D., started studying producer options and made a discovery that trade laws are different than others enforced by the federal government. The difference: It's the industry's responsibility to initiate corrective action, not the government's.
In 1998, the two decided to assume the responsibility of protecting their industry. They created the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America, and filed a trade case through the U.S. Department of Commerce to confirm their suspicions that Canada was unfairly dumping cattle in the United States.
They used volunteers to crisscross the country and solicit contributions from independent cattle producers, local bankers, feed stores, trucking firms and the like. It was a $1 million case and is described as the largest case in number of participants of any in the agency's history. The U.S. Senate shut down, temporarily, because so many members wanted to attend the hearings.
In 1999, the Commerce Department ruled, after a series of hearings, that Canada indeed was dumping. The department implemented temporary tariffs to mitigate the harm.
The trade case had two parts - fact finding and action. Later, the International Trade Commission acknowledged that the dumping was occurring but found the damage to the U.S. cattle industry was too insignificant to warrant permanent tariffs. The tariffs were lifted. Many thought R-CALF was over.
A new realization
The way McDonnell and Bill Bullard, R-CALF's chief executive officer, tell it, producers who would frequent Washington congressional offices at the time of the trade case came away somewhat shocked.
"They were surprised that Congress didn't understand that there was any problem in the cattle production economy in the U.S. In fact, (congressional members) were saying they'd been hearing everything was fine - 'So why are you cowboys in my office.'
"It brought out the realization that the cattle industry was, essentially, following the vision and strategy of the nation's meatpackers," Bullard says, noting that NCBA had lined up against the R-CALF position on the trade case against Canada.
"Further, there was a misplaced belief that what was good for the meatpackers was inherently good for the cattle producers," Bullard says. "That realization is what caused the original founders to reorganize R-CALF as a membership-based organization, to become the exclusive voice of the independent cattle producers of the United States."
R-CALF was reorganized in 1999. The founders created 10 board directorships, representing 10 regions in the country. North Dakota, South Dakota and Nebraska are in one region. Montana, Wyoming, Idaho, Washington and Oregon are in another. Directors serve three-year staggered terms. Elections are held in conjunction with an annual convention, held in late January. All directors are elected by mail-in ballot.
The first convention was held in Rapid City, S.D., but subsequent ones have been held in Billings; Kansas City, Mo.; and Denver.
Keeping local control
The idea was to keep control local. The group was membership-based, adopting a one-member, one-vote policy. Voting members must own cattle. Annual membership was set at $50, making the organization affordable to people with herds of five to 5,000 animals, Bullard says. Local and state cattle associations can "align themselves" with R-CALF with an annual $500 fee.
R-CALF had 3,500 members by the end of 2000 and today has 16,700 members, along with 60 affiliated groups. The membership is primarily cow-calf producers, stockers and feeders, or "backgrounders," as well as independent feeders - pretty much everybody on the production side, except the largest of cattle feeders who have contractual agreements with packers.
"What we're finding is that producers are becoming increasingly frustrated with the traditional state associations, who are closely aligned with the NCBA, and at odds with issues we're pursuing," Bullard says. "As a result, new organizations are being formed so producers have more say in the outcome on these important issues."
Three years ago, some R-CALF members began to donate calves at auctions, with proceeds directed toward R-CALF.
"These calf sales have been growing like wildfire," Bullard says. "They'll resell that calf over and over and over again. Sales of those since the first of the year are $1.6 million."
Most of the money is earmarked for ongoing litigation, but some goes to the legislation and public relations campaign that R-CALF says is necessary to protect U.S. producers from the introduction of mad cow.
"It's very costly," Bullard says.
Seats at the table
One of the first turning points for R-CALF came when the group obtained official seats at the business forum of the Free Trade Area of the Americas talks. R-CALF sent representatives to Argentina, imparting a different message from the meat processing and packing industry.
"We were the only cattle producer organization representing the United States," Bullard recalls of his first meetings. "We were surprised that the NCBA wasn't there."
R-CALF sought recognition that the cattle industry produced a perishable and cyclical product that is highly sensitive to changes in supply.
"As a result, we wanted to implement safeguards that recognized these unique characteristics so we could be protected from surges or other contingencies that may arrive in a deregulated arena," Bullard says.
R-CALF also obtained a seat on the Agricultural Trade Advisory Committee of the U.S. Trade Representative Office. While NCBA initially disregarded R-CALF, the larger group soon was represented at some of the trade meetings.
In 2004, R-CALF challenged the USDA rule that would have reopened the border after the bovine spongiform encephalopathy incidents.
"We caught the USDA allowing unlawful products in from Canada. We sought a restraining order against the agency in Billings and effectively protected our industry from commodities deemed too risky."
The court took action to block that. Now, R-CALF is girding itself for a
$1 million bill in a fight against a USDA rule that permanently would relax America's import restrictions against Canada. The rule was published Jan. 4 and the effective opening date was to have been March 7. R-CALF filed suit Jan. 10, challenging the rule. On March 2, a district judge in Billings agreed with R-CALF and granted the preliminary injunction to block the rule from being implemented. A trial on the merits of that issue will be held July 27 in Billings.
Meanwhile, USDA and the meatpacking industry have appealed the decision to temporarily block the rule. That will be held July 11 to 15 in the 9th Circuit Court of Appeals in Seattle.
In a heated battle
"We are in a heated battle with the USDA, the National Cattlemen's Beef Association, the American Farm Bureau, the American Meat Institute, the National Meat Association, the Canadian government and the Canadian Cattlemen's Association."
All of those groups support the effort to immediately reopen the border, Bullard says. "It's entirely premature" to reopen the border to "a country that, under a limited testing program, has already discovered multiple cases of BSE."
R-CALF has its allies. Some 67 organizations, including the National Farmers Union, have recently filed friend-of-the-court briefs, supporting the R-CALF position. The group also has the attorneys general of several states, including North Dakota and Montana.
"For the past three months, I've been conducting daily strategy sessions with our team of lawyers, public relations consultants and congressional lobbyists," Bullard says. "We have been working aggressively to advance this BSE matter."
Besides BSE, the group has been bird-dogging the funding of country-of-origin labeling and studying the effect of the Central American Free Trade Agreement.
"We are very concerned CAFTA will harm the U.S. cattle industry," Bullard says. "We've been working with sugar because we share a common interest."
He says the theory of these agreements is that when the United States opens up its markets, it will increase their profitability in producing raw products and, over time, this profit will allow them to become moresophisticated customers.
Testing the theories
"What you find is that once you open up these markets, U.S. companies move down and take advantage of cheaper production costs and turn around and export to the U.S., without a benefit to the country itself. R-CALF believes that the North American Free Trade Agreement was oversold to cattlemen, based on theoretical notions, many of which have not been true."
Curiously, R-CALF has sidestepped the issue of checkoffs.
"We support the producers' right to a periodic vote," Bullard says. "We simply monitor this as other industry participants."
As a result of the border closure, R-CALF learned that it was the live cattle coming across the border that were having the biggest impact on live cattle prices in this country.
"The live cattle (coming in) were the 'captive supply cattle,'" Bullard says. "Whenever we had a price rally in the United States, these would come in and satisfy the demand and drive down the price rally. Then they'd return to the domestic supply."
Since the closure, U.S. producers have seen historically high cattle prices. U.S. producers began an unprecedented liquidation phase in 1996. The U.S. herd size today is the lowest since the 1950s.
"Rather than focus on maintaining production capacity in the United States, we've been allowing imports to supplant production."
Bullard says the public relations program has been aggressive on the part of USDA. Secretary of Agriculture Mike Johannns declared that the current ban already is letting in enough boxed beef to satisfy demand. Johanns says he's worried that Canadian killing and processing will develop, putting U.S. producers at a disadvantage.
But Bullard says it's hard to trust the system. Bullard says Canadian boneless beef from animals younger than 30 months are "subjected to some of the most severe risk management measures that scientists recommend" for minimizing BSE risk. Among other things, it's required that this beef be processed in segregated kill/processing plants in Canada. USDA's rule would have eliminated those safeguards, he says.
"There is comfort in knowing that the beef presently coming across is subject to the most severe measures," Bullard says. "The final rule would relax even those measures."
Bullard notes that Canada "happens to be the 23rd country" whose beef was prohibited from entering U.S. markets because of the threat of BSE. The United States is the only major importer accepting Canadian beef. There still are more than 30 countries that ban beef or cattle from Canada.
"We're the only reason Canada is able to sustain this overproduction situation they've brought upon themselves," Bullard says.
The BSE issue has demonstrated "how uncertain the global market really is." He says it should "cause countries to rethink their global strategy."
"Clearly this issue has devastated the Canadian industry," he says, noting that the industry is simply hanging on with "tremendous subsidies, maintaining the industry at levels prior to BSE."
"Unfortunately, it's the first country where the U.S. has attempted to relax its standards, and have done so without the required rule-making."
As for the threat of Canada building its processing capacity, Bullard says that's overstated.
"The U.S. slaughters 35 million animals a year," Bullard says. "Prior to BSE, Canada slaughtered 3.2 million. It's simply not reasonable that the packers will abandon the huge market in the U.S. in favor of the smaller market in Canada."
The U.S. packers who will be hurt are those that had become dependent on live cows and bulls from Canada, he says. It's significant that these older animals wouldn't be affected by the USDA rule, which would allow in only Canadian animals younger than 30 months.
Much of the increase in Canadian processing is for cow and bull slaughter. A University of Florida researcher, who has looked at the topic in detail, has determined that the primary impact of the rule is on facility expansions for cattle that would not be affected by the rule.
There is only one major expansion being planted at the Moose Jaw, Saskatchewan, Excel plant. The rest are for cows and bulls. Bullard says the dominant packers in the United States also are the dominant ones in Canada - Cargill and IBP.
"There's no question they've made windfall profits off of the Canadian cattle industry, buying at depressed prices and selling boneless beef, undifferentiated, into the U.S. As profitable as that is, it would still be more profitable for the packers to resume their position of being able to import captive Canadian cattle to control the price of cattle in the U.S.," Bullard says.
Soon, all of this activity will have a new leader.
Letting it go
"Over half of my time is spent with R-CALF issues," McDonnell says. "Basically, we just get up a little earlier in the morning to do it, and go to bed a little later in the day."
The way McDonnell describes it, a new president or vice president will be elected from existing board members this fall or winter. New director candidates will be nominated at the annual convention in January. The ballots will be mailed out by March 1. Outgoing directors are founding members McDonnell, Kathleen Kelley of Colorado and Herman Schumaker from Herreid, S.D.
McDonnell says R-CALF has a good supply of young leaders. "I hope we've built an organization, with strong enough values and structure, that the incoming people and existing leadership can carry on," McDonnell says.
McDonnell says his only regret has been the awareness of "hate campaigns" that have been launched against him, across the years, including an e-mail campaign. He hints that some of these might be connected to national beef organizations and that he's still considering legal action about them.
"I think it's time for me to step down, let the next generation take over," he says.
"Every person in R-CALF is superior to me, in one way or another," McDonnell says. "I have no remorse about getting out of the way. I don't claim to be the sharpest guy in the world, but I'm just smart enough to know if you surround yourself with people better than you, anyway."
