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These Numbers Don’t Add Up

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CattleCo

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Good article from Mike Johns. Mike is a straight shooter and he will be a fantastic NCBA President next term.


These Numbers Don’t Add Up

By Mike John

President-elect, National Cattlemen’s Beef Association

April 7, 2005

These are prosperous times for many in the cattle industry – especially the ranchers in the cow-calf sector. Prices for all classes of cattle are strong. Weather finally appears to be on our side. Some of the areas of drought that led to herd reductions in the Western region of the country appear to have had some recent relief, so even more producers are going to have green grass and plentiful feed.

All of these factors, combined with terrific consumer demand for beef, make for an industry that is faring well. The Beef Demand Index increased by almost 8 percent in 2004 – the largest year-over-year surge in the history of the index. Per capita beef consumption also rose by about two pounds per person, and per capita spending on beef rose to an all-time high of $240 per year. Consumer confidence in the safety and quality of beef is also at record-high levels.

But some - who say they represent the cattle industry - would have you believe that tight beef supplies are driving up beef prices, and that our favorable market conditions are the result of the Canadian border closure.

They’re not coming clean with the facts. The hard facts will tell you that strong consumer demand is sustaining cattle prices – not tight supplies. In fact, in 2004, the U.S. beef industry had the second largest net supply of beef (production plus imports minus exports) in history at 27.7 billion pounds. The largest year of supply was 2002, at 27.9 billion pounds.

But American producers captured their smallest-ever share of the U.S. beef supply. The United States imported 1.1 billion pounds of Canadian boneless beef in 2004, and Cattle-Fax expects that figure to rise by 15 to 20 percent in 2005. The fact that it will arrive as boxed beef - rather than “on the hoof” – makes little difference to consumers or the price that they pay. But it does mean that cattle feeders, processors and others in the U.S. beef industry miss out on the opportunity to add value to these products.

At the same time, we are bringing in Mexican cattle by the truckload. In 2004, the United States imported as many feeder cattle from Mexico as it did from Mexico and Canada combined in 2002, the last normal year of trade.

Prior to our borders closing, the United States was a net exporter of beef products, representing a $1.4 billion net to cattle producers. Today, we are a net importer. In other words, cattlemen have lost at least $1.4 billion in value, reports the Livestock Marketing Information Center. Meanwhile, with economic signals strong, we are growing our domestic herd. How do we turn these numbers around, and regain our position as beef supplier to the world? Certainly not by disparaging the safety of our product. The tactics employed by activist groups within our industry do nothing but delay the re-entry of the U.S. cattle industry into key export markets, costing our cattle producers an estimated $175 per animal in the process. Regaining full access to markets such as Japan, Korea and even Mexico depends on normalization of trade based on reasonable, science-based regulations - not creating a hysterical, isolationist environment that wrecks consumer confidence, weakens demand and strangles international trade.

I urge cattle producers to fully commit to continuing to grow global beef demand and building a stronger and larger U.S. beef industry. The first step in this journey is to see through the empty rhetoric and misinformation that is being spread about our industry and our product. When we look at the facts, we know that science-based, fair trade policies are the only environment that will allow us to grow and thrive. Archaic, isolationist trade restrictions may have surface appeal, but they can only take us backward. Be wary of those who like to tell you they are looking out for “the little guy” or “the independent producer.” Crunch their numbers, and you will find they simply don’t add up.

Mike John is a cattle producer from Huntsville, Missouri, and president-elect of the National Cattlemen’s Beef Association (NCBA).
 

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