Let’s Be Careful
As the new year rolls in, we all wonder what 2022 will have in store for agriculture. I want to stay positive and don’t wish for another year like the last two, but hope for the best.
There was a quickly called meeting by the White House with meat producers this past Monday afternoon. The president wants to spend around $1 billion from the American Rescue Plan to expand meatpacking capacity for independent meat processors through a number of initiatives. They also visited on ways to strengthen the Packers and Stockyards Act. The Biden administration realizes meat producers and feeders are unfairly being held to low profits.
Visiting with some in Washington, D.C. who attended the meeting, there were some reservations on the outcome of the meeting. As I understand, the meeting was announced the day before on Sunday. During the meeting, it was not explained if the administration was talking about new money or old money already earmarked.
The good part of all this attention the meatpackers are getting is it will make for more awareness to consumers and others of the times in the cattle cycle when producers are not making a profit.
The not so good issues I and others feel we need to pay attention to is the potential for increased government intervention in our meat businesses. There is no doubt the beef industry needs stronger enforcement of the Packers and Stockyards Act, more price transparency and to do away with the processing label on all packages of beef at the meat counter.
The processing label has nothing to do with a country of origin label, it is simply a label telling the consumer what country the package of meat was processed in. This label has really misled consumers. In times like this, when beef prices are at a record high at the meat counter, I’m not sure the consumer is looking at labels, but just the price of the package of beef.
Executive Vice President of the Colorado Cattlemen’s Association Terry Frankhauser said, “These companies (packinghouses) are the ones that feed the world, and we need them because we know we can’t harvest these animals in tiny animal packinghouses. I don’t know if government intervention fully is the right answer here. It is when laws are being broken, we need to think of the carrot, not the stick.”
Frankhauser said other issues should also be addressed such as modernizing rules and regulations and figuring out how to deal with employee shortage impacting all aspects of the beef industry.
The Biden administration’s action plan to invest $1 billion to expand competition in the U.S. meat processing industry and strengthen enforcement of antitrust regulations has drawn mixed reaction from cattle producers and feeders as it is still unclear what the administration wants to do with regard to the Packers and Stockyards Act.
We realize the Biden administration’s main goal is to stop inflation, which is currently the highest in 40 years. Meat prices have been the largest contributor to grocery inflation.
We also have to be careful when this cattle cycle flip flops and there are fewer cattle and higher prices for the producers. We see signs that this part of the cycle has started. Remember in past years when prices were similar to now and everybody was looking for a way out? “Lean Beef” was being developed, and as soon as higher cattle prices came, everybody forgot about lean beef and enjoyed the high prices.
Whatever happens and despite prices, we need to stay on course and find answers to the current issues.