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Problems with cattle markets and packers focus of Senate Ag Committee hearing
There have been several bills proposed in Congress to address the price imbalance in the cattle industry and the Senate Ag Committee heard testimony on Wednesday to work toward a solution.
Justin Tupper, vice president of the US Cattlemen’s Association and the owner of the St. Onge Livestock Auction in South Dakota says this isn’t a partisan issue, it’s a producer issue. “In my years as an auctioneer operating St. Onge Livestock, I’ve learned the most important participant in true price discovery is the second bidder,” he says. “In most cases in the fat cattle trade today, we don’t have a second bidder. There’s simply not enough market participants.”
Mark Gardiner, a partner in Kansas-based Gardiner Angus Ranch says more price discovery and transparency are needed, but mandates wouldn’t improve prices. “I would stress the absolute smallest producers have reaped the highest dollar per head value on our value-based grid,” he says. “Because they can hit those targets better than anybody else. And quite frankly that’s what’s kept my family in business and what’s kept our other families in business.”
Dr. Glynn Tonsor, an ag economist at Kansas State University says the market’s response to the Holcomb fire and the coronavirus pandemic wasn’t necessarily a surprise. “When we’ve had the shocks we’ve had, we would expect beef prices to go up and fed cattle prices to go down,” he says. “That is what we’ve seen. The magnitude of what we’ve experienced stands out and in many ways the life experience, that I hope we’re on the end of, has been very unique.”
Tonsor says mandates could also lead to unintended consequences that would be detrimental to producers.
