Making Markets Make Sense


by Kayla Sargent

It’s no secret that cattle markets have sent producers for a loop over the past year.  Unprecedented price swings and the ever-widening gap between the retail price of beef and the price of live cattle has made for trying and frustrating times.

“The ranchers and all of our producers that we work for are seeing historically low prices on the fat cattle when the grocery store and all of those places have not seen a decline,” United States Cattlemen’s Association Vice President and Marketing Committee Chair Justin Tupper said.

Industry groups hear from producers that change is needed, and each respond in their own fashion.  United States Cattlemen’s Association (USCA) is hoping that despite organization affiliations, the industry can make progress as one voice.  At least that’s the goal of the upcoming Winter Thaw in Billings, Montana Saturday, February 22.

The event, held in conjunction with the MATE Show, will give producers the opportunity to listen to a wide array of speakers on topics that include women in ranching, producer profitability, beef quality assurance, and updates from the Cattlemen’s Beef Board.

Perhaps most anticipated is the evening Cattle Market Power Hour at PAYS where a dynamic panel of marketing experts will break down just what has happened in the market recently and where some potential changes could yield improvements.

“One of the big things for me and strive points for USCA is to be able to bring some of our industry groups together and focus on the many things that we agree on and try to push for some positive change,” Tupper, who is moderating the marketing panel, said.  “I think many times as industry groups we get caught up in each of our own agendas and we forget the big picture of what we need to move forward.”

Mandatory Price Reporting…

Specifically, Tupper said with the upcoming reauthorization of Mandatory Price Reporting (MPR), which only happens once every five years, the time is right to make progress that could affect the producer’s bottom dollar.  MPR was developed by USDA Agricultural Marketing Service to help facilitate “open, transparent price discovery” and provide market information to all participants.  As fewer and fewer cattle are traded on the cash market, the information disclosed by MPR must be transparent and accurately reflect the trades.  In fact, according to Tupper, today as much as 85 percent of cattle are traded in formula trades.

“Those formulas are derived off the five-state area weighted average.  The way that they are able to beat down the price for 85 percent of the cattle, essentially, is by buying 15 percent of the cattle on the cash market cheaper and then it’s reported that way,” Tupper explained.  “So, in real simple terms, that’s one of the big problems that we see that needs change.  They can manipulate the market by buying those 15 percent in the cash market cheaper or some version of manipulating 15 percent to buy 85 percent – it’s a pretty good business model for them.”

To make MPR more accurately formula trades and offer more transparent market information to all participants, USCA’s marketing committee has found some potential solutions to include in its reauthorization.  The panel is expected to discuss how these changes could work.

“I’m sure there will be a lot of discussion about price reporting from point breakouts of zero to 14 and 15 to 30 days; also of origins of cattle and whether that should be designated on there as a quality issue; and the regions and the way the five state areas are reported,” Tupper said.

While the technicalities of MPR can seem daunting, Tupper stressed that some tweaks could ultimately affect producer’s bottom dollar.

“There are so many technical issues with it that it kind of gets you ground down in the weeds, so to speak, but it definitely does make a difference on producer’s bottom line,” he said.

Your Voice Was Heard…

Beyond the MPR discussion, Tupper anticipates the marketing panel to touch on broader industry issues like packer consolidation, ownership of the “Big Four,” and the beef checkoff.  He encouraged producers to attend the forum for a day full of education and a chance to be a part of the solution.

“If not you, who?  You’ve got to get out and make your voice heard,” Tupper said.  “Nobody is going to get out and defend us if you’re not going to, and we know the results if we don’t get out and try to make some positive changes for the industry.  We’re in great times right now where we can make some change.  The biggest part of being able to make change is speaking with one voice.  We need to understand that we’re never going to agree on every issue, but there are so many issues that all these industry groups can agree on and we’re in a time if we can speak with one voice, we can really make a difference.”

When the industry spoke out through Western Ag Reporter’s #FairCattleMarkets campaign, the administration took note.  USDA Marketing and Regulatory Programs Under Secretary Greg Ibach is slated to attend the Winter Thaw, pending final confirmation, to participate in the marketing panel and dive into producer conversations.  The campaign, spearheaded by PAYS owner and operator Joe Goggins, encouraged producers to take to Twitter and ask President Trump to assist in making the cattle markets fair through transparency and true price discovery.  Goggins will open Cattle Market Power Hour with an update on the campaign and Under Secretary Ibach will offer the administration’s response to the producer outreach.

Joining Under Secretary Ibach on the panel will be Feeder Flash’s Corbitt Wall, Beef Basis’ Brett Crosby, Market Analyst Lee Reichmuth, and cattle feeder and Iowa Cattlemen’s Association Director Mike Schwarck.

“We’ve got some really high-quality speakers that have some great knowledge in the industry and I look forward to a spirited and outstanding discussion that day,” Tupper said.

The MATE Show…

Before gathering at PAYS that evening, Winter Thaw participants will have day full of workshops and plenty of time to visit the MATE Show (Montana Agri-Trade Exposition), produced by the Northern International Livestock Exposition (NILE).  Under Secretary Ibach is scheduled to tour the MATE Show, a nod to the importance of Montana agriculture, NILE General Manager Jennifer Boka said.

“As we all know, Montana is, solidly, one of the leaders across the country in agriculture, not only from cow numbers but just sheer mass of square miles that Montana agriculture covers,” Boka said.  “To have the Under Secretary here just shows us the value that the entire industry places on what goes on here in Montana.  We are leaders in the ag industry across all facets and it will be great to have him here visiting with people and getting to see one side of Montana agriculture where we can highlight many different things under one roof.”

As the inaugural year for the Winter Thaw, Boka looks forward to the event “crossover” and said the collaboration was a “simple partnership.”  During the blocked time for Winter Thaw participants to visit the MATE Show, a Beef Quality Assurance presentation will be available.  Boka added that event organizers were sure to include adequate time for attendees to visit with MATE Show vendors – a task that is becoming ever important in today’s digital world.

“It’s interesting to me that we are seeing so much digital buying nowadays,” Boka said.  “And I think the result of that is that shows like the MATE Show are going to continue to grow and get stronger because people can’t go and see all those options that they have digitally in-person, under one roof anywhere.”

Boka said even though it’s likely some attendees will make their purchases online at home after the show, the “tactile experience” is necessary.  Attendees can see the tractors, equipment, tools, etc. firsthand and participate in one-on-one conversations with knowledgeable sales representatives to aid in their purchasing decisions.

This year, there are just over 270 vendors included in the MATE Show, the Home and Health Expo, and the Bull Pen Preview.  Boka said anywhere from 16,000 to 18,000 people are expected to attend the show over the three-day timespan.

To learn more about the MATE Show, see Western Ag Reporter’s Annual MATE Show Special in Section Three of this week’s issue.  To learn more about the Winter Thaw contact USCA Director of Outreach Lia Biondo at lia@wssdc.com or go to bit.ly/WinterThaw to register.

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