In the News
Source: KSOM Radio
Oct 05 2016
By Tom Robinson
(Atlantic) United States Senator Joni Ernst met with nearly 70 cattle producers and other interested individuals in the industry in Atlantic Wednesday afternoon.
The cattle market has dropped 41-percent since April 2015 to the present day and cattle feeders are scratching their heads and asking why.
Cody Orme, a cattle feeder from Minden, Iowa, spearheaded the meeting because he wanted to let the Senator know what is going on in the cattle industry. Orme says the market volatility is a big issue right now.
“One day we’re bid $110.00 in the fat market and all of a sudden the board drops $5.00 to $7.00 in a week and that animal is worth $100 less,” explained Orme. “That’s fine as long as the meat stores get their price decline as well. What we’re wondering is why and trying to figure out a solution for now and in the future which doesn’t hinder either party.”
Eric Nelson, a Cattle Feeder from Moville Iowa, admits the market has always had its ups and downs, and there has always been a reason for it. However, this time around the loss of equity has been significant and much of it is unexplainable.
“It doesn’t add up why we’ve had this 41-percent price drop when the size of the cattle herd hasn’t increased that much,” stated Nelson, who admits the herd has increased just three-to-four-percent and there is a slight increase in supply due to increased market weights.
“However, the economic principal of a 1-percent increase in supply would equate to a 2-percent decrease in price. But the price decrease which we’ve had points to a 20-percent increase in supply.,” said Nelson. “We haven’t had a 20-percent increase in supply. So I am wondering, what’s going on?”
Several producers questioned the way cattle are sold today. For instance; many producers sell cattle which aren’t delivered to the packer for three to four weeks. A lot of the producers brought up the problem with formula pricing.
“Any cattle that are formula priced take away from actual price negotiation,” said Nelson. “Economists will tell you if cash negotiated cattle is less than 10-percent of the total slaughter it’s hard to know what the actual market price is. And there was a week in November 2015 where cash negotiated cattle was less than 10-percent.”
“There is a lot of angst in what we are experiencing with market volatility, and there’s not as much cash trade anymore,” said Senator Ernst, when asked about what she is taking away from the meeting. “No one can pinpoint why this is happening or where it’s coming from. Perhaps we need an independent audit and more transparency. We need to find out what is going on in this market.”
Other topics brought up at the roundtable include; packer monopoly, mandatory price reporting, the failure of the CRP program, the farm bill and trade issues.
Senator Ernst says they will roll up all this information and present to her colleagues in the Senate and her friends’ in the House of Representatives to let them know how important these issues are to the consumer across the United States.