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Published July 18, 2011, 09:24 AM

Will USDA market reports resume for cattle producers?

WEST FARGO, N.D. — Mark Hilde doesn’t have to think long to determine the value of nonbiased U.S. Department of Agriculture supervised data on livestock market prices in North Dakota.

By: Mikkel Pates, Agweek

WEST FARGO, N.D. — Mark Hilde doesn’t have to think long to determine the value of nonbiased U.S. Department of Agriculture supervised data on livestock market prices in North Dakota.

“Producers use Agricultural Marketing Service numbers to compare markets,” says Hilde, branch manager for Central Livestock Association West Fargo, which markets some 40,000 head of feeder cattle, cows and other animals every year. “This is done by a third party, and it’s unbiased. It kind of gives you a direction of the market, whether it’s going up or down. I know it’s a valuable tool.”

But unless the state or someone else steps up to pay for the service, the reporting — already interrupted by budget cutbacks — could go away, permanently.

Budget shortfall

USDA’s AMS traditionally had fully funded reporting at six North Dakota sale barns. Under that program, sales results are included in a Chicago Mercantile Exchange index that offers national price contexts for feeder cattle.

In 2011, the federal government’s budget constraints required a 25 percent cutback of its contribution that traditionally been about a $14,000 program, leaving a shortfall of more than $2,200 that the state of North Dakota temporarily came up with for the coverage of West Fargo.

Currently, the AMS reports sales from the North Dakota cities of Dickinson, Mandan and Napoleon, but has dropped sale reporting for other sites in the state, including West Fargo. One option would be to continue reporting for more barns from November to February. Hilde says that is insufficient because significant sales continue into May.

Julie Ellingson, executive vice president of the North Dakota Stockmen’s Association in Bismarck, N.D., says her board discussed the topic in mid-July and members thought it was “very important” to get the nonbiased reporting back for the state. She says the board authorized her to approach the North Dakota Department of Agriculture to determine whether state funds can be found to complement the federal funds.

“The message from our board is that we find value in this data, and we want to see if there’s a way to maintain or continue this program,” Ellingson says.

Finding the funds

North Dakota Agriculture Commissioner Doug Goehring says his department realizes the importance of the figures to state beef producers and is looking at ways to do provide funding again, but says he was disappointed that the federal funding was cut back, creating a “big void” of information on eastern North Dakota and western Minnesota statistics. He says his department scraped together some funding for the program last year and is studying that again. The department is limited because the Legislature appropriates money for specific purposes, he says.

Russ Travelute, western area supervisor for the AMS Livestock and Grain Market News, in St. Joseph, Mo., is in charge of 12 states. His region includes the Sioux Falls, S.D., area office, which covers North Dakota. South Dakota also currently contributes zero on a program that totals about $40,000 in federal funds. That doesn’t include the regional office in Worthing, S.D., which is just south of Sioux Falls. That AMS group is in charge of regional livestock figures for feeder cattle, slaughter cattle and sheep, as well as the Yankton, S.D., market, and ethanol co-products, cash grain and hay markets.

Some other states contribute significant funding to their livestock price reporting program, while others don’t, Travelute says. The federal office typically does “bridge funding” for some states when they have budgetary shortfalls. Otherwise, the federal officials simply offer technical oversight of USDA guidelines and standards for reporting. Travelute acknowledges that in some cases where states, including California and Louisiana, have been unable to financially contribute to the market reporting, the federal government has been forced to discontinue its market news program.

Greg Lardy, North Dakota State University chairman of the animal sciences department, says the figures are not only important for indicating market trends for beef producers, but also is important for long-range scientific studies.

Data ‘vitally important’

The AMS data offers basis data with weighted average prices. Otherwise, producers only would have numbers provided by private sources including the individual markets themselves, which sometimes don’t reflect the entire range of sales.

Similarly, Karl Hoppe, area livestock extension specialist in Carrington, N.D., says the federally supervised reporting is standardized, using sizable sale groups and avoiding exaggeration that can take place in some other market reporting methods. He says the tool also is helpful in sorting out values in eastern vs. western markets in the state and region, which can be influenced by transportation to feedlots in corresponding locations in the south, or are not necessarily reported in a timely fashion.

Tim Petry, a NDSU animal economics specialist, says the reports are important for determining the basis — difference between cash and futures markets — especially for 750- to 800-pound feeder cattle.

“I think it’s vitally important that we are represented in the CME Index so we understand how our price compares to the futures prices. The index is helpful in various management decisions,” including sales timing, he says.

The figures also are used in determining futures market, which determine cash settlement prices for Livestock Risk Protection products available from federal crop insurance agents.

It is unclear how producers view the urgency of restoring the reporting.

Jeff Lyons, one of the customers at the West Fargo stockyards’ regular sale July 13, says he uses numbers regularly in considering his costs in securing animals for a 1,000-head feedlot he operates. He says the numbers help make marketing decisions in his business, although the summer hasn’t been a time when the figures have been as much on his mind as it would be in the fall and winter.

Hilde says that the reporting is important and he’ll have to make sure it gets done by the time West Fargo’s Big Iron Yearling Sale is held Sept. 14.

“I can’t hire the USDA to get me a market report,” he says.

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