USDA moving forward on fixes for cattle market problems
USDA's Greg Ibach said a July 2020 investigation into the cattle industry revealed some things the USDA can do to alleviate some problems. Other issues will need to be taken up by Congress or by industry.
BISMARCK, N.D. — The U.S. Department of Agriculture has begun to make some small changes after investigating cattle market volatility and will work with Congress and industry to make other changes, a top USDA official told the North Dakota Stockmen’s Association Convention.
Greg Ibach, USDA Under Secretary for Marketing and Regulatory Programs, spoke on Oct. 10 at the North Dakota Stockmen’s Association convention in Bismarck, N.D. Ibach largely addressed the ways the coronavirus pandemic had affected the cattle and meat packing industries and how the USDA is responding.
The crowd of more than 100 cattle operators didn’t need a recap of the main incidents that have roiled the cattle industry in just over the past year. First an August 2019 fire at a Kansas meat packing plant and then disruptions from packing plant shutdowns and slowdowns during the beginning of the coronavirus pandemic raised questions of the integrity of cattle markets. Prices for boxed beef — processed retail cuts — in both incidents went to record highs while live cattle prices plummeted.
Three federal agencies have been looking into cattle markets, Ibach said. The Department of Justice and Department of Commerce investigations are ongoing, while the USDA completed its probe on July 22.
Ibach said the USDA has found three “themes” of things that can be done to improve the cattle markets: things USDA can work on with industry, things USDA can work on with Congress and things USDA can do on its own.
On the front of what USDA can do on its own, Ibach said several things already have been accomplished or are in the works. First, the department took the word “estimated” off its daily slaughter reports after finding that they were extremely accurate — within a half percentage point of actual numbers. That, he said, could allow people to trust the numbers more.
Next, USDA Rural Development is looking at grant and loan opportunities to help people start small packing plants, particularly for places on the edge of the “slaughter belt.” USDA also is looking at how its Food Safety and Inspection Service interacts with small processing plants to ensure that there is trust in the system for federal buyers of U.S. beef.
Ibach said the USDA is working with Congress to address things like the need for regional price reporting and with the cattle industry and the market industry to look at changes that could be made to risk management products to enable more producers to use them.
Ibach provided some good news regarding packing plants. When the coronavirus pandemic began, packing plants were on the “front lines of some of the disease issues that were cropping up,” he said. The plants responded by obtaining personal protective equipment for employees and took other measures to make it a safer workplace, including putting up barriers and starting testing programs.
“Those employees at the packing plant have better protection when they’re at work … than they do when they walk out of the plant,” Ibach said.
He said plants are returning to capacity, but a backlog of livestock remains.
“We still have a backup,” he said. “We still have some cattle bigger than they should be.”
Should the checkoff remain?
In July 2020, Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America, or R-CALF USA, launched a national petition drive requesting a nationwide referendum on the termination of the Beef Promotion and Research Order, commonly known as the Beef Checkoff Program.
The group has been critical of the checkoff program, under which cattle producers are compelled by law to pay a per-head fee to the Cattlemen’s Beef Board, which uses the money for promotion, education and research of beef. R-CALF USA previously has argued that state-level checkoffs violate the First Amendment rights of cattle producers by requiring payment but offering no recourse when the producers do not agree with the product of the checkoff’s work.
Ibach said the group has until July 2, 2021, to obtain at least 10% of the signatures of beef producers in the U.S., estimated by R-CALF USA to be 88,269, to bring the matter to a vote. The USDA will monitor the process to make sure no groups provide undue influence to get people to sign the petition, including providing eligibility for prizes and raffles upon signing, he said.
Ibach said he continues to believe in the importance of checkoffs, including the beef checkoff, but says that the voices of people who disagree are heard.
“We’ll continue to work within the statute to be able to work with those producers who have concerns as well as those producers who want to continue the checkoff,” he said.
Marty Smith, president of the National Cattlemen’s Beef Association, who also spoke on Oct. 10 at the convention, said estimates are that the referendum itself will cost the checkoff program $2.5 million to $4 million.