Farmers are getting less and customers are paying more for beef

BILLINGS, Mont. -- Media reports indicate U.S. cattle feeders have lost $3 billion from the sales of fed cattle in just the past 11 months, and the U.S. Department of Agriculture estimates that feeders lost an astounding $23.82 per hundredweight for fed cattle sold in October 2008 and $22.70 per hundredweight for fed cattle sold in November 2008. This represents losses on each animal sold at $298 and $284, respectively.

Someone needs to stand up and holler, "Foul!"

In a report issued by the CME Group on Nov. 24, the multinational meatpackers' gross margins for 2008 far exceed their average gross margins earned during the years 2002 through 2006. USDA also reports that the spread between what U.S. cattle feeders received for their cattle and what U.S. consumers paid for beef was wider from August through October 2008 than at any time in our industry's history. A widening spread between what the cattle feeder receives for cattle and what consumers pay for beef indicates that the marketplace has become inefficient, noncompetitive and unjust for both cattle producers and consumers, and that's exactly what is happening.

In October, the share of the consumer beef dollar received by the U.S. cattle feeder fell to just 43 cents, which is lower than the share producers were receiving in 2002 when fed cattle were selling for less than $67 per hundredweight, well below the cost of production.

What this means is that the U.S. fed cattle market has become so manipulated by the corporate packers that they are able to all but steal cattle from hard-working U.S. cattle feeders and then sell the beef produced from those cattle at record prices to wholesalers, which in turn sell the beef at record prices to unsuspecting consumers. Retail beef prices from August through October were higher than at any time in history -- while cattle producers were losing their shirts.

The tremendous losses in our fed cattle market has affected, and will continue to affect, the prices for lighter-weight cattle sold by cow-calf producers and others. Additionally, these losses will accelerate the continuing exodus of independent feeders from our industry. During the 10-year period from 1997 to 2007, our industry suffered a loss of 19,000 feedlots. That means there already are 19,000 fewer buyers for lighter-weight cattle than there were just a decade ago. The current fiasco certainly will worsen this negative trend.

The National Cattlemen's Beef Association, which receives millions from the mandatory beef checkoff program paid for by hard-working U.S. cattle producers, blocked every effort by independent cattle producers who tried to correct this problem in Congress last year, before it could reach the disastrous proportions we're now experiencing. NCBA made certain that corporate packers were able to keep the tools they use to manipulate the live cattle market. These anticompetitive tools are known as captive supplies and they include packer ownership of cattle and formula contracts that do not contain a negotiated price.

R-CALF USA has warned the industry for years that if we do not reform captive supplies, our industry will continue to shrink until independent cattle producers no longer can afford to stay in business without obtaining a production contract from a beef packer. This already has happened to the once independent hog producers, by way of vertical integration, and this would be the end of economic independence for U.S. cattle producers.

I urge my fellow cattle producers to vote with your pocketbooks and vote now, before it's too late. Quit supporting the packer-aligned trade associations with your membership and contributions, and immediately join and support the trade association -- R-CALF USA -- that exclusively represents your interests: the interests of independent live cattle producers.

-- Stayton Weldon

Editor's Note: Weldon is director of R-CALF USA Region V in Texas. He runs a herd of Hereford cows, breeds them to Brahman bulls and raises the F-1 Braford heifer, which is adaptable to the climate where he ranches.

Corn Palace needs

to utilize the Internet

MITCHELL, S.D. -- A new Web site promises to bring attention to the Corn Palace, an attraction that is touted heartily on billboards, travel brochures and through national media outlets.

One Corn Palace advertising avenue that hasn't been fully explored, however, is the Internet, and it appears that deficiency soon will be addressed.

We've discussed the problem in the past. Anyone seeking quick information about the Corn Palace certainly could do a search on the Internet, but they wouldn't find much information actually composed and posted by the Mitchell (S.D.) Area Chamber of Commerce.

The site cornpalace.com simply takes a visitor to the Corn Palace Convention and Visitors Bureau Web site. Yes, there is some information about the Palace at that address, but again, it's generic and basic.

We learned that the chamber is working on a plan to make the Corn Palace the centerpiece of a new Web site.

Without a good, reliable Web site produced and provided by the city or the chamber, we worry that future guests aren't getting a good idea of what the Corn Palace truly offers.

Also in the past, we have noted results from a study conducted by the Black Hills State University Center for Tourism and Research.

Among the findings:

n The state's Internet site, travelsd.com, was the most popular Web-based source of information for Mitchell visitors.

This is disappointing. We feel the potential Corn Palace tourist's first Internet stop should be a site maintained by local tourism managers.

n The median age for Corn Palace visitors last year was 54.

That median visitor age needs to be dropped somewhat to guarantee future guests at the Palace.

And where does the younger crowd get much of its information? On the Internet.

Corn Palace visitation is so important to this city's business district and because of that, we hope all possibilities are thoroughly explored.

It's good to hear a new Web site is in the works.

-- Mitchell (S.D.) Daily Republic

Straining the

ethanol industry

ST. JOSEPH, Mo. -- Good news for Missouri motorists is turning out to be bad news for the state's ethanol producers.

Motorists are fortunate that lawmakers kept their options open last year when they approved a wide-ranging ethanol initiative.

A law passed Jan. 1 requires all regular and midgrade gasoline sold in the state to be blended with 10 percent ethanol -- except when gasoline is cheaper.

Just as mandated, for months virtually all motor fuel sold in the state contained ethanol. The price at the pump in 2007 was determined to be more than 7 cents less per gallon for ethanol blends, and that advantage continued into the first half of 2008.

But then gasoline prices plummeted, and so, too, did the near-term fortunes of ethanol. In the last month, gas retailers across the state have abandoned the alternative fuel in favor of conventional gasoline.

Where does that leave the ethanol industry?

No one can say for sure when gas prices again will top those of ethanol blends. Some are betting it will come this spring, but who really knows? Meantime, detractors fault ethanol's status as a price-advantaged fuel.

They note that it is taxpayers -- the vast majority of whom are motorists -- who pay for a 51-cent-a-gallon federal tax credit for ethanol blended with gasoline. They also point out that ethanol blends produce about 3.4 percent less energy per gallon than conventional gasoline.

Take those two together, and the detractors contend we're normally paying a premium, not a discount, for the privilege of burning ethanol blends in our cars and trucks.

And then there is the compelling case that ethanol's growth has put a strain on the nation's corn supply, forcing up prices for everything from cattle feed to candy bars.

-- St. Joseph (Mo.) News-Press