Debate continues on how to address competition in cattle markets
Many in the cattle industry are in agreement that increased transparency in markets is needed, but how to get there remains under debate.
During a Senate Ag Committee hearing on Tuesday, William Ruffin, a cattle producer from Bay Springs, Mississippi said the Cattle Price Discovery and Transparency Act of 2022 is the best way to do that. “If the packers do have to buy cattle off the negotiated cash market, then it’s going to cause more independent feedyards, who are on the verge of bankruptcy now to be back in the market,” he says.
Shawn Tiffany owns and operates Tiffany Cattle Company, an independent cattle feeding, and marketing operation, based in Kansas. He told Committee members if the bill passes – it would be detrimental to his operation. “It’s going to apply 20-year-old pricing mechanisms to an industry that has far advanced beyond cash trade,” he says.
Tiffany says marketing issues have been around for decades. “I remember as a boy, with my dad managing a feedyard, cash trading everything at the time, there were these same arguments,” he says. “That the packer has too much power over us, and AMA’s allowed producers to get paid for the product that they are producing.”
Ruffin says the lack of competition in the market is impacting his operation. “The fact that I can’t get but one bid for my cattle anymore, that’s true,” he says. “The fact that producers in my area are going out of business.”
Colorado State University livestock economist Stephen Koontz says economies of size have made the cattle industry more efficient. “I pose a question to producers – would you rather have one bid from the packer with what you know is $200 per head costs,” he says. “Or would you rather have 3 bids from packers with $500 per head costs.” Koontz says there’s also been no research to date that shows mandated cash trade would improve cattle prices.
Ruffin, Tiffany, and Koontz all testified during the Senate Ag Committee’s Hearing on the Cattle Price Discovery and Transparency Act and the Meat Packing Special Investigator Act on Tuesday.