Cattle industry leaders and Kansas Livestock Association members took in a number of speakers during the annual convention Dec. 1 to 3 in Wichita, Kansas. Current National Cattlemen’s Beef Association President Jerry Bohn was on the slate for Beef Industry University on Dec. 2.
Bohn, a former KLA president, updated attendees on issues happening in Washington, D.C.
“We’ve been through a lot the last two years, it’s been tough,” he said. “It’s been out of balance.”
The inequity of what the packers are making versus what beef producers are getting has been a hot button issue for a while now. But because of the pandemic and other issues with packers, there’s also been a supply problem. Cattle were backed up to the point where they weren’t processed in a timely manner.
Bohn has been in meetings with the cattle marketing committee within NCBA to find a possible solution to these issues.
“We developed a program that would encourage an increase in negotiated grid trading, particularly in Texas, Oklahoma, New Mexico and Kansas,” he said. “We also would hope that we could encourage increased packer participation.”
The third quarter results of this program have been interesting, he said. There were some “triggers tripped” that will ultimately lead to discussions at the NCBA convention in Houston February 2022 about whether or not the industry wants to go down the road of mandatory cash trading.
“Hopefully that doesn’t happen. I don’t think that’s going to happen,” he said. “But in the meantime, I think we had some success. We’ve increased the amount of negotiated trade that is going on in the southern Plains, particularly in Texas.”
Kansas wasn’t seeing the number of trades Texas was because, according to Bohn, Kansas trades about 25,000 to 40,000 head a week on a negotiated basis. Texas on the other hand is only trading about 15,000 to 30,000 head a week.
As far as packer participation goes, of the four major packers, some of them participated more than others.
“Some of that is as a result of programs that they have in place, that they’re locked in, and that they can’t make the change as quick as we’d like,” Bohn said. “This industry is in a big shift. (It) takes a lot to get it turned. But I think we are making some progress.”
Another initiative in the marketing arena is a cattle contract library bill coming out of the U.S. House of Representatives. Although a bit controversial, proponents believe if more information can be shown about alternative marketing arrangements, along with premiums, discounts, and requirements, leverage will increase for cattle feeders. Opponents think the only benefit will be for the packers.
“They’ll figure out what their competitors are doing,” Bohn said. “We’ll narrow the premiums that we receive for our cattle. So again, that one’s going to be negotiated.”
There’s also concern about the lack of packing capacity, even with a number of new plants being proposed. Progress is being made on plants in North Platte, Nebraska, and Council Bluffs, Iowa.
And it’s no secret labor is an issue across the industry.
“It’s estimated that we’re missing probably 4,000 to 5,000 head a day of fed cattle being processed right now because of a lack of labor in the current plants,” he said. “So think where we would be if we could just get those plants to operate at full capacity.”
Bohn said the current administration “wants to spend a lot of money,” and agriculture will likely take a hit, especially when it comes to the ability to pass on farms, ranches and feedyards to the next generation without having to sell part of it to pay taxes.
“We got through the House of Representatives with a step up and basis still left in place,” he said. “They’re still negotiating in the Senate. I think we’re optimistic that we will be able to protect that.”
Increased capital gains taxes and decreasing the estate tax exemption is one aspect they’re looking at, and those involved in agriculture need to make their elected officials aware of what these tax implications could do to their operations. President Joe Biden’s social spending package in the Build Back Better Act could wreak havoc in farm country.
“It’s also estimated that about 40% of the ag land across the nation will change hands in the next 20 years,” Bohn said. “So that’s why it’s really important that we get we were able to protect all of these tax advantages are that are available for agriculture right now.
Another popular item in Washington and around the country is sustainability and climate change. Bohn said NCBA had a 17-member task force that spent part of the past several months developing some sustainability goals for the cattle industry. The group believes the beef industry needs to consider a few of the goals.
“It’s not that the industry is already not doing a good job,” Bohn said. “It’s because the consumer expects us to be active in this area.”
One more issue in Washington is one that Bohn believed had “been put to bed”—the Waters of the United States. It went into place in 2020, but once Biden took office it became an issue again.
“So we’ve now reverted back to the 1986 rule that was in place until 2015 and they’re going to revisit Waters in the U.S. again,” he said. “So we’re going to have to refight that battle all over again, and try to prevent them from doing damage and harm to you all and your operations and your ability to run your business as you see fit.”
President Biden also wants to have a program, America the Beautiful, to conserve 30% of the land and water by 2030. Bohn suggests staying tuned for this one since it could influence private property rights.
In the approved $1.2 trillion infrastructure bill, Bohn sees some good progress.
“One is that we have been working as an industry,” he said. “You’re all are aware of the challenges of truckers are having to haul livestock across the country because of hours of service. We were able in that infrastructure bill to get an additional 150 miles at the end of a haul added on to the hours of service limitation.”
So far livestock haulers have been exempt from the hours of service laws.
“In fact, we just found out in the last few days that that is now effective through Feb. 28, 2022,” he said. “That all livestock haulers are exempt from hours of service. So we’re going to continue to work to try to get them exempted permanently, but needless to say it’s a push.”
Also in the infrastructure bill investments in rural broadband, rebuilding roads and bridges, among other things. When it comes down to the beef industry, Bohn believes it has a lot of things going for it, even after a tough go for some in the last decade.
“One of the most positive things I know about right now is how great beef demand is,” he said. “It’s the best in over 30 years, both domestically and internationally. So we must be doing something right.”
Kylene Scott can be reached at 620-227-1804 or [email protected].
