R-CALF CEO speaks on need for producer involvement in beef industry

Lander, Wyo.--R-CALF USA Chief Executive Officer Bill Bullard recently was the featured speaker in Lander, Wyo., at a banquet of more than 150 cattle producers. Fremont County Cattlemen's Association hosted the event.

"You participate in a dynamic, highly competitive, multi-segmented beef supply chain, and each segment must compete against each other in order to ensure that profits generated by consumer beef purchases are properly allocated," Bullard told the audience. "This is how a competitive industry functions. If producers do not compete for their fair share of the profits, no one else will either."

Bullard asked the crowd to look at their industry through the eyes of a multinational packer, an exercise that helped illustrate the point that while producers and packers are integral partners in the beef supply chain, they each must pursue different strategies in order to minimize their risk, maximize their profits and enhance their competitiveness.

The packer wants to integrate the cattle herds of Canada, the United States, and Mexico into one North American entity, thereby expanding their available supplies of cattle so they can minimize the frequency of higher prices caused by tight supplies, he said. On the other hand, producers benefit when supplies tighten, and so it is in the producers' interest to maintain the separate identity of their U.S. cattle industry.

In addition, packers are willing to downwardly harmonize health and safety standards to what they believe is a more reasonable level to ensure that consumers cannot perceive that beef produced from cattle in the U.S. is in any way superior to beef from cattle in Canada and Mexico, Bullard said. If one of the countries from which packers obtain their supplies has higher standards, then consumer preferences could limit the packers use of cattle produced in the countries with lower standards, thus defeating the packers' objective of expanding available supplies. However, producers in the U.S. know that if they hold their industry to the highest standards, their cattle will command the highest price.

Also, Bullard continued, packers want consumers to seek out their beef in the marketplace, regardless of where the packer obtained the cattle to produce the beef. Therefore, packers want to label their beef with their company name. Producers also want consumers to seek out their beef in the marketplace. But producers benefit by a label that distinguishes beef with a country-of-origin label. Producers want consumers to seek out beef that was born, raised and slaughtered in the United States, as this is what will drive demand for their U.S. cattle.

Bullard outlined R-CALF USA's four-point plan to ensure the long-term profitability and viability of independent, U.S. cattle producers. The plan calls for implementing Mandatory Country-of-Origin Labeling (M-COOL) so producers have the tools they need to compete in the marketplace. R-CALF USA also seeks to reform anti-trust laws to limit the packers' use of packer-owned and controlled cattle, thus removing the tools that packers have used to gain a competitive pricing advantage over U.S. cattle. Cattle-specific safeguards are needed in trade agreements to protect the cattle industry from price-depressing import surges. Finally, the plan calls for strengthening health and safety import standards to maintain the U.S. cattle industry's reputation of producing the best beef in the world under the best conditions, a reputation earned by maintaining the highest health and safety standards.

"Cattle producers need a strong national organization to represent the exclusive interests of independent cattle producers," Bullard said. "The rest of the beef supply chain is already well represented by their exclusive organizations, and it is time that producers begin to effectively compete for their interests. This is why R-CALF USA was formed, and when R-CALF USA gains another 7,000 cattle-producer members, it not only will be the fastest growing national association representing the industry, but the largest and most effective organization."

Date: 2/20/06