By Jeff Caldwell.
The average cattle producer is at serious risk of going out of business, according to Kansas Cattlemen's Association members.
This issue was discussed at the third KCA annual meeting on Jan. 19 in Dodge City.
Citing what he called "a total economic breakdown" underway in the United States, Mike Callicrate, cattle producer and feedyard owner, St. Francis, KS, said the cattle producer is being stressed by a market driven by domination of a few large packing corporations, which have driven the market price of beef down substantially, along with alliances between grocery retail corporations and packers, while the retail price has remained steady or increased. This shift in the market structure, driven by global business development, has left the American cattleman with a shrinking market share.
"There are a lot of big companies that are global, and they are demanding volume, not necessarily quality," Callicrate said. "That has driven even more concentration in production and distribution."
In addition, Luke Schwieterman, commodity broker and owner-operator of Schwieterman Commodities, said cooperation and communication among cattle producers, packers and grocery retailers is lacking, and, as a result, consolidation has an even greater effect.
"It is how we are splitting the money up going out the back door of the grocery store that is the problem," Schwieterman said. "When people consolidate, it is to get a bigger share of the pie."
These practices, according to Schwieterman, border on violating anti-trust laws, which the government must enforce, in order to maintain a fair market.
"That is the purpose of government--to make sure it (the market) stays on a fair and level playing ground," he said.
In addition to being a legislative matter, enforcement of anti-trust law in regard to the cattle industry also lies within the duties of the U.S. secretary of agriculture, which, according to Callicrate, has lacked for many years.
"A good law can become a bad law, because of a lack of enforcement, thanks to secretary of agriculture after secretary of agriculture," Callicrate said. "None of them have enforced the law. They simply do not have the will."
As a result of concentration and volume-driven demand, according to Callicrate, market conditions are created that nullify most of the average cattleman's ability to compete in the marketplace and, more importantly, his essential freedom.
"I am against unfairness in the marketplace. I am against an industry that lacks competition. I would argue that competition is fundamental to freedom," Callicrate said. "Somewhere between where that calf hits the ground and where that steak hits the plate, you have to talk about the price."
This problem is something that requires immediate action, according to Schwieterman, and must be addressed immediately, in order to preserve the prosperity of the nation's cattle producers.
"You (cattle producer) are going to have to do something," Schwieterman said. "We are going to have to fight fire with fire."
One element that has damaged U.S. cattle producers' ability to compete today, according to Mike Schultz, co-founder of the KCA, has been the development of a global economy. While originally seen to be beneficial to the U.S., he credited the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA) with driving the market price for beef produced in the U.S. to all-time lows.
"Remember NAFTA and the WTO? They promised prosperity in the global environment," Schultz said. "Seven years later, let the record show, U.S. trade surpluses of beef fell from $1.2 billion to $700 million."
These global entities, Callicrate said, are responsible for initiating a repeat of what has happened throughout history--the agriculture producer, or "wealth creator," lacking proper payment for goods produced.
"Throughout history, the wealth creator in agriculture has been a serf or peasant, and has been exploited," he said. "The WTO and globalization are designed to keep you in serfdom."
Callicrate offered a number of potential changes that he said could restore a market more suited to the needs of small, independent cattle producers. In addition to passing mandatory country-of-origin labeling, Callicrate said fair competition could be restored with the break-up of agribusiness firms that control the market, which he called "arbitrary" and "whatever they (packers) feel like they can get away with paying," such as Tyson, IBP, ConAgra and Cargill.
In addition, Callicrate said smaller, more local farms and producers should be promoted, in order to more fairly compete with larger firms.
"We need to promote and financially support more localized, non-global food systems that give both small- and commercial-size farms market access," he said.
The KCA, which currently includes more than 750 members, is a growing organization that, despite its short, three-year history, has become involved with lobbying in Topeka and Washington. Schultz said KCA members are working hard for the good of the average cattle producer. He said that he has seldom been met by friendly faces, even by Kansas legislators.
"We are probably one of the youngest organizations who is working with the legislators in Topeka," Schultz said. "We have some who are unfriendly, and even the ag chairs in the House and Senate do not want to see us."
Despite the KCA's unpopularity, Schultz said it is important that each cattle producer must voice his or her opinion on matters pertaining to maintaining a fair marketplace.
"We have to get off the tractor, get out of the feed truck, go to the house and make the phone call (to legislators)," Schultz said.
Schultz attributes the KCA's unpopularity to the fact that members are exposing the true injustices in the market that go against the influential ideas of the large packers and retailers.
"We have been labeled dissidents, activists and populists, and that is not the case. We just tell the truth," Schultz said. "There are problems, and we are going to try to address them."