October 12, 2021
US government mandates could cost cattle sector billions of dollars, according to report
A recent report from Texas A&M's Agriculture and Food Policy Center said the US government mandates for price discovery could cost the US cattle industry billions of dollars.
David Anderson, a livestock economist and editor for the 180-page report — called "The US Beef Supply Chain: Issues and Challenges" — told Brownfield the industry is complex, and an easy solution doesn't exist. The report is the result of a collaboration with Texas A&M's Agricultural and Food Policy Center, national experts and the United States Department of Agriculture (USDA).
The authors of the report said they urge "extreme caution" when considering changes to a system that has "rewarded high-quality beef production" while acknowledging regional differences.
One finding stated that mandated minimum negotiated cash trade would have a one-year, negative impact of US$2.5 billion and US$16 billion over a decade.
Anderson said mandates for negotiated cash trade will have limited impacts. "That doesn't mandate that everybody is going to get a bid every week for the cattle they’re trying to sell," Anderson added. "It's certainly boosts the amount of cattle that are traded. It likely boosts price discovery, but it may not solve other problems that many other folks have talked in these fed cattle to packer transactions."
Even though there's incentive to grow small and medium size processors, Anderson highlighted that may not be a sustainable solution to capacity concerns long term.
"In times past, when folks have looked at opening a plant, they’ve looked at it when supplies were plentiful and yet we have a cattle cycle and we're reducing the size of herd right now," he said. "By the time the plant could open, this capacity constraint may not be as severe as it is now which means there going to pay more for the cattle and they're already at a cost disadvantage."
Todd Wilkinson, vice president of the National Cattlemen’s Beef Association, testified at a US House Ag Committee hearing and said USDA doesn't need to grant money to build facilities.
"We don't want to set up a bunch of whole new processors just to see them fail to watch the big boys in to buy them up because that doesn't gain us anything," Wilkinson said.
- Brownfield Ag News