By Chris McClure, Contributing Editor
You don’t often think about our dependency on the internet until it is unavailable. For the past forever it seems, we have been in the midst of a move from northeast Texas back to the Panhandle. It is an unfortunate aspect of the current state of the world that obtaining basic services, such as internet, has been deeply affected by the COVID-19 pandemic. I will attempt to avoid any (okay, much) commentary related to that issue except to say that it has deeply impacted the way we do business.
It is almost impossible to go into many businesses these days. The fear of spreading the virus has caused a number of them to close their doors to all but employees, except under special conditions in which you are required to wear a mask, keep your distance, avoid contact with any surfaces such as a piece of paper and numerous other minor things, which add up to a major inconvenience. Ignorance has allowed the proliferation of half-baked ideas into a plethora of company polices (not to mention government edicts and regulations) that make it difficult to accomplish simple tasks like getting new internet service.
The cattle feeding industry is not exempt from issues created by our systemic reaction to the virus and attempts to control or prevent its spread. One area of greatest impact is at the beef packer.
We are still dealing with the chaos of the immediate reaction to the first lockdowns resulting from the announcement that a “highly contagious and dangerous new variant of the coronavirus” had breached our shores. The market reacted, as usual, with an extreme gyration in the prices being paid at every level.
I must admit that I took advantage of the dip and bought a few loads of lightweight heifers, the last of which went on the grid this past week. If it hadn’t been for a higher mortality rate than expected, they would have done quite well in spite of rapidly rising feed costs.
If the market had recovered as expected to normal levels for this time of year, those heifers would have done quite well. However, as we all are deeply aware, fats are trading about $10 back from where they were a year ago. Global demand is strong, exports are strong, domestic consumption is strong, so what is going on in the market? As usual, we blame the packers for what is perceived as an artificially suppressed market.
How do you fix the market? Competition is usually the answer. Entrepreneurial types are moving into the packing industry on a number of fronts – from “mom and pop” lockers that custom process a beef, to slightly more adventurous types who are certified to sell individual cuts to the public. There are ranchers selling directly to consumers because the trend for buying locally has created opportunity. The drip into the bucket isn’t even a nuisance to the large global entities, which more and more deeply control our food supply.
Is there room for a regional or national player to enter the business? Many think so, but few are willing to shell out the major cash outlay required for entry considering the risk of going belly up will be high when the existing players respond. I think it would definitely fall into the “high risk” category of investment, in spite of reported record profits to the current players.
What about a regulatory approach? Can government intervention fix the problems? When has government intervention fixed anything long term when the very entities that are being regulated pour millions into lobbying for favorable treatment?
Can we, as their supplier, change the situation? If we could act concertedly as an industry, we might be able to move the dial a little bit back in our direction, but it would require unprecedented cooperation among all cattle feeders – including those with “special arrangements” with the packers. This approach takes us back into the regulatory arena; is that what we really want?
I’ve heard a lot of talk recently that sounds like the Generals of the Confederacy just prior to the surrender at Appomattox Courthouse; it reeks of defeat. I’m not a big fan of surrender and I hate to hear the phrase “you just can’t compete” repeated by numerous individuals. So, if you can’t compete, what do you do? Do you join them or, do you find something different to do? Fortunately, I also hear a few determined individuals who voice ideas that indicate a desire to find a different route to the same destination rather than waving the white flag of surrender.
The bottom line is that we need the packing industry and they need us to supply them with product. There have to be some “win-win” scenarios – it’s just a matter of finding them. Maybe that’s the real question; are we looking to chart a course that is beneficial to all or just ourselves?
There is a tendency among humans to have a short-sighted view of things. We rarely create plans that will endure more than a few years, let alone a few lifetimes. Where are the far-looking people who want to create a better world for our kids and grandkids? They certainly aren’t in Washington, D.C., and they aren’t leading major companies. They are out in the country – cattle feeding country.