CALF_News_August_September_2021

13 CALF News • August | September 2021 • www.calfnews.net new and independent local and regional packers. Beef state senators urged Attorney General Merrick Garland to have the DOJ move forward with its investigation into anti-competitive practices in the meatpacking industry. “It’s in the best interest of both produc- ers and consumers for the DOJ to get to the bottom of the current market dynam- ics and assess why they seemingly always result in producers getting the short end of the deal,” said Ethan Lane, NCBA vice president of government affairs. Fair Markets? In June, the Senate held a hearing on “Examining Markets, Transparency and Prices from Cattle Producer to Con- sumer.” Peel wasn’t there to testify, but he followed the discussion on how markets could be made fairer for producers and feeders. “Fair doesn’t enter into economics,” Peel declares. “It’s a market system. You pay as little as possible for product and sell it for as much as you can on the out- side. If there is a drought elsewhere and you have hay for sale, do you sell for less money than the market dictates? You’re usually not going to do that.” He notes that during the drought period from 2011-2014, Southern Plains herds were forced to liquidate. Cattle prices increased. Profits were strong for cow-calf, stocker and feeding operations. Even the least-efficient producers pock- eted $100 or more per calf. Again, that’s when cattle supplies were short. Packers were forced to pay more for cattle. And producers were forced to pay more for herd replacements.What was fair? “Fair is a policy question, and the poli- cies being discussed are what worry me,” Peel says. “It’s not my job to set policy. It’s my job to tell the consequences. Make sure you have the information as to why we’re in this situation. Much of the policy stuff being discussed flies in the face of all of the research we have in how this industry works. “Research shows that mandates are a bad idea. Concentrated markets don’t necessarily have anything to do with price discovery. Better price discovery won’t make better prices. If you do a thorough mandate that imposes new transaction costs, there’s a very good chance you will cause prices to go lower. That’s what research tells us.” Alternative Marketing Agreements Glynn Tonsor, Kansas State Univer- sity agricultural economist, was among those who testified at the Senate hearing on markets and transparency in June. Tight packer capacity and cattle market- ing were discussed. “Economists expect lower fed cattle prices and higher beef prices when a system is at or near operational capac- ity,” he said. “On balance, that is what we have observed in markets. Going forward it is generally expected fed cattle volumes will decline and some physical processing capacity may be added.” He praised alternative marketing agreements (AMAs) or formula pric- ing, which have grown in use in recent decades. Tonsor said AMAs originated Part of the Huvepharma line of feed additive solutions huvepharma.us 877-994-4883 See what the power of choice can do for your profitability. Switch to Monovet ® 90 (monensin, Type A medicated article). It’s the first monensin bioequivalent available in the U.S. WHEN YOU HAVE CHOICES OF YOUR BOTTOM LINE YOU HAVE CONTROL Monovet ® 90 (monensin, Type A medicated article) MON052021-001 Continued on page 16 