CALF_News_August_September_2021

17 CALF News • August | September 2021 • www.calfnews.net Animal Health International is a full-service distributor committed to helping beef producers increase production and improve efficiencies. Through our innovative technologies, expert knowledge, expansive product portfolio and fast, customizable delivery options, we help customers manage a sustainable and profitable operation and keep the animals in their care healthy and safe. animalhealthinternational.com 800.854.7664 20AH0030b (11/19) David Anderson, Texas A&M Uni- versity Extension economist, agrees that AMAs have reduced transaction costs between feeders and packers, and has helped both sides. “AMAs have value and reducing them will impose more costs, resulting in lower calf prices and higher retail beef prices,” he says . “Value-based marketing in the indus- try was the effort to reward producers for improving quality by paying them for it, paying premiums for quality. Ranchers have changed the entire herd makeup by moving to improving quality over the last 40 years. “Going back to paying on the average would be a problem. In fact, while some want to go back to negotiated cash prices —meaning paying on the average — I don’t think many want to forgo the gains in quality and getting paid for quality that has emerged. It’s hard to envision going back to that,” Anderson asserts. “Cattle producers have always opposed government intervention in their business, but the ongoing disparity in margins have understandably created a sentiment that a government mandate is needed to fix the market,” according to a statement to CALF News from leader- ship at Texas Cattle Feeders Association (TCFA), “Unfortunately, a government-man- dated business model dictated in law will not likely be revised or reversed in the future. A mandate will have many unin- tended consequences, such as increasing operating costs for the beef supply chain, which will make beef less competi- tive with other animal and alternative protein sources. Laws, regulations and industry marketing plans that minimize government interference, but provide antitrust oversight, are the preferred solution.” TCFA prefers a volunteer negotiated cash trade plan set in January by NCBA (see “NCBA’s Voluntary Negotiated Cash Trade Plan,” CALF News June/July 2021). It calls for feeding regions to meet 75 percent of their so-called “robust” trade numbers. “TCFA members exceeded the goals based on university research in the second quarter (April- June) of the plan. We will continue to meet these goals,” TCFA says. Peel sees a break in producer/feeder market conditions. “Again, large cattle numbers hit the market in early 2020. There was a supply bulge and capacity restraints,” he says. “But we’re working our way through it with lower fed cattle numbers. In about a month, the capac- ity issue will go away in the short term. We’re through the worst of this in terms of market conditions.” The market was fractured in 2014 when cattle prices were high, Peel says, while today, the market is broken in a different way. “Overall, the market will fix these things,” he says. “But with all of the anger out there, we’re considering policy things that are pretty scary from my standpoint. “We’re making long-term decisions on short term conditions. If you’re in the middle of a tornado, it’s not the time to remodel the kitchen.” 