National Farmers Organization Says Cattle Pricing System Needs Modernization
(AMES, Iowa) October 8, 2019 — National Farmers Organization says the country’s cattle producers deserve a more modern and competitive cattle pricing system. In mid-July, prices cattlemen receive for their animals dropped dramatically after a fire at a Tyson meat processing facility in Holcomb, Kan., while packer profits skyrocketed.
“The fact that cattle prices dropped so dramatically and packer profits soared is a wake- up call that America’s cattle pricing system needs to change,” said National Farmers Director of Livestock Marketing Pat Lampert. “We as an industry need to move toward a value-based price discovery system.
About 15 percent of cattle nationally are sold in the cash market, making it very difficult to establish accurate and fair pricing. The remaining 85 percent are sold under some form of captive supply.
“Today’s cattle markets are very different from those of twenty years ago,” Lampert said. “Because everyone deals within a system of shrinking cash cattle markets, it’s very difficult to arrive at a fair price.”
National Farmers Organization officials suggest an alternate pricing approach could be based on a blend of average spot cash prices, nearby weekly cattle futures and the weekly beef cutout value.
Cattle pricing frustration was at the forefront during a cattle producer meeting in Omaha, Neb., last week, hosted by the Organization for Competitive Markets. At the meeting, producers said they were losing more than $200.00 per head, while packer margins were more than $400.00 in August.
“We are ready to work with others vested in the cattle industry to help find a solution to these thinly-traded markets,” said Lampert. The most logical way to a fair and honest cattle market would be to base the system on a cattle producers’ actual production costs.
National Farmers markets milk, livestock and crops for thousands of American agricultural producers. We offer six decades of experience representing farmers and ranchers, and grouping production from many ag operations. We help producers market together. National Farmers’ experienced marketing professionals negotiate on conventional and certified organic farmers’ behalf in cash and contract sales, establishing commodity sales terms with the farmers’ interests in mind.