Dave Maples: Thoughts from Dave

Thoughts From Dave

Dave Maples Executive Vice President

“We are not all in the same boat. We are in the same storm. Some have yachts, some have canoes, and some are drowning. Just be kind and help whoever you can”. Quote from Damian Barr. I just happen to see this quote on the way home from the NCBA convention in Houston, Texas last week. It resonated with me after attending the live cattle marketing committee where the issue of “mandate” or “not” was debated yet again. The issue is about how the industry sells fat cattle to the packers. Do you do it by negotiated trade on the grid or by way of an alternative marketing arrangement. As I have listened to the debates over the years the quote by Damian Barr hit home with me because we are all (the cattle industry) in the same storm but we are not in the same boat when it comes to selling our cattle. I have seen it for years in different aspects of the industry. If you have a larger group of well managed superior genetics, you could be in the yacht. Most often you will have a better outcome than someone with just a few head of unmanaged calves who is most likely in the canoe or maybe drowning. Back to the NCBA convention there was a resolution that the live cattle marketing committee debated for nearly an hour in a standing room only audience. This was not the first time the issue had been debated and researched. When a vote was called the established interim policy would remove any doubt about the associations distaste for having the government regulated “cattle producers’ freedom of choice to conduct their own business and utilize their own marketing programs.” The committee vote was 146 to 41 and the full board voted in a very similar manner. This interim policy would put NCBA in line with policy established by the American Farm Bureau Federation in asking that Congress strip mandated levels of trade from the Cattle Discovery and Transparency Act pending in the Senate. This is not to say that there are other aspects of the bill that NCBA would support. The need to add transparency into how the prices for formula-contracted cattle are negotiated is one area of support. The industry has wrestled with the issue of price discovery for years as more and more cattle have moved from cash trade to forward contracts. The issue came to a boiling head during the drastic increase in packer margins during the pandemic.

Cattle Fax

Just a few of the CattleFax predictions during the Market update at the NCBA Convention and Trade Show were as follows. 1. Inflation risk are significant in the next 2-3 years. Be prepared. 2.The annual growth trend for meat and poultry production will continue to moderate, packing plant chain speed and capacity constraints as well as elevated feed cost. 3.Cow herd will stabilize by 2023. 4. The smallest cyclical cattle and beef supplies will stretch into 20242025. 5. U.S. meat exports will continue to grow as the global population increases. 6. The demand for High Quality Prime, CAB and upper 2/3 CH beef will remain strong. TASTE is KING! 7. Prices for cattle are headed higher the next several years as supply shrink and margins realign. 8. Profitability will improve significantly for cow/calf, fed cattle and feeder cattle producers in 2022. The Kentucky Beef Network will host a webinar with CattleFax in early March so make plans to Zoom in.