AMARILLO, TX – There’s one issue in the cattle industry that just isn’t going away anytime soon; the one dealing with market disruptions and a lack of price transparency. Since a fire at a Holcomb, Kansas plant more than 22 months ago, the only segment of the industry that appears to be cashing in on high prices is the packer segment.
Last week the Senate Agriculture Committee heard testimony on the issue of “Examining Markets, Transparency, and Prices from Cattle Producer to Consumer” and found differing views on the disparity of profit margins for packers and cattle producers, differences between price and value determination, the need for greater market transparency and increased negotiated trade to improve price discovery and requests to support new beef processing capacity.
According to Texas Cattle Feeders Association (TCFA), its members have more than tripled the average weekly volume of negotiated trade over the past year, surpassing levels established in a 75% plan by the National Cattlemen’s Beef Association (NCBA). “We’ve proven that an industry solution to increasing negotiated trade will work,” TCFA Chairman Scott Anderson explained. “We do not need a government mandate and all the unintended consequences that could result. Our members have clearly demonstrated their commitment to increasing negotiated trade and improving price discovery; however, it is also equally apparent that current factors such as market power and leverage are negatively impacting the cattle market, and we are committed to addressing these issues.”
All in attendance, however, agreed on the need for more beef processing capacity to shift leverage from packers to feeders.
(SOURCE: All Ag News)