Prices, packing plant backlogs affect beef producers

     The way Lane Eads sees it, two problems stand out for beef producers in Jones County and throughout Iowa.

     “There are a number of things that have played a large role in what our producers are seeing today,” Eads said. “Two things that come to mind initially are depressed prices at the producer level in the current market situation, and a large backlog of market ready cattle.”

     Eads is Eastern Iowa Membership Coordinator for the Iowa Cattlemen’s Association, serving as a liaison between county organizations and state leadership. He has been at the job for less than a year, but it has been an eventful one, with COVID-19 issues affecting all aspects of the agricultural industry.

     Much like the pork industry, beef producers are running into backlogs at packing facilities, forcing farmers to be innovative in their plans.

     “Producers are in a situation now where they are trying to slow the growth rate of cattle, without losing profitability for having cattle on feed longer,” Eads said. “There is a very fine line that a number of producers are having to utilize right now.”

     Doug Kurt, who farms between Monticello and Cascade and is president of the Jones County Cattlemen, said some of the problems producers are facing were self-fulfilling prophecies.

     “We started out the COVID thing like everybody else, not sure what’s going to happen,” Kurt said. “There was a lot of fear and panic in the industry. People get nervous, and a lot of things happen.

     “One of the things that happened was, the market started to fall off, because of thoughts that it might affect demand and it might affect the workers at the packing houses. And that turned out to be true. With the close quarters, meat packing was the ideal situation for the coronavirus to spread and grow.”

     Eads added: “We are seeing prices in the retail case reach record highs during this time. The supply of beef has become slimmer due to the throughput issues that we are facing in our industry.”

     This comes at a time, Eads said, when people are demanding beef products more than ever.

     “The demand for grocery store meat, and beef specifically, is the highest it has been for a number of years,” he said. “People are having to cook at home more, and that is why when you shop you see the shelves are empty, and the prices are creeping up.”

     Meanwhile, Eads continued, “producers are not reaping the rewards of upward demand and price. We are facing a large disparity between the price of boxed beef, which is what packing facilities sell to these grocers, restaurants and food stands and trucks.”

     Both Eads and Kurt said there is high hope for a bill, introduced in May by Sen. Charles Grassley, that would mandate a minimum level of negotiated cash cattle trade.

     The bill would require each large packing facility in the United States to purchase a minimum of 50 percent of its weekly kill by volume of cattle, in the cash market. It would also require a 14-day delivery period.

     “This would be extremely beneficial for our producers in Iowa and around the United States,” Eads said. “A small amount of packing companies in the U.S. own a large majority of the packing facilities. In the current market they have all the leverage, and we as producers to not have any power to negotiate.”

     “It would force fair marketing on what the farmer can get for his product,” Kurt said. “With only four major packers controlling 80 to 85 percent of the beef kill, they kind of have a monopoly, and they set the price.

     “If we had more cash cattle being traded, when box beef went up two months ago with this COVID thing, we would have had leverage to pull our price up as well.”

     Eads said the Iowa Cattlemen’s Association is continually gaining more support behind the bill.

     Kurt agreed: “We have a lot of hope. The Iowa Cattlemen are behind it, the Jones County Cattlemen are behind it, a lot of producers are behind it. In order for us to get that through, we’re going to have to work with other states that are pushing for it, like Nebraska, South Dakota, North Dakota and Minnesota.”

     Meanwhile, both said conditions for beef producers are starting to gradually improve as the number of workers at the packing plants rises.

     “They’re getting close to 80, 90 percent of what they were,” Kurt said.

     “Things are beginning to improve ever so slightly,” Eads said. “Producers are becoming more current as we work through this large backlog of cattle. Plants are starting to come back, and seem to be committed to harvesting the large weight cattle. This is allowing producers to have the flexibility to manage these animals better.”

     Until things get back to normal, the problems producers have will continue to affect not only beef, but all other aspects of their operations.           

     “It’s affecting every commodity I’ve got on this farm,” Kurt said. “The inputs I buy to raise a crop of corn or to feed out the cattle haven’t gone down any. Fertilizer, chemicals, seed corn, grass seed, parts at the (equipment) store, all that stuff has stayed up. It puts a squeezer on everybody.”