When I first heard that the Montana Beef Council was partnering with Wendy’s to promote North American Beef I let out a string of expletives deleted. I suspect I wasn’t the only one. Subsequently I learned through a reliable source more of the details of how this happened. According to my source, the Wendy’s of Montana franchise initially proposed to feature Montana raised beef. After it was determined that there was not enough Montana raised beef available on the market, the intention was changed to feature USA produced beef.
Up to this point I commend Wendy’s of Montana for having a good idea. Exactly how it went wrong I am not certain. Either the beef packers who supply Wendy’s would not deliver USA born, raised, and slaughtered beef, or the price they demanded was not right. In the end, the Montana Beef Council partnered with Wendy’s to feature North American raised beef. Why the Montana Beef Council decided to use checkoff tax dollars that were paid by Montana ranchers in order to promote Canadian and Mexican beef remains the big mystery.
Now this may seem a bit unrelated, but please bear with me. Recently I was driving home from Billings and tuned into Canadian Radio to listen to the news. They were interviewing a guy who was complaining about our Country of Origin Labeling (COOL) law. This guy blamed US cattlemen for inflicting COOL on them, but when he was asked specifically how COOL was affecting Canadian beef producers, he explained that the beef packers, citing COOL as the reason, were paying Canadian producers less.
That doesn’t make much sense to me. Beef packers need Canadian beef because US producers are not raising enough cattle to meet consumer demand. If, as the experts never tire of telling us, supply and demand explains everything that happens in the cattle market, then explain to me why Canadian cattle are being discounted before COOL has had any chance to be effective. Given the modern electronic technology available to control inventory, it doesn’t strike me that keeping track of the meat from a pen load of Canadian steers would be that hard or expensive.
The common denominator, both for our issue over Wendy’s and for what the Canadian ranchers are facing in the market, is the beef packing cartel. We, as American cattle producers, have organized to promote a number of initiatives that we feel would be beneficial for us. Getting the COOL law passed has been a major achievement, but as we see from the Wendy’s situation, the benefits remain elusive. The reason is the beef packer cartel which wields enormous economic power over every aspect of the cattle industry.
Until we find the courage to confront the packer cartel directly, we shall continue to be subject to market failures and disappointed by events such as Wendy’s using Beef Checkoff Tax money to promote North American beef. The solution is actually simple. The power that the beef packing cartel holds over livestock markets is through unpriced captive supplies that are used to strategically control the market. This is a practice that is clearly illegal under the Packers and Stockyards Act.
Requiring packers to bid for their supply will restore transparency and competition in the fat cattle market. Once we have transparent and competitive markets, if the big three aren’t interested in supplying Wendy’s with Montana or USA raised beef, than a smaller upstart competitor most certainly will. It is very clear what is required – it is just old fashion COMPETITION.