NOBULL: The meat lobby’s opposition to COOL is a disservice to U.S. cattle producers — NCBA has betrayed the trust…

Their fierce opposition to COOL and numerous other pro-cattle producer issues make it abundantly clear that NCBA has betrayed the trust of checkoff-paying cattlemen. The beef checkoff (now commonly known as the beef tax) represents more than 80% of NCBA’s total revenue; being essentially the lifeblood of this front organization for the meat packers. It is estimated that they have received a billion dollars by virtue of their veritable lock on the CBB committee that awards the contract. Rather than doing the ethical and proper thing and recusing themselves from the contracting process, they repeatedly use their unprincipled influence to award the contract to themselves.

Enough of our preoccupation with treating snakebite, it is time to deal with the snake! The Secretary of Agriculture has the power to fix this sordid situation and should summarily terminate NCBA’s contract.

Fred Stokes

High Plains/Midwest Ag Journal

The meat lobby’s opposition to COOL is a disservice to U.S. cattle producers

The mandatory Country of Origin Labeling law facilitates competition between U.S. cattle producers and the cattle producers in the 16 countries from which the U.S. currently imports either beef or cattle. It does this by empowering consumers to choose from which country packers must source their live cattle supplies. For example, if consumers consistently choose to purchase beef labeled as produced entirely within the United States, then demand for exclusively U.S. cattle will increase and demand for cattle of foreign origin or mixed origin will either remain the same or will decrease.

A recent investigation by the U.S. Department of Agriculture found that packers could not sell beef labeled as originating from Canada or Mexico for the same price they could sell beef labeled as originating entirely within the United States. This finding shows that COOL impacts the price that packers can charge for beef based on where the beef originated. This, of course, is not good news for packers because it disrupts their ability to maximize profits by sourcing cattle and beef from lower-cost countries and selling it to retailers for the same price that domestic beef would command.

Multinational packers and their allies (including the National Cattlemen’s Beef Association) that comprise the meat lobby fought hard to eliminate COOL in the 2014 farm bill because they wanted to preserve the packers’ ability to source cattle from wherever they wanted and to sell the resulting beef for the same price as if it were produced exclusively in the United States by U.S. cattle producers. U.S. cattle producers and consumers are fortunate that the meat lobby failed in their effort to eliminate COOL.

The meat lobby consistently touts two half-truths to justify their opposition to the widely popular COOL law. The first half-truth arises from the meat lobby’s failure to disclose both sides of the trade equation—exports and imports. The meat lobby focuses exclusively on exports claiming that they oppose COOL because Canada and Mexico do not like COOL and together those countries make up about $2.1 billion in beef exports. This claim is true.

But, by omitting the import side of the trade equation, the meat lobby hides the fact that the value of imports from Canada and Mexico, for which there is no additional value added by the U.S. cattle industry, is about $2.3 billion. This means the United States maintains a trade deficit with Canada and Mexico in the trade of beef, beef variety meats, processed beef, and beef-on-the-hoof (cattle imported for immediate slaughter for which there is no value added by U.S. cattle producers). Thus, the trade imbalance with Canada and Mexico costs U.S. cattle producers about $300 million annually, based on 2013 trade data.

The second half-truth arises when the meat lobby claims that U.S. cattle producers add value to all the imports of live cattle from Canada and Mexico by backgrounding them, running them on grass or wheat, or by feeding them. This is only partially true because about one-third of the cattle imports from Canada and Mexico are cattle imported for immediate slaughter. In 2013, for example, about 670,000 head of cattle were imported for immediate slaughter and, consequently, these cattle did not provide U.S. cattle producers with value-added opportunities and U.S. cattle producers do not make any margin on these cattle.

In fact, these slaughter-ready cattle depress domestic prices because they add to the available supply of cattle in the U.S. market. According to the U.S. International Trade Commission, the price elasticity for fed cattle is such that a one percent increase in supplies will reduce domestic prices by two percent.

Similar to the price-depressing impacts caused by slaughter-ready cattle imports is the potential for prices to be depressed by increased imports of beef. Recently, the USDA proposed a rule to allow the importation of fresh beef from Brazil, despite the fact that Brazil is not considered free of Foot and Mouth Disease. Based on its economic modeling, USDA claims that if the U.S. imports 40,000 metric tons of Brazilian beef, U.S. producers will take a financial hit of about $165 million due to lower cattle and beef prices. If Brazilian beef imports increase to 65,000 metric tons, then USDA estimates that U.S. producers would take a financial hit of about $316 million.

The volume of beef imports from any of the 16 countries that currently export beef to the U.S., such as from Nicaragua, Costa Rica, Honduras, Australia, New Zealand, Uruguay, Brazil, Mexico and Canada, as well as the imports of live cattle from Mexico and Canada, most certainly have an impact on the prices that U.S. cattle producers receive for their cattle. The COOL law is the only tool that U.S. cattle producers have to enable them to compete against this growing tide of imports in the U.S. market.

Without COOL, the packers can decide which country’s cattle are in demand because they will have free rein to decide from which countries they will source their cattle and beef to satisfy domestic beef demand. With COOL, the decision regarding where packers must source their cattle and beef will largely be made by consumers each time they exercise choice at the grocery store based on where they prefer to have their beef produced.

As the largest producer-only representative of the U.S. cattle industry, R-CALF USA will continue to encourage U.S. consumers to use the new COOL labels to seek out and ask for beef that is born, raised, and slaughtered right here in the United States.

—Bryan Hanson, R-CALF USA president, Fort Pierre, S.D.

Date: 3/17/2014

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