NCBA’s President-Elect Jerry Bohn Discusses 50/14 On AgriTalk

Feedlot cattle ( FJ )

The coronavirus crisis has “caused price discovery (in the cattle industry) to basically evaporate,” farmer, cattle feeder and NCBA president-elect Jerry Bohn, Pratt, Kan., told AgriTalk’s Chip Flory on Thursday. “We were barely in balance with supply and demand before the crisis, and now we’re backing these cattle up – we’re probably three to four weeks behind in marketing.”

Bohn admits the relationship between feedyards and packers is as stressed as it has ever been.

“There’s a lot of anxiety and anger about what's going on. This is the second black swan event in about seven or eight months after the Tyson fire,” Bohn said. “People are upset about the spread between boxed beef prices and cash fed cattle prices. Unfortunately, a lot of the bad ideas that have ever been born in the industry are showing up again.”

 

One idea gathering significant attention since COVID-19’s impact on cattle markets is a minimum percentage of cattle procured by packers each week be on a negotiated cash basis. Earlier this week Iowa Senator Charles Grassley and Montana Senator Jon Tester proposed a bill in the Senate that would mandate 50% of the cattle traded be on a negotiated cash basis with 14-day delivery. Bohn said NCBA does not support the idea of government mandates for the cattle markets.

NCBA President-Elect Jerry Bohn

“NCBA’s policy is that we believe it’s important to protect our members right to conduct and do business as they see fit that best meets the needs of their individual businesses,” he said. “And the bill Senator Grassley has proposed would mandate that many of our producers will have to change the way they're currently sell cattle. The question comes to mind is ‘what part of government's going to do that? Who's going to determine what's fair and what's legal and what's not? We believe that should be decided by the industry.”

Bohn said NCBA has a cattle marketing task force currently working on that issue. It’s not an easy issue to fix, “but we believe it should be an industry-led solution, not a government-mandated solution.”

In the mid- to late-1990s, Bohn said value-based marketing began to evolve. That was at a time when “beef demand was declining at a precipitous rate.”

Because of value-based marketing, Bohn says, “I believe that producers are now getting rewarded for the quality that they produce, and consumers are getting the kind of product that they want to buy. Beef demand is very good right now across the country and around the world. I think that’s a direct result of sending the proper signals back to the industry to produce the kind of cattle that produce the kind of beef that consumers want to buy.”

Regarding the concept of 30/14, or 30% negotiated sales with a 14-day delivery, Bohn said, “If it’s government mandated we’re not going to be in favor of that. Does there need to be more price discovery? I think we would all agree that's a problem that the industry must deal with, but, mandating how we do it and mandating that the government will be in charge – that’s just the wrong direction.”

Bohn said if the industry was forced to go to 50% cash trade, “there will be less money available to producers in the future, not more.”

Related stories:

Senate Bill Would Require 50% Negotiated Trade

 

Comments
Submitted by just about broke on Thu, 05/14/2020 - 23:23

of course the ncba would be against anything that prevents the meatpackers to continue to steal from us. this would also screw up the sweetheart deals ncba members are getting from the packers. who cares what the ncba thinks? Just give me my check off money back and then you can say whatever you want!

Submitted by William Albert Brown on Fri, 05/15/2020 - 07:15

So you mean you would rather see a system just stay in place that would eventually put small to medium family owned and operated farms like mine out of business. Then explain why I should support the NCBA? We must have a level playing field for us to compete and this bill insures that. The NCBA needs to decide if they are going to represent beef cattle producers, or if your just going to stay in the back pocket of the big packers and continue to line your pockets with the check-off dollars from beef producers.

Submitted by Tim Esch on Fri, 05/15/2020 - 07:28

If we let Ncba lead the charge nothing would change. You guys are so out of touch with the producers out here. I think you forgot what it's like at the bottom!!

Submitted by Ron Beck on Fri, 05/15/2020 - 09:02

Industry will not police itself. This is why we have the Sherman Anti-Trust Act and other laws that try to stop big business from running roughshod over the little guy. NCBA's task force working on this is like Nero fiddling while Rome burned.

Submitted by Max on Fri, 05/15/2020 - 09:14

I've done a lot of business with Jerry over the years but I disagree with how grid cattle are priced. The base price always goes back to average cash price which over time has led to non-competition in price discovery. Maybe it should be tied to the end product prices?

Submitted by Very concerned cattle feeder on Fri, 05/15/2020 - 10:12

Explain to me how we get less for our cattle if this is adopted we need competition in the business and this would create it

Submitted by Joe Neill on Fri, 05/15/2020 - 16:34

Go back years ago in the 60's, 70's. and 80's when we had major packers as well as numerous small packers. We could get a bid on cattle 5 days a week from someone. Today we have let efficiency get us to 4 packers harvesting 80% or more of finished cattle with 2 of these 4 owned by foreign companies. That is not a good way to keep the market level or to get through times like this virus era when the plants are so big that one fire or a virus in one plant can change the dynamics of the market. That is too much control for the good of the cattle industry and just as important for the good of the American consumer. We need free and fair markets and to do that we need more medium size plants and different ownership