Cornett: Thinking the Unthinkable

Sorry to be so late to the party here, but I’m just now realizing that “packer concentration” is just the strawman in the debate over the Cattle Market Transparency Act and mandating cash trade.

This isn’t Feeders v Packers. It’s Feeders v Feeders. Little v Big. Region v Region. Business structure v Business Structure. One set of folks hoping to use the power of government to help them be more competitive with the other.

I hate to say it, but one might say, even if one hated to say it, that this is a “crabs in a bucket”* situation. If one assumes, that is, that formulas and progress are synonymous. Which, of course, not everybody assumes.

Plenty of folks are scared of the chickenization scenario, in which first come formulas, then come production contracts, then come “no other options.” Which sounds pretty awful, at least judging by the complaints one hears from the folks who grow chickens (or, increasingly, pork) on contract. But, then, they just keep growing more fowl and pigmeat, don’t they? And taking more and more of beef’s market share.

If things are so awful for them, why do they keep doing it?

So, I would like to think through that thought of fowlifying beef’s marketing system and ask others what they think. I want to present a pro-chickenization argument first. Mostly because I think most of us haven’t given it much thought. It’s just a boog-a-boo. I’ve never heard a cow owner make the argument. To most of us it’s unthinkable. Like, say, hell and damnation. A bad case of the shingles. Just, like, “no thanks.”

It stuck in my mind when a midwestern feeder earlier told me he was afraid of seeing the cattle industry go the way of the hog business. He said he has a hog production contract, but that is basically “just for the income.”** Which I hear as, for the lack of risk. For the steady, 8-to-5, joblike income.

I spent most of my life with a job and a paycheck. There are things to be said for it.

And I think about my little cow deal and I think, “what’s so wrong with that?” I mean, for my many years, I’ve seen a lot of ups and a lot of downs. Some years cows are gold, some years they’re lead. Some years they’re taxable, some years they’re deductions. The job? Well, it was journalism, so not much impact either way on taxes. But the pay was just as predictable as the bills.

Unlike my cow business.

And I try to think what a fowled-up beef market would look like. I presume a Tyson or National, or maybe a feedyard with a formula, would want to control my genetics. So, they might furnish the cows or give me an option of genetics that I (or they) think would work in my piece of Texas.  Maybe some ear, maybe not. Maybe they’d want some folks to grow grade and some to grow yield.

They might want to put me into a competitive pool, as they do with fowl folk. So, I might need to adjust some things. Stocking rates, perhaps? Vaccination protocols. Injection sites? Branding practices? Things to keep me carbon friendly? I don’t know, but it would be THEIR branded product I was producing, so they’d want a lot of say over what I do. And, I imagine, if I didn’t do it right, they’d have ways of making sure I didn’t have a big income tax bill. (Remember, I’m arguing on the positive side of this. I’m always looking for ways to lower my taxes.)

So, what I’m giving up here is what? The right to do things that don’t enhance the value of the product? And, if I’m a feeder or stocker operator, the chance to hit that once-per-cycle homerun?

So that’s my argument. I have fewer decision-making headaches. I have less price risk. I turn out somebody else’s cows and deliver X pounds of calf. Right?

And, in the end, beef cows aren’t fowl or pigs.  If the packers squeeze a fowl person out of business, somebody else will build a fowl barn. It won’t work like that with cows. They don’t make more land and the efficiencies of a chickenized cow world are nowhere near the efficiencies associated with concentrated confinement with chickens and hogs. Most of our cows are on small acreages with free labor from kids and mamas and no corporation is going to want the headache of putting them out of business. A guy might not get rich in that scenario, but my feedback recently indicates breakeven-plus would be better than folks think they’re getting now.

That’s all I can think of to argue for us giving up our freedoms and upside potential and turning our individual fates over to the tender mercies of folks who kill and chop up big-eyed, peace-loving cows for profit.

I can imagine that it wouldn’t take a lot of thinking to conjure an opposing argument.  But I don’t recall seeing it. I just always heard, and think of, chickenization as a threat.  

Something approaching involuntary servitude. But if you think of it locally, like a local butcher offering me a contract to provide feed and care for his cattle, well that’s not so scary, is it?

If one accepts that there are worse fates than answering to a corporate master, then what is the fuss about? Why are so many of us so opposed to people using “sweetheart” contracts? Is it just the crab thing? What is so magic about cash trade in which, let’s face it, the packers have and always will have, the upper hand?*** Is it not possible that there might be some benefit to looking into, experimenting with,  other marketing models? Or at least not passing laws against it?

Anyhow, if you’re inclined to study more on the mandate matter, you might click on the Texas Farm Bureau site to find some reasoned arguments against the bill.

Again, this is a regional thing, and that’s the argument from Texas. Cora Fox with Iowa Cattlemen’s Association gave Paige Carlson an equally well-argued case from that part of the world.

I am not the king of America, so I don’t have to make any decisions on this. But I do like to think through the various sides, and I just sat down to write this because of the realization that this really isn’t about packers at all. May the best lobbyist win.

Our job—the government’s job—is to be sure that the packers are playing fair. Competing fairly on both sides of their transactions.***

So, if Congress wants to waste a few bucks over-investigating the packers, I say go for it. Go for it, P&S. Go for it, DOJ. Right or wrong, fairly or unfairly, there is much distrust in the country of the packers’ ethics. Over study, if you must.

Let us know we’re being treated fairly before we and our elected officials over-react to perceived threats and lock doors before we know what’s on the other side. Tell me what you think at Scornett9163@yahoo.com

*That has such a negative connotation that I hesitate to use it. There are so many considerations—the role of family farmers, the need for rural economic activity, for instance—that come into play. I don’t think the typical mandate supporter thinks he is trying to hold others back. He’s just trying to stay competitive. But. 

**Didn’t people once refer to hogs as “mortgage lifters”? Why yes, they did. 

Nobody owns or ever owned a swine because they look good in the pasture. You never saw John Wayne drive a herd of swine through Indian territory. There are many reasons people own cows. The only reason anybody owns a pig is money. Or, I suppose, “greed” if he owns a lot of pigs.

***Which reminds me. Is anybody looking into that JBS thing where they settled with the buyers who claimed the packers had been conspiring to fix prices? How much of that sort of stuff is allowable before the government quits promising to do something and does something? If the feds have looked and found nothing worth prosecuting, tell us THAT. We’re passing laws here, guys.