A recent Twitter post highlighted a graph comparing the trend of monthly U.S. fed cattle prices versus the retail cost of beef. The graph reflected the story of leverage and margin that’s at the forefront of debate and discussion within the industry. However, the graph wasn’t specifically addressing that issue. Rather, the purpose was to generate support for COOL including the following statement:
“During the nearly seven years since MCOOL for beef was repealed, U.S. cattle producers experienced lower cattle prices and were deprived the means to build demand for their U.S. produced cattle.”
COOL proponents contend the law provides competitive advantage to U.S. beef producers and enables farmers and ranchers to receive higher prices. But the tweet failed to paint the broader picture; it didn’t reflect Canadian fed cattle prices that have marched in lockstep with the U.S. market (the correlation is .93). (See chart below.)
U.S. vs Canadian Fed Cattle Price
With that in mind, we’re left with one of two take-aways. One, COOL must have also provided Canadian producers the same benefit, Or two, COOL never mattered in the marketplace and didn’t establish any differentiation between the U.S. and Canadian markets. Either way, the data indicates COOL is self-defeating and doesn’t really allow producers “…to build demand for their U.S. produced cattle.”
Nevil Speer is based in Bowling Green, KY and serves as Director of Industry Relations for Where Food Comes From (WFCF). The views and opinions expressed herein do not necessarily reflect those of WFCF or its shareholders. He can be reached at nspeer@wherefoodcomesfrom.com.
