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Auction Yards to Explore Causes, Solutions to Cattle Price Collapse
USAgNet - 10/25/2016

In the wake of falling cattle prices, which have fallen farther and faster than in any time in history, livestock auction yards in central and eastern South Dakota and North Dakota will host a series of meetings to address the depressed market. Beginning Nov. 10, Hub City Livestock Auction, Aberdeen, S.D., will host the first of five public meetings designed to explore the causes of the ongoing price collapse and identify solutions that livestock producers can pursue to reverse the unprecedented price declines. The Nov. 10 meeting will begin at 7 p.m. at the Best Western Ramkota Hotel, Aberdeen, S.D. All meetings are open to the public.

Herman Schumacher, co-founder of R-CALF USA, area cattle feeder and former owner of Herreid Livestock Auction, is organizing the meetings so area cattle producers can learn about the forces causing both cash cattle markets and cattle futures markets to act irrationally despite tight cattle supplies and strong beef demand, factors that suggest prices should be rising, not be falling.

"Producers want to know what can be done to fix our broken markets and these meetings are intended to give producers information they need to begin doing just that," commented Schumacher.

Schumacher said the cattle-price freefall started soon after the U.S. Department of Agriculture (USDA) announced that cattle inventories, which were at a 65-year low in 2014, had increased by just 1 percent in 2015.

"It's impossible for a mere 1-percent increase in cattle inventories to compress our supply-driven price increase, which should have lasted three or more years, into a single year, but that is exactly what happened" asserted Schumacher.

He said fed cattle prices fell by more than 40 percent during the past 18 months and calf prices fell even more, declining by over 50 percent during the same period. "The price of calves in September 2016 was more than one-third less than it was in September 2015," he said.

However, though cattle prices have fallen drastically, the price of retail beef paid by consumers remains at near record levels, falling only about 8 percent from 2015 highs. Schumacher says this is convincing evidence that something or someone is interfering with U.S. cattle markets.

In January a request was made to the U.S. Senate Judiciary Committee by R-CALF USA, a national cattle group, for an investigation into the cause or causes of the cattle price collapse that began soon after Congress signaled it would repeal country of origin labeling (COOL), the law that required consumer labels that distinguished imported meat from domestic meat. That signal was sent in June 2015 when the U.S. House of Representatives voted overwhelmingly to repeal COOL. In May 2016 the U.S. Comptroller General, who heads the Government Accountability Office (GAO), accepted the request from the Judiciary Committee to conduct the cattle market investigation.


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