In this podcast we talk with Jessica Hermann, Vice President of Legal and Government Affairs, on the 2020 Nebraska Legislative Session.
Jessica discusses Nebraska Cattlemen’s priority bills, what happened and where they ended up. The difference in practices in the Rotunda after COVID-19. LB 1107 which was the property tax relief bill that was passed and the next steps towards NC’s overall goal of property tax reform. Between now and next session NC is tracking a few interim studies.
The webinar kicks off with Dr. Michelle Arnold, DVM, MPH, DABVP (Food Animal) Ruminant Extension Veterinary at the University of Kentucky Veterinary Diagnostic Laboratory. Dr. Arnold gives an overview of preconditioning in beef calves. There are many risk classifications upon arrival of beef calves including light weight calves, the kindergarten effect, exposure to BRD pathogens, transportation details, appearance and more.
Why bother preconditioning? It is more work, but it adds value. Many buyers look at preconditioning factors when purchasing. This makes the calf worth more because it decreases the buyer’s risk.
Alfredo DiCostanzo is a professor of beef cattle nutrition management at the University of Minnesota (23 minutes 18 seconds). Alfredo discusses feeding and management approaches to backgrounding cattle. Cow-calf producers make the animal and cattle feeders manage the output of the animal. “Backgrounding is an opportunity to state cattle while enhancing value.” A conclusion from the research provided by Alfredo is that “price conditions in the last 5 years tend to favor backgrounding fall calves and running stockers in the summer.”
The final speaker is Galen Erickson, Nebraska Cattle Industry Professor of Animal Science at the University of Nebraska – Lincoln (55 minutes). Galen focuses on the feedyard sector and gives an overview of what happens at the feedyard. There are beef cattle raised across the United States but the feedyards are mainly located within the plain’s region. Feedyards consider a few things as success when buying: health, performance, and economics.
Listen as these speakers dive deeper into their topics and let you in on how to add value to your feeder calves.
The webinar starts off with Jeff Stolle, Nebraska Cattlemen market reporting service, giving a market overview going on 150 days from when COVID-19 started to affect our marketplace. Jeff goes through charts of the Nebraska weekly average for dressed steers, USDA choice boxed beef, USDA choice/select spread, USDA cattle on feed: 7 sates – 1,000+ capacity, USDA weekly steer carcass weight and more.
Ashley Kohls, Director of Government Affairs at Nebraska Cattlemen, gives a recap of some of the NCBA Summer Business meeting that was held in Denver last week (21 min 21 seconds). Something NC gets asked frequently is our organizations stance on the Live Cattle Marketing committee meeting. Do we consider it a win, lose or draw? Allison VanDerWal, Executive Director at MN State Cattlemen Association, gives an update on the remaining committee meetings from NCBA summer business meeting. (34 minutes 40 seconds) Find out more as Ashley and Allison dig deeper into policy and the happenings of the meeting.
Nikki Whitaker, Membership Coordinator at Kentucky Cattlemen’s Association, gives a USDA CFAP Program update (42 minutes 50 seconds). Everyone received their 80% and FSA Administrator Fordyce did say during the NCBA summer meeting that the extra 20% is likely. CFAP payments are slowing thus far there has been $6.8 billion or 43% paid so far. Iowa takes the cake thus far on livestock payments of $344,xxx,xxx.xx through the CFAP program.
Jessica Herrmann, VP of Legal & Government Affairs at Nebraska Cattlemen, talks about the two current bills in congress for the fourth round of COVID funding (49 minutes 46 seconds). Jessie goes over the HEROES Act that was passed in the U.S. House of Representatives giving $16.5 billion in direct prescriptive support and $33 billion indirectly when considering other ag relief and conservation efforts in the package. The HEALS act that was passed in the U.S. Senate gave $20 billion in direct aid to livestock producers at the discretion of USDA.
Moderated by: Ryan Cox, Extension Meat Specialist at the University of Minnesota Speakers: Laura Field, Legislative Coordinator for Nebraska Department of Agriculture and Preston Correll, Marksbury Farm, Kentucky. More about Marksbury farm here.
“I’ve got a market, I’ve got the cattle, let’s get this going”… Ask yourself these two questions 1. Is there a true market for your product? And 2. Is there a steady supply year-round?
For Preston Correll the bigger question aside from financing, supply and market demand was “can I spend enough time doing this? Can I keep my day job?” Starting out from ground zero “99 out of 100 times you will fail if you are expecting this new venture to pay your salary, pay for the farm, pay for your mortgage, I don’t care what your performance says it’s not going to work out that way.” Starting small and growing into your customer base can be very rewarding. Another key point, you must have excellent accounting. “I caution people who want to start from scratch and go get a big bank loan to do business.”
Success rates of people reaching out wanting to process vs. those who actually go through with it.
Laura Field describes Nebraska situation as “unique in the landscape of processing facilities as we have many large packers and a lot of smaller lockers that are certified USDA inspected and again just as many small lockers that are exempt. We do not have a State inspection program in Nebraska.” Even with a State Inspection program in place getting a facility up and running is and will be a rigorous process.
Promoting Product – how to?
You must have something to hang your hat on. It does not matter what type of product you have you must find your niche market, develop your label plus hold the necessary inventory for business. Starting out for Marksbury farms they had to have 15 weeks of sales in inventory per market. Understand the labels and what your product must be to label them as a specialty. Remember that “there is value in the brand.”
Seasonality of Supply
From a processing perspective the reality is that the business is dominated by weekly schedules. The shelf life of meat having a weekly delivery window is appropriate. From the marketing side seasonality isn’t necessary a big deal when you are very small, 20 head a year, if you are organized and have your processing spots set up in advance allowing you to sell when the time is good. When you grow larger seasonality is something that can be tough to manage. Having enough head to process every week you need to take inventory into account, and you may not always need that inventory when the next animal is ready to go.
Co-packing for a processor helps as added value to your processing plant especially if you personally do not have enough inventory to keep the plants doors open during the week. Preston suggests finding some way for the processor to get their customers vested in the success of the facility ensuring that they will continue to come and do business.
How do to distribute your product?
Know and research your state and/or federal processing as well as retail regulations and exemptions.
Where do you start?
Look at numerous other plants. How are they laid out, what do you like what don’t you like. Gain knowledge and the structure and equipment before you build and buy. If you are not knowledgeable in meat processing find someone that is that can help and advise.
Listen for more information on pricing your product, prerequisites, Nebraska Beef in Schools Program and more!
Ashley Kohls, Director of Government Affairs talks with Scott Yager, NCBA Chief Environmental Council on the recent Navigable Waters Protection Rule.
On June 22nd, the Navigable Waters Protection Rule (NWPR) became effective law in all states but Colorado. In light of the court-ordered stay, Colorado will continue to act under the 1987 Rule and post-Rapanosguidance. All other 49 states are now living under the NWPR. This is a solid victory as we have completed the first hurdle on the road to Supreme Court endorsement of the Trump Administration’s NWPR.
The Trump administration’s replacement of the disastrous 2015 WOTUS Rule is a win for the cattle industry. The NWPR draws back the federal overreach of the 2015 WOTUS Rule and provides clarity on farm exclusions. As the NWPR is a major achievement of the Trump Administration, it is being challenged in multiple courts across the country by several coalitions of activists and Democratic AGs.
Anticipating the courtroom battles, NCBA’s Officers and Executive Committee elected to continue our leadership on this issue by intervening in select cases to defend the rule. Our litigation coalition filed motions for intervention in lawsuits in South Carolina, California, and Colorado. The judge in South Carolina granted our motion, allowing us in the lawsuit as defendant-intervenors. We are still waiting for California and Colorado to decide our requests for intervention.
For more information be sure to check out: https://www.epa.gov/nwpr
To follow this litigation and NCBA’s involvement please visit their website: https://www.ncba.org/
Moderated by: Dr. Elliot Dennis, Agriculture Economics – UNL
The webinar began with Richard Jelinek, Vice President – Global Education, FCM Division of INTL FCStone discussing the importance of Risk Management Price and Basis Risk (4min 20 seconds). Richard tells you why price risk management is important. “Success favors the prepared. Success also favors those willing to change”. Richard takes you through volatility, risk and reward aka market opportunity, and overall cattlemen’s market - price AND basis.
When do you pull the trigger on risk management? The second presenter was Mike Maroney, Client Services Manager at CIH Beef Margin Management Program and he gives insight to this question (16 min 30 seconds). There is not a discrete moment in time when you are trying nail the to hit the exact high or exact low in the marketplace. The answer: It is a process! Yes, the ideal time to hedge is during the high but you will not know it is the high until it becomes hindsight. Mike goes through some tips and factors to consider when developing your risk management game plan. RESOURCE: MarginManager.com
Miles Bearden, Risk Management Consultant, FMC Division of INTL FCStone covers risk management applications – futures & options (26 min 50 seconds). What exactly is hedge? True hedge result = net result of the two market positions, local cash market and futures/options/otc. Miles go through examples of futures strategies, what if scenarios and how futures convey obligations. He then discusses options strategies, what if scenarios and how options convey rights. Miles finishes up with key points when hedging with futures and options.
Next Pete Fish, Risk Management Associate, FCM Division of INTL FCStone digs deeper into risk management alternatives – video contracts and livestock risk protection (41 minutes 45 seconds). Pete goes into marketing tools such as forward pricing using video auctions and livestock risk protection. If you take anything away from this presentation it should be that knowing your breakeven is key to using these tools.
We finish up the presentations with Kenny Burdine, Extension Livestock Economist, UK Agricultural Economics (53 minutes). Kenny stresses the importance of having a game plan when using price risk management tools. Risk management plans force you to develop a solid plan, gain knowledge of your market, understand your options, and identify your resources. Risk management plans should include multiple strategies, acknowledgment of risk tolerance, and consideration of your financial situation.
Questions and Answers (1 hour 5 minutes 40 seconds)
On this episode Jessica Herrmann, NC Vice President of Legal and Government Affairs discusses current assistance funds for livestock producers and answers top questions that we have received on both programs.
CFAP enrollment is open until August 28th, 2020. Over this three-month period approved applicants will receive 80 percent of their maximum total payment to ensure the availability of funding. The remaining portion of the payment will be paid later as funds remain available.
Producers interested in applying please download the application here. Prior to submitting your application please contact your local FSA agency. Also, if you have questions or need additional one-on-one support with the CFAP application process, please call 877-508-8364 to speak directly with a USDA employee ready to offer assistance. For more information on CFAP click here.
On Wednesday, this week Governor Pete Ricketts announced the availability of $100 million for livestock producers under the Nebraska Coronavirus Relief Fund Program co-administered by the Nebraska Department of Economic Development. If you missed the release you can read it here.
Stabilization grants for livestock producer’s signup begins on June 15. Producers can use the SBS grant money as working capital to pay for operating expenses, with the purpose of helping the producer maintain or bounce back during the period of economic downturn.
Nebraska Cattlemen will keep everyone updated as more information on the application process becomes available. Once available the application and deadline dates will be announced here: https://getnebraskagrowing.nebraska.gov/?page_id=82
The segment of the beef supply chain closest to the consumers may have more leverage than we realize on how cattle are raised and priced. We wrap up our webinar series hearing from meat industry merchandisers who work on the opposite side of the packing industry as cattlemen to hear what goes into negotiation beef prices.
Kate Miller, known as “The Meat Lady” online, is a 3rd generation cow calf producer from southern Arkansas. With ten years of domestic and international meat sales experience working with Sysco, US Foods and other broadline distributors and retailers—she tries to bring meat industry experience back home to the farm–to help tell the story of beef from trailer to table.
Part 3 of our Black Swan Event Series - with Peter Carstensen.
Topics that we will be covering:
History of antitrust law in the United States
Antitrust enforcement in the meat packing industry
Available options to producers: how to change the current structure
Failure of merger law to succeed
Role of the Packers & Stockyards Act and its relevancy in recent market disruptions (Holcomb & COVID)
Speaker: Peter C. Carstensen is a Professor of Law Emeritus. From 1993 to 2002 he served as Associate Dean for Faculty Research and Development at the UW Law School. He is a graduate of the University of Wisconsin, and received his law degree and a master’s degree in economics from Yale University. From 1968 to 1973, he was an attorney at the Antitrust Division of the United States Department of Justice assigned to the Evaluation Section, where one of his primary areas of work was on questions of relating competition policy and law to regulated industries. He has been a member of the faculty of the UW Law School since 1973. He is a Senior Fellow of the American Antitrust Institute.
Part 2 of our Black Swan Event series - with Susan Littlefield, Steve Williams and Ed Greiman.
Steve Williams, JBS (Right)—Steve has worked with Continental Grain Company Feed yard in Texhoma Oklahoma as well as Monfort Cattle Buyer out of Guymon Oklahoma before joining the JBS team where he has been for 24 years.
Ed Greiman, Upper Iowa Beef (left)— Ed is the general manager at Upper Iowa Beef. He also operates a cow/calf and feedlot operation with his family. Ed has held positions in some of the most influential organizations and companies in the beef industry.
Part 1 of our Black Swan Event series - with Jeff Stolle
About the speaker: Geoffery (Jeff) Stolle – VP-Marketing – Nebraska Cattlemen – Lincoln, NE
Jeff Stolle was born and raised on a family owned cow-calf and row-crop farming operation near Wharton, Texas – on the Texas Coastal Bend between Houston and Victoria – and is an Animal Science graduate of Texas A&M University. After receiving his undergraduate degree in December of 1989, Jeff remained at Texas A&M and did graduate work in Feedyard Management and Beef Cattle Marketing before joining the Nebraska Cattlemen Association as a Market Analyst in the summer of 1991.
Jeff has served as Vice President of Marketing and the lead staff person for the association’s Market Reporting Service since 1994. The Market Reporting Service currently provides up-to-the-minute market information for approximately 300 feedyards in Nebraska, Iowa, South Dakota, Minnesota, and Illinois. Jeff is also the primary staff person for the Association’s Marketing and Commerce Committee and NC staff liaison to NCBA on marketing and risk management focused issues.
Jeff and his wife Sarah feed cattle on their own account in Nebraska custom feedyards and also work as sales representatives for Crossroads Cattle Co. of Austin, Texas – marketing calves and yearlings from throughout the United States into Midwestern feedyards.
Pete McClymont Nebraska Cattlemen EVP interviewed Colin Woodall, NCBA CEO about Country of Origin Labeling.
Country of Origin Labeling an issue the industry has been dealing with for nearly 20 years. A significant misinterpretation is that consumers don’t know where their food is coming from; therefore, it must be contaminated beef coming from other countries. However, that is not the case; COOL is a marketing program which has nothing to do with food safety. For 6.5 years COOL was the law of the land and there is no indication that it benefited the industry. In fact, many folks can account for the losses they saw because of country of origin labeling.
If you look at the data, the price slide started well over 6 months before COOL was repealed in December 2015. Canada and Mexico are 2 of the top 5 export markets for beef and moments away from putting retaliatory tariffs in place over COOL. The World Trade Organization ruled in their favor over COOL saying it violated the trade agreement because of the segregation that went into place in order to comply with country of origin labeling.
NCBA believes in a voluntary country of origin labeling program. Producers would not get the benefits of individualized creative product labeling from a federally mandated program that they would with a voluntary one. The beef industry needs to be flexible with labeling, allowing producers to do what is best for their operation and for consumers across the World.