by Sally Colby
In reviewing the ways in which 2021 affected cattle producers, National Cattlemen’s Beef Association (NCBA) Vice President of Government Affairs Ethan Lane said the focus was increasing profitability throughout the supply chain.
As he reflected on the first year of the Biden Administration, Lane said the NCBA is pleased with progress made. “We have to start where we’re ending, and that’s with the Build Back Better initiative and some of the large, aggressive spending plans advanced by this administration quickly as they took office in January 2021,” he said. “We spent most of this year trying to educate members on Capitol Hill and consumers around the country and others about the very real threat of including pay-fors for this multi-trillion-dollar spending package that could negatively affect cattle producers around the country.”
Lane mentioned several potentially disastrous impacts on cattle producers including stepped up basis and transitioning agricultural operations from one generation to the next, accelerating the death tax limit and dramatically increasing tools like capital gains up into the 40% range. Lane noted that about 40% of U.S. cattle operations are expected to transition to the next generation within the next 15 years.
“That culminated in one of the largest grassroots campaigns this industry has ever launched,” said Lane. “I’m proud of the work NCBA did, leading that charge in Washington, D.C., not just for the cattle industry or agriculture, but for small business owners throughout the economy. The Hill hears us, they hear our producers and managed to craft bills that don’t include onerous pay-fors in rural American and the cattle industry in particular.” Lane added that hundreds of other groups stood with NCBA to push back on proposals, but it’ll be important to continue the focus in 2022 with the potential for another version of Build Back Better.
Regarding sustainability and climate, Lane said NCBA developed sustainability goals showing industry-wide climate neutrality by 2040. “In the past, we’ve always been thought of as a threat or an impact,” he said. “We’re now being embraced as a climate solution, which is the right place for this industry. There are tremendous opportunities for producers who are already producing the highest quality beef in the world with the lowest environmental footprint to continue to make progress, find ways to connect with consumers and look for new opportunities to benefit in their businesses.”
Markets and cattle prices were another focus for NCBA in 2021. Lane said supply chain issues that developed during COVID are resolving and packing capacity discussions will continue. He emphasized the need for new packing capacity in underserved areas and assurance that new capacity will result in generating more value for producers’ products and beef dollars back on the ranch rather than further down the supply chain.
“We have a tremendous amount of demand right now both nationally and around the world and we don’t want to lose that,” said Lane. “If only one aspect of the supply chain is making money it isn’t going to work.”
NCBA is also focusing on price discovery – buyers and sellers negotiating to arrive at a fair transaction prices. Lane explained that the voluntary framework has resulted in a dramatic increase in negotiated and cash trade around the country, especially in regions underperforming on cash trade. “That isn’t an accident – it’s a lot of work by a lot of producers around the country to find ways to market more of their cattle in a negotiated means over the course of a year,” he said. “They’ve done that in places where they maybe didn’t want to or it wasn’t the best business decision. It’s part of an effort to make sure we have the price discovery we need in this marketplace.”
However, Lane said the system isn’t sustainable long-term and that instead of government mandates, the industry needs options that allow producers to choose the best marketing method for their cattle. “We need to make sure we’re guaranteeing healthy, robust price discovery that we need to inform the base prices on some of those AMAs,” he said, “and make sure we have a real indicator out there of what these cattle are worth on the market from week to week.”
2021 was a dramatic year for trade, and the U.S. is now exporting more than $10 billion a year in beef to foreign markets. Lane said China wouldn’t have been a discussion point a few years ago, but the billion-dollar market for beef in that country continues to grow. Markets in Japan, South Korea, Taiwan and Hong Kong are also expanding, as are continued discussions on UK market access.
The 30×30 agenda has caused concern among landowners and livestock producers, and Lane said so far, the administration falls short of the alarm seen in the country. “They’ve put out a statement of principles – an assertion that they want to focus on working lands as part of the solution and focus on local stakeholder input,” he said. “Those are talking points that come from our feedback into that process. The only way to make something like this work is to listen closely to what works on the ground and recognize those uses that are conservation uses, especially cattle grazing as a conservation use.” Lane believes the administration is trying to figure out what they want regarding 30×30, adding that no plan will placate the environmental community, especially the more radical aspects.
The House has recognized the need to identify areas of broad agreement in the industry to move forward including reauthorizing LMR and providing new transparency to the Cattle Contract Library. “In the Senate, we have some aggressive personality politics at play,” said Lane. “We have some senators who had long since really stopped listening to the ground and they’ve really plowed ahead on their priorities. We appreciate the measured way the House has moved forward with this set of issues because there is a lot of disagreement in the cattle industry on this mandate piece.” Lane suggested working on areas of broad agreement as the rest of the industry figures out where to go.
The U.S. is currently in herd contraction, a natural part of the cattle cycle that’s being exacerbated by drought conditions in some areas of the country. “As we look toward the next few years, we want to see growth continue,” said Lane. “We want to see capacity build so we’re in a position as an industry to keep the world provided with that protein that they love so much coming from the U.S.” He added that there’s no competition when the U.S. goes head-to-head with competitors in foreign markets. “When U.S. beef is an option, it’s always first choice.”