AG Squawk with Davis Michaelsen | Bill Bullard | What's Next for the Cattle Industry?

We sit down with Bill Bullard of R-CALF USA to untangle why record retail beef prices can coexist with painful volatility for cattle producers. We trace the push to restore mandatory country of origin labeling and how imports, market concentration, and policy choices shape the future of the US cattle herd.
• why the US cattle industry keeps contracting and why succession is harder
• how imports and relaxed standards can pressure a market that already underproduces
• what mandatory country of origin labeling (COOL) is and why beef lost it in 2015
• where the new COOL language sits in the Farm Bill process and what “WTO compliant” could mean
• why retail beef prices can rise while live cattle prices fall and what that signals
• how packer and retailer concentration affects margins and price discovery
• why heavier carcass weights show up in tight supply cycles
• the case for import limits, antitrust enforcement, and Packers and Stockyards Act action
• New World Screwworm update and why the border closure matters
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Transcript

Midday Markets And Livestock Drop

SPEAKER_01 0:14

Well, corn and wheat gave back some of yesterday's gains. Cattle and hogs skidded lower in today's trade. We'll talk about cattle in today's show, and we fully expect to less go up to some extremely valuable perspective. From behind the big blue, bodacious microphone of Ag Bull, your pal Davis Michelson here on Ag Squawk in the afternoon. I may be in trouble today. I'm not afraid to paddle out into deep waters, but in this case, I would I would say I'm no hat and no cattle, but I'm very excited to have our guest today. We've got Bill Bullard, CEO of RCAF USA today. I've got a ton of questions regarding the cattle market, and I'm wanting specifically, I wanted to get Bill on to talk about the labeling issue. M-Cool, mandatory country of origin labeling moved forward earlier this month, and we'll for sure make a point to get to that, what it means, and what is next in the process there. So uh lots to look forward to in this show. And I'm looking forward to getting to know Bill. We've kind of been in the same circles, but uh never really had a face-to-face conversation. So I'm excited to bring him to our audience. We'll get a little elevator speech on Bill and what what he's been up to, what his background is and where his interests lie, and then we'll get into the conversation. By the way, speaking of conversations, if you have not checked out our exclusive panel discussion on the USDA reports yesterday, it was me, Tommy, and Jed after the reports. We did a I did a land show yesterday afternoon, uh, but then after that, for paid subscribers on our website, we've got a discussion on the markets. Tommy and Jed both gave some great perspective on what to do with these numbers, what they mean for us moving forward, and how how we might most uh positively respond to them. I think you'll enjoy it. Just one of those things that we offer over at Agbol.com to try and keep you sharp, keep you on the cutting edge, keep you taking your marketing by the horns, AgBull.com. All right. Having said that, let's go to the export sales. Corn, soybeans, and wheat all kind of came in within the range of pre-report expectations. Not a lot of fireworks here, although decent demand is ongoing. In fact, speaking of which, meanwhile, another daily sale to China reported to the tune of 125,000 metric tons for the 26-27 marketing year. Like to see that export demand nice and hot. Let's go to the tail of the tape and talk about how the markets acted today. Now, it is 1 p.m. Central time, so the markets have yet to settle. But as of early this morning, after yesterday's post-report surge, corn futures opened moderately lower today, immediately giving back about half of what was gained yesterday. Soybeans were fractionally lower, and wheat futures fell slightly at the start of the day session. Livestock futures lower to start the session as well. Rounding into the lunch hour, soybeans flipped to a few cents higher as corn clung to early losses. Wheat futures also held course just below unchanged. Same story with the livestocks, with Fed cattle leading bovine declines and lean hogs more than 50 cents lower. Now, before we get to where the markets are right now, just the quotes, it won't be the settlements. We're not quite settled just yet. Uh let me mention plus 500 software. We here at Agble use plus 500 T4 software for up to the minute quotes, a host of options in the futures and options, real-time quotes, plus 500, that's plus 500. And my plus 500 says we've got December corn here at prior to settlement. We've got December corn uh down nine and a half cents at 471 even. Your Novi beans, not quite as bad there, down two and a half, eleven eighty and three quarters presently at 1 p.m. Central. Soybean meal and soy oil both lower on the day. Your winter wheats had a pretty decent day earlier this week. Now we've got the December Chicago down three cents at 666 and three quarters. Oh, there we go, 667. I like that quote a whole lot better. And then uh the December KC down four and a quarter at 733 and one half, and over to the livestock, which is where our conversation will ultimately rest today. I've got October feeders down a dollar and a nickel at 329.35. October fat cattle down $3.50 at $2.20 and 30. And then over to the October Lean Hog Futures down a buck 37 and one half, 82.17 and a half. And it looks like those are wanting to settle out, but I'm not going to call those final settlements just yet. It's a little little early. Go to agbull.com and you can check out how the markets wound up once once she's all said and done. All right. Having said all that, it gives me great joy to bring in Bill Bullard, CEO of RCAF USA. Bill, you're very generous to spend some time with us today. As I said

Welcome Bill Bullard R-CALF USA

SPEAKER_01 5:34

in the very beginning, I'm no hat and no cattle. I'm at a double disadvantage in this conversation, although I do have some some questions. You and I went back and forth a little bit ahead of the show to get ready. Let me just start by saying how much I appreciate you being here. Introduce yourself to my audience. As I said, you and I have kind of been in similar circles before, but never really spoke to each other. So give us a little elevator speech on Bill Bullard.

SPEAKER_00 6:01

Who are you, buddy? Well, sure. Well, glad to be here. So I have been the CEO of RCAF USA for the past 25 years, and our organization is the largest trade association that exclusively represents live cattle producers and live sheep producers. We don't represent any other segment of the domestic supply chain, and we represent our members in order to ensure their continued opportunities to be profitable and to remain as independent livestock producers in the United States. So I'm a former cow calf producer myself, and again, has been here for over two decades representing the interests of everyone in the entire live cattle supply chain, from the cow calf producer to the backgrounder and stalker to the feedlot owners. And that's uh this has been a very challenging time for our producers. Uh, unfortunately, we've lost a lot of producers over the past 40 years. We've lost, in fact, half of our beef cattle operations. We've lost uh nearly 10 million mother cows.

SPEAKER_01 7:01

That that that's a stunning figure. 10 million mother cows. You know, I was talking earlier about labor issues and about, in particular, row crops, but also livestock to some degree. We we've observed the kids go off to college and they don't come back to the farm. They don't want to farm when they get done. Is that is that a similar circumstance over there on the on the ranching side and the the livestock side?

SPEAKER_00 7:25

Well, it certainly is. And the cattle industry is unique amongst the agricultural commodities. Number one, it's the single largest segment of American agriculture, generating more in cash receipts than any other commodity. Number two, we do not overproduce for the domestic market. In fact, we underproduce. And that's why our industry is so sensitive to an increased volume of imports into this country. And uh what we've seen for the past several decades is really a dysfunctional market in the U.S. cattle industry and a market that is rocked with uh volatility, that is hurting every sector segment of the industry from the cow calf producer to the feedlot owner. In fact, we've seen a decline in the number of feedlots of about the numbers 86,000. Just since we uh the mid-90s, when we entered the North American Free Trade Agreement, we have seen our industry contract at an alarming rate.

SPEAKER_01 8:18

I'm gonna throw you a softball and then I'm gonna ask you a tougher question. Is American beef truly better than any beef anywhere else in the in the known universe?

SPEAKER_00 8:28

Well, absolutely. So we produce the best beef

Why The Herd Keeps Shrinking

SPEAKER_00 8:30

in the world, and under the best of conditions, we have some of the most stringent of both production and food safety standards from around the world. And uh unfortunately, and a good example to demonstrate this is that back in the mid-90s, we had to reduce our food safety standards in order to facilitate more imports from developing countries because those countries could not meet the higher standards of the United States.

SPEAKER_01 8:56

And is that does that remain the case? Are those standards still in place?

SPEAKER_00 9:01

Well, that's right, because we used to require all beef uh imported from around the world to have food safety systems at least equal to that of the United States. And that standard was too high. So they relaxed the standard and said they only need to be equivalent to the United States, which means close enough. So, yes, that standard persists as well as a standard that used to require our food safety inspectors to physically inspect foreign meatpacking plants in order for them to maintain their certification on a monthly basis. They no longer do that anymore. Now it's on a periodic basis, and uh that may be well be the cause of some of these uh problems that we've experienced here lately.

SPEAKER_01 9:43

Yeah, yeah. Well, I I want to get into labeling there because I think that's probably part of a solution, but it it must have been other countries who were who were crying foul, saying it's unfair to hold us to the same standard as U.S. producers. Am I hearing you right?

SPEAKER_00 10:00

That's correct. So Congress passed the mandatory country of origin labeling law in the 2002 Farm Bill. And uh from that point forward, we had a requirement that all fruits and vegetables

Standards Imports And Market Dysfunction

SPEAKER_00 10:11

and all fish and shellfish and all peanuts and all chicken and all lamb uh be labeled for consumers at the grocery store as to where the either the uh commodities were grown or where the meat products were born, raised, and slaughtered. So that had been the law since 2002. And then Canada and Mexico filed a complaint against the World Trade Organization alleging that the U.S. country of origin labeling law was discriminating against live cattle from Canada and Mexico. And so, although we had country of origin labeling for all the commodities and continue to, beef was excluded, as was pork, in 2015 when Congress repealed the country of origin labeling law with respect to beef and pork, because the World Trade Organization ruled that we were treating our domestic product more favorably than we were treating domestic product. Of course, we disagree completely with that ruling, and that's why we have been very persistent in encouraging Congress to reinstate mandatory country of origin labeling for beef so consumers can choose from where and by whom they want their beef uh raised and produced.

SPEAKER_01 11:23

So if it was the WTO that that kiboshed country of origin labeling, we we just saw and I I read your write-up on it. Was it August 6th, just a week ago or so? It mandatory country of origin labeling language did pass through the Senate, as I recall. I might need your help on the specifics of this, but but I guess I want to get to where does where does that legislation go from here? What is it tied up in? But my first question would be is there anything in there new that would keep the WTO from putting the kibosh on it again?

SPEAKER_00 12:03

Yeah, good question. So we need a little bit of history here. So after the World Trade Organization ruled against country of origin labeling, every president since then, from Obama to Biden to Trump one and Trump two, have taken steps to significantly reform the World Trade Organization because they viewed it to be acting outside of their authority, they viewed it to be overreaching, they used, they accused it of be of meddling with domestic laws. And so the WTO today is a very different entity, uh, world tribunal, than it was over a decade ago when it first ruled against country of origin labeling. So, directly to an answer to your question. So the country of origin labeling amendment that was passed in the Senate version of the Farm Bill by the Agricultural Committee in the Senate, meaning the 23 members of the Ag Committee voted overwhelmingly, 17 to 6, to include mandatory country of origin labeling in the Senate version of Farm Bill. It was a historic vote, and it was a we won by a wide margin. Clear indication that Congress understands the desire of consumers to know where the beef is produced. And so the amendment that was passed restores country of origin labeling in the existing country of origin labeling law that continues to require fruits and vegetables, fish and wildfish and peanuts and chicken and lamb to be labeled. So now beef would be included. But there's a provision in there that says that our U.S. Secretary of Agriculture and our U.S. trade ambassador will have one year to negotiate and to uh develop a means of implementing country of origin labeling that would be WTO compliant. And we believe that this is a bar that can be easily reached by our negotiators. And but in the event that a means to uh implement country of origin labeling in compliance with the WTO is not satisfied within a year's time, the law will nevertheless go in effect. So after Congress passes it, it would go in effect uh one year later. And then if other countries want to file disputes, they can and start the process all over again. But as we look at what this administration is doing, specifically with respect to the U.S., Canada, Mexico agreement, they have raised serious questions about the fairness of those agreements and their impact on our domestic industry because they've been uh devastating to our U.S. cattle and sheep industries in the United States. So we're confident that this amendment will pass muster, if you will, with respect to the WTO, and it will certainly meet the needs of American consumers and producers.

SPEAKER_01 14:45

Bill, and I do want to get to that the the dynamic between cattle prices and and consumer beef prices, but but let's just stay here for for another moment. Is uh does it take a completed, passed, signed into law farm bill to get this accomplished?

SPEAKER_00 15:05

Yes, the answer is yes. So what we have

Mandatory COOL History And New Vote

SPEAKER_00 15:07

to do, it has now uh been included in the Senate text of the Senate's farm bill through the ag committee, but the ag committee itself did not pass the farm bill. And so the Senate is on recess now, they'll come back in September, and hopefully they will pick the farm bill back up in the Senate Ag Committee and pass it. Typically, it would then go to the full floor of the Senate for passage and perhaps for additional amendments. And then we would have a Senate version of the Farm Bill that differs from the House version. The House version, for example, does not include the mandatory country wards and labeling amendment. So typically uh the leadership in the Senate and the House would designate members to serve on a conference committee, and they would hammer out the differences between the Senate and House version. Once they've accomplished that, then the bill would go back to both houses, the Senate and the House for ratification. And if approved, it would go to the president's desk desk for signing. So that at that point, as when the president signs the bill, then we will have a farm bill. And if country of origin labeling is included as we intend to keep it, then we would have country of origin labeling uh enacted again.

SPEAKER_01 16:19

Bill, I've been reporting on the yeah, the farm bill is close. Oh no, we're way off on a farm bill. No, the farm bill is close. Anytime that I've reported on on the the new farm bill, it I've been sort of shaking my head with tongue in cheek just a little bit. I don't hold out a lot of hope that it that we're gonna get this done anytime soon, especially with with midterms coming up. Can you give me any hope here? Can you can you shine some optimism on me just a little? Or is it even there?

SPEAKER_00 16:47

All I can do is add to the uncertainty. Uh we are hopeful, we are hopeful that they will bring it back up in September. And once it passes the Senate AG Committee and goes through the floor for passage, it can move relatively quickly to go back through the processes that I described. And so there's a possibility we could have this in September, but the likelihood is we're going to be in the lame duck session uh and hopefully get it accomplished there. So, yeah, this has been um uh frustrating and uncertain as to uh when this will finally occur. And obviously, this is quite late already, but that's been consistent with some of the actions by Congress here of late, running past deadlines.

SPEAKER_01 17:31

Well, the truth is better than sunshine. So I appreciate you giving us giving us the truth there on that because we we just need to know the the reason that this has become such a such an issue for me, and I don't know if the two are related. I I don't think initially they were, but they're they're sort of convenient bedfellows is the the wide disparity between imports and exports over on the cattle side right now. This it feels like this should add imperative to country of origin labeling, given how many cattle are coming into the United States.

SPEAKER_00 18:05

Well, well, that's right. So we we are a net importer of beef, and unfortunately, the United States has been growing its dependency on foreign beef for arguably the most important protein uh dietary protein source here in America. And so this is disconcerting that we have allowed for many years for our industry to maintain a deficit. And of course, uh, we have not been expanding the herd for the past seven years after the herd had been declining for decades, because so leaving us with a historically low inventory of beef cows, and that's our production factory. And as a result, if we don't make major reforms to the industry, then we will continue to grow our dependency on foreign imports. And in the last couple of years, we've seen that. We've seen domestic consumption increasing for the past three years, while the volume of domestic beef produced in America has been decreasing. And those production reports that you just talked about estimate or project that we are going to see a decline in production yet for the next two years. That would be five years, our markets would be operating in a dysfunctional fashion. You would not expect that the domestic industry would reduce production at a time when beef consumption was increasing. And this Congress has to address.

SPEAKER_01 19:30

I would, I guess I would I would nod very fervently here. USDA yesterday, in fact, just put out third third and fourth quarter production down, but steady in 2027. Steady with not enough is still not enough, isn't it, Bill?

SPEAKER_00 19:44

Well, that's right. So I don't know if we're ready to put up the chart I brought, but it kind of helps us explain what what's happened to the industry. So what this is is a chart depicting the price

Beef Price Spike Cattle Price Whiplash

SPEAKER_00 19:57

of beef that consumers pay, and that's the blue graph, and compares that or contrasts that with the price that cattle producers receive for live cattle. And it starts back in about 1999 or early 2000s and goes all the way through 2026. So at the left of the chart, you see that as the blue graph was increasing, that's the price consumers pay for beef, then the domestic industry was enjoying higher prices. And so the domestic prices were chasing the retail prices upward. And then we hit that first peak again on the left of the chart, and that's 2014. At that time, our herd size had fallen to the lowest level in 70 years, and so supplies were tight, and yet domestic demand for beef was incredibly strong. So we had rising beef prices, bringing our cattle prices higher, and the expectations in the cattle industry was that we would receive higher prices for the next three years, and that's due to the long biological cycle of cattle. It takes about three years from the time you decide to expand the herd till you actually bring cattle back into the marketplace. Well, instead of continuing with relatively higher prices, cattle prices inexplicably collapsed, and they collapsed further and faster than any time in history. Beef prices kind of consolidated some. And then in the beginning in 2017, we saw a real anomaly. We saw, again, the blue chart, these prices were increasing on a monthly basis, headed skyward, while cattle prices, the red line, were stair stepping downwards. So you in an industry where the only ingredient is beef, is cattle, you have this inverse relationship, rising beef prices, falling cattle prices. That makes no sense. That's a classic example of severe market failure in an industry. So then we get down to where the stair stepping stopped, and you can see that the red line began to increase again. That's where the supply became so incredibly short, and domestic consumption was incredibly strong, and willingness to pay more for beef was incredibly strong. And the herd size then was fallen to about the lowest level in 75 years. So we had a severe. Imbalance between supply and demand domestically. We had the tightest supplies in 75 years, and yet we had the strongest beef demand and the most willingness for consumers to pay. So what happened was that the forces that were suppressing cattle prices during this period were no longer effective given the severe imbalance between supply and demand. And the cattle prices began chasing these consumer beef prices skyward. And that's where we've seen today record high beef prices that consumers are paying, and cattle producers are finally receiving record high cattle or prices for the cattle that's helping them to recover from the multiple years of depressed prices that they experienced beginning in 2015. But very importantly, our live cattle industry consists of three segments: the cow calf producer that raises the calf, breeds the cow, raises the calf. Then you have the stalker and backgrounder that grow the animal for about six to nine months. Then you have the feedlot sector, which means that the cattle industry itself is paying these record high prices for cattle. And then when you have extreme volatility in the marketplace, like what we've seen, we've lost about $30 a hundred weight on these fed cattle prices. This puts severe financial strain on the margin operators within the live cattle industry. Those who are buying these higher priced calves, feeding them with expectations that they too would be profitable. Instead, what we've seen is some of them have found themselves in the in this volatile market, lack of profitability and exiting the industry. So again, we have to reform this industry. Contribute margin labeling is a very important first step because it provides the producer with the tool to mitigate uh the increased volume of imports. And that tool is in partnership with consumers, we will be empowering consumers to choose whether they want beef produced by America's cattle farmers and ranchers or whether they want their beef produced in some underdeveloped or developing country.

SPEAKER_01 24:19

So, in other words, we're a calf is just too expensive the day it hits the ground for anybody to feel like they can make margin on it, they can make a profit on it, despite the fact that consumers are as willing as they've they've been maybe ever to pay up for beef at the meat counter. Is that what I'm hearing you say?

SPEAKER_00 24:38

Well, exactly. So what we have is we have four packers that dominate the marketplace for fed cattle in our industry. Four packers controlling 85%

Packers Retailers And Margin Grab

SPEAKER_00 24:48

of the market. And downstream from the packers, of course, are the retailers. And they are likewise highly concentrated. So I brought another chart to show what's been happening uh between the downstream sectors of the industry. If you look at this chart, you see the blue line going back. I can't read this myself. I think we're going back to 1980. The blue line is the margins that the meatpackers earn in the industry. And you can see that they've been relatively constant for the first half of this graph. And then they began to increase significantly towards the right side of the graph. Uh, this was about that 2014-15 period when cattle prices suddenly collapsed and the meatpacker margins were increasing. So then we hit 2021. You can see that blue line skyrocketed it, and packers are receiving the highest margins in history. And then since that time, they began to decline. But the next downstream segment is the retailers. So the red line represents the margins that the retailers have earned over this period. And you can see that even while the meat packer margins were remaining relatively constant, the retailer margins were increasing throughout this entire period. And then after 2021 is when we see this divergence. We see that the retail margin continues to increase. That means the difference between what they pay the packer and what they charge the consumer. And on the the producer or the packers side, that's the difference between what they pay cattle producers for cattle and what they sell to the retailer. So the the retailer margins have been continually increasing, but after 2021, the packer margin subsided. And we can see that today. So we've heard reports that the packers are lose, losing, you know, record uh experiencing record losses. But at the same time, the retail prices are increasing, which is why we fully support President Trump's call for an investigation in the entire supply chain of beef, because we believe that a large portion of the inflated beef prices consumers are paying are the result of the highly concentrated retailers exercising market power in the marketplace and bolstering their profits.

SPEAKER_01 27:10

Boy, is is it is it a case of retailers realize that the people are willing to pay up for beef? And so, you know, maybe we add a couple cents here, we add a dime there. And if people keep paying it, maybe we add another couple cents, maybe another couple of dimes here and there. Is it that simple?

SPEAKER_00 27:25

Well, not no, but it does follow the fundamental rule that the retailer would charge consumers whatever the market would bear in order to maximize their profitability. So that's clearly a large part of this. But also included in this is the methods by which they purchase their beef from the packers, and that's true with the packer themselves. So they have long-term contracts, forward contracts, spot market contracts, and it's the mix of those that actually enable the concentrated marketplace to actually exercise their inherent market power. Their market power is great as a result of their dominance in the marketplace itself. But they need tools to exercise that market power, and these procurement tools are what we believe they are using in order to manipulate prices and overcharge consumers and underpay domestic cattle producers.

SPEAKER_01 28:23

I've talked before with with Jed Sidwell about my colleague Jed Sidwell, of about sort of the the standoff between the feed yard and the packer, and how the packer

Heavy Cattle Buying Power And Labels

SPEAKER_01 28:34

doesn't want to pay more and the feed yard doesn't want to take any less, and so we're feeding cattle for a longer period of time. I I wonder how aggressive the packer is willing to bid up to to bring those cattle in. Do you do you have a sense of that?

SPEAKER_00 28:48

So when you're we're in a tight supply situation situation like we are, the the packers' option is to uh delay purchases of cattle that are ready for slaughter and cause them to be fed longer so that they gain more weight, so that they add more tonnage. And that's exactly what we're seeing. We've seen a significant increase in the the weight of both the live cattle and the carcasses that the meatpack is buying. And they're doing this in order to minimize the impact of this tight supply situation. So we have overfed cattle that are now going to market. And so your question is, is will they eventually clear out uh the feedlots with these heavier cattle? And given the tight supply situation that we still have, and the prediction by predictions by USDA and the fact that we believe that consumer demand will remain strong, we believe that eventually we will clear out uh these heavier weight cattle and perhaps eventually get back to selling cattle, you know, when they reach their optimal slaughter weight. But 939 pounds is is over that that threshold right now. And and that's the weight of the current carcasses right now, about 939 pounds, which is a significant increase uh over previous years.

SPEAKER_01 30:01

Absolutely. How well is is the packers them are the packers themselves, I guess I I should ask, having to adjust how they do things to to accommodate these these heavier carcass weights here? I mean, I'm I'm sure that they were set up for a certain weight, but at some point you kind of go off the chart, don't you?

SPEAKER_00 30:19

Well, uh uh up until very recently, these packers would impose discounts on cattle that exceeded uh 1400 pounds, for example. Okay, and so they didn't want them, and so they would discount the producer that would incentivize the producer for sell the cattle, perhaps for less than what the producer thought the market value was. But now, under this extreme tight supply situation and strong beef demand, now the packers are coveting these heavier weight cattle. So, how they are accommodating them when they claim before that uh they didn't have, they weren't set up, I do not know the answer to that. But what I know is they are taking steps in order to minimize the impact upon their operations from the tight supply situation that we have.

SPEAKER_01 31:04

Yeah, interesting, interesting. All right, let me ask you this. I'm I just want to throw this out there once again. Uh I was talking to Jed, and he was talking about passing by by the meat counter there, and noticed all the different labels that are already on meat. You've got uh grass-fed, you've got ethically raised, you've got organic, you've got this, you've got that. Are consumers responding to to those sorts of labels at as far as you can tell, or do you know?

SPEAKER_00 31:36

Well, so the market suggests that they are responding, otherwise, the meat packers would not be continuing to track the meat through their processing plants in order to uh maintain the integrity of those different labels. So we suspect that the consumer does want more information about the beef. Some consumers are seeking out a grass-fed product or organic product, for example, and others are not. But we believe that these, you know, these are commonplace in our industry today. And very importantly, even the meat packers are arguing that it's too expensive to track the meat product through their processing plants in order to affix a country of origin label. And these branded programs um dispel that myth because the meat packers are already doing it for all these various reasons you described, so that they can produce, they could put a label on a product that they believe that consumers would respond favorably to.

SPEAKER_01 32:32

That was exactly where my my question was going. You're inside my head, Bill. If we can put all these other, you know, sort of boutique labels on on packaging, why can't we just we just put you know, country of origin, USA, or or wherever it might be? That's that's an interesting thought.

SPEAKER_00 32:53

Up until now is because the Packers didn't want to, because they maximize their profits when they do not have to disclose from where they sourced their beef.

SPEAKER_01 33:03

That's a whole other interesting wrinkle, Bill. I hadn't considered that. Huh. All right. You know, I was looking over, and by the way, Bill Bullard, CEO of RCAF USA, and I'm gonna pull up my interweb here just to make sure that I get the website correct. RCAF USA.com. That's r-cafusa.com. Bill, you you've you've got some stuff that you've written on there. You've got some great news stories to keep people updated on what's going on in your guys' world there. One thing that uh I don't want to fire you up here, but it was interesting, and I've I believe it it bears discussion if if only for a moment. Meat Institute, completed by Decision Innovation Solutions detractors, often avoid using empirical research when when they're critical of uh of the cattle industry, don't they?

SPEAKER_00 33:58

Well, they do, and and the meat packers have commissioned their own uh report. They call it an economic study, which it is not, but the report was an attempt to convince Congress that implementing country of origin labeling would be one, too burdensome and number two, too costly. And the way they achieved that was they made assumptions about the industry and assuming how much beef, for example, would would fall into the category with the highest cost, and they didn't explain the basis for their assumptions. So they essentially took antiquated studies that were done, one was 10 years ago, the other one 17 years ago, and they attempted to update them with more current data and then um adjust it for inflation and then make these assumptions as going forward. But those antiquated studies are uh completely wrong to be using to evaluate today's industry because today's industry is very different than it was 10 years ago. Again, the tight supply situation. We have the smallest cattle herd, we have the highest beef prices, we have the highest level of imports. And typically these imports would be suppressing domestic cattle prices. We expect that to happen soon, given the volume of imports that are entering this country today. But right now, uh we're in uncharted waters. The marketplace is not functioning according to fundamental economic fundamentals, and we're just gonna have to keep monitoring this to see how it plays out. But country margin labeling is certainly the step in the right direction. And despite the fact that the meat packers who are bringing in sourcing beef cheaper in foreign countries, bringing it into the U.S. market, placing it alongside the domestic product so consumers can't tell the difference, and charging the same price for the imported beef that they purchased cheaper as they are charging for the domestic product.

SPEAKER_01 35:55

Bill, I'm I I guess I want to jump the tracks just a little bit, and then we'll we'll talk about the weather, and then I'll cut you loose. You've been very generous with your time, but this may not be a short discussion, but dry pastures, we're short on hay. It's getting to be kind of some pricey feed prices

Rebuilding The Herd Import Limits

SPEAKER_01 36:14

and uh expensive calves, high overhead. Wants to bring in new cattle producers. Boy, that sounds like it sounds like a tough sell.

SPEAKER_00 36:24

Right. And just as just as a shrinking cattle herd did not happen overnight, it has taken decades to reduce the size of our herd to make it incapable of meeting uh domestic demand for beef. The situations that we find ourselves in today are all issues that have been building over years. So the question we've been needing to expand the herd for decades. We have not been successful in doing it. Though the herd tried to expand in 2014 during the peak in that first graph that I showed, in fact, investments were made to expand, but only to experience collapsed cattle prices. And those who expanded essentially lost money and we lost producers. In fact, a 2002 census says that between 2017 and 2022, we lost over 106,000 beef cattle operations from our American cattle industry. And so they experienced severe losses, and now we're we're repeating that same scenario tight supplies, good beef demand, and uh expectations that these prices would remain high, but we haven't addressed the market power that is being exercised by the meatpackers, nor have we addressed the excessive imports that are displacing our domestic production. So, with these higher prices that would normally trigger the expansion of our herd, producers are saying, we just went through this and there's been no fundamental changes to the structure of the marketplace. We're not confident that if we make the investment today, that we will receive a return on that investment and remain profitable on into the future. Our industry has been in a state of contraction for decades. And until we take steps to reverse that, we will not see an expansion. One thing that we're recommending is that the government come forward and say, we are going to put a limit on imports, but we're not going to do it today. We're going to phase it in three years from now and begin reducing the volume of imports that have been displacing domestic production. That way, producers could make the investment decision today, knowing their beef from their animals wouldn't make it to market until three years from now. And when it does make it to market, they know that they would not be undercut by a flood of cheaper imports at that time. This would be an assurance by the government that they intend to encourage and incentivize the domestic industry to rebuild. And that's one very important step. And of course, the other step is to address the exercise of market power and to enforce our antitrust laws and our Packers and Stockyards Act so that these meatpackers do not have the tools to exercise the inherent market power that they possess.

SPEAKER_01 39:04

Bill, I've taken up enough of your time almost. In the future, maybe if you wouldn't mind coming back, maybe when when we've got an update on on some of these issues, particularly the the labeling issues. I'd like to talk about succession because it feels like the the line of succession from rancher to the next generation has been broken in in a lot of operations and leading to some form of chaos, which which makes it difficult for for an industry to bear. One more thing, and hopefully we can maybe talk about that in the future. One more thing I did mention that I that I've been thinking about, just real quick. New world screw worm. And it was a big scary thing for the longest time. And I don't I don't hear about it like I like I once did there. Did do you have an update on New World Screwworm, where we're at, and what's what's the

New World Screwworm And Border Closure

SPEAKER_01 39:54

current state of affairs there?

SPEAKER_00 39:56

Yes. So the New World Screwworm was being contained uh in Central America uh for many, many years. It broke free uh in a few years ago, and one of the causal factors for it to begin spreading in Mexico was attributed to illegal cattle trafficking, cattle that were being illegally trafficked from Central America into Mexico, bringing the New World Screwworm with it. The New World Screw Worm then began to populate in Mexico and spread northward. And on June 3rd, the United States experienced its first outbreak of New World Screwworm. We've had 45 cases that have been detected in central and southwest Texas and one case in New Mexico. But the the outbreak in the United States has been has been minimized by the efforts of the USDA. They have been releasing uh sterile male screw worm flies, which by entering the population will depopulate the fly population. We think that that has been extremely effective in preventing any further outbreaks in the United States. And very importantly, the Secretary of Agriculture closed the border to live cattle and livestock imports from Mexico. And so Mexico, though, continues to combat this pest, particularly in its southern regions. And uh we do not believe that they have yet addressed the illegal cattle trafficking, so they may be continually reintroducing the New World Screwworm into Mexico. So we're urging the Secretary of Agriculture to keep the southern border closed until Mexico can demonstrate it has eradicated the New World Screwworm from within its entire border.

SPEAKER_01 41:37

It may have fallen out of the headlines, but no less a dangerous issue worthy of our concern, isn't it?

SPEAKER_00 41:43

That's right. We we had this uh pless before back in the mid-60s. We were able to eradicate it with the sterile male fly method, and uh the screw worm is uh has been projected to if it if it were to become widespread in the United States, uh, to cost our industry and the wildlife industry uh well over a billion dollars. Wow, wow.

SPEAKER_01 42:05

Well, let's let's leave it there before we let you go. I'd I'd like you to well you RCAF is based out of Billings, Montana. Is that is that where you're located today? That is correct, yes. Yes. When you look out the window,

Smoke Heat Floods And Final Notes

SPEAKER_01 42:20

what's the uh what's the weather like out today? Smoky. Smoky.

SPEAKER_00 42:25

Yes, wildfires up in this uh northern tier uh have been significant.

SPEAKER_01 42:31

Yeah, yeah. Have they gotten down into Montana as well? Because I know Washington and and Oregon were really struggling, California and even up into Canada there. Yep. How close are they to to the Billings area?

SPEAKER_00 42:44

Well, they're they're aways from the Billings area, but they're in the western part of the state, pretty widespread. It's been overly dry, and that's been a significant problem, continues to be.

SPEAKER_01 42:55

Wow. It's the it's it's the extremes in the weather right now. You you folks are are very dry out there, and then out in Indiana, they're they're underwater, uh, where even where our own Tommy Grissaffi is is located. Gosh, thoughts and prayers on on both ends of that spectrum there. Let's uh let's look into the National Weather Service. An active pattern, they say, will continue to bring heavy to excessive rainfall and flash flooding threats to the Midwest and Ohio Valley over the next couple days. Dangerous heat conditions continue, central and southern plains, southeastern U West into the next week. Potential for record tying and record-breaking temperatures with many areas forecast to see their hottest temperatures so far this year. Man, it's hot here in Kansas City right now. I tell you, Bill, let me ask you this. I've got a complaint about uh KC Barbecue, and I don't have many, but I do have one. When it comes to brisket, they slice it too thin. I like a nice thick hunk of brisket. And to have it thin like that, it just it just doesn't do it for me. Do you have an opinion on brisket at all?

SPEAKER_00 44:03

Well, other than that, I really enjoy it. Um and I know that with an organization with limited resources, we're careful about the issues that we take on. Oh, very good.

SPEAKER_01 44:15

You're a diplomat, sir, aren't you? I appreciate that. Before we go, really quick, just some items of mild interest. Today in 1860, it's the birthday of Annie Oakley, American she shootist, I guess you could say. Here's a quote from her I ain't afraid to love a man. I ain't afraid to shoot him, neither. Annie Oakley, born this day in 1860. 1930, Don Ho, American singer and ukulele player, was born. And in 2013, the Google Maker went down. Google Incorporated suffered an outage for five minutes. All of its services, including Google Search, YouTube, and Google Drive, experienced this outage. During that brief time window, only five minutes, the world's internet traffic dropped by 40%. You talk about corner in the market, dropped by 40% in just a five-minute outage. Bill Bullard, CEO of RCAf, uh, r-cafusa.com is where you can find more r-cafusa.com. Bill, you've been very generous with your time today. I really appreciate it. You've you've educated me, helped me get my head around these issues, and I hope that my viewers have have been able to stick with us and pick up on all of these things, extremely important issues that you bring up. And I hope you'll come back again sometime. Be happy to. Thank you, Davis. Bill Bullard, CEO of RCAF. Thanks to Trade the News for keeping my squad updated on the news that moves the markets. Get useful news from Trade the News. That's trade the news. News that's actually news. May I also direct you to AgBull.com. Dig deeper with AgBull Intel. Dial 855737 Farm. Take the markets by the horns with AgBull.com, $25 a month. Or hey, get two months free on us. It's actually on Tommy. Get two months free, $250 for an annual subscription. With that, Jed Sidwell will be back first thing in the morning to get you off on the right foot. And then I'll have my Friday conversation with Jim Wiesmeyer tomorrow afternoon. Come on back.