Contact: Burt Rutherford  

             Cattle feeders can look at their present market situation as a journey, Paul Engler said.  And with any journey, it's good to look back at where you've been, where you are now and where you want to go.

            Engler, 2002 chairman of the Texas Cattle Feeders Association (TCFA), described the TCFA Convention as part of the journey.  "Why did you come?" he asked the more than 600 cattle feeders in attendance.  He answered by saying that events like the TCFA Convention are important milestones in cattlemen's' journey because the speakers can help them look at their industry through a new set of lenses. 

            "I believe that all of us have probably lost a little sleep over the market," Engler said, "but if you really wanted to have one of those nightmares where you woke up in a cold sweat, you dreamed about an act of bio-terrorism and the catastrophic results of such an attack."  That's some of the take-home information cattle feeders found at the TCFA Convention.

            The topic of "who's the beef industry" has been on many peoples' minds recently, Engler said, and the TCFA Convention addressed that.  "Folks have said over the course of the year that they're not in the beef business, they're in the cattle business."  And that's true, to an extent, he said.  "But we all have to ask ourselves the question, "who will buy our cattle if consumers don't buy our beef?'  Without consumer demand, we don't have a market at all, and we must never forget that."

            However, much of the focus this year has been on cattlemen's market journey.  Engler reminded cattle feeders of the early days, when cattle were sold in terminal markets and a commission man stood between the seller and the packer buyer. 

            "Then one day, a cattle buyer told himself that this system was ridiculous with all its added costs and asked himself, "why don't I go to the country and trade directly with the feeders?'  This he did and direct buying got started.  Incidentally, he was black-baled by the Omaha market." 

            This direct-buying, average-cash-method of trading fed cattle has been dominant for right at 40 years, Engler said.  "I maintain that the only reason this method has lasted this long is because it has served the packer very well.  If it didn't, it would have been gone long ago."  Recently, a mile marker in cattle feeders' journey has been grid marketing and group selling.  "It is estimated that 62% of our fed cattle are now marketed on a grid and the number continues to grow."

            The question of where the beef industry is going next on its journey has generated plenty of thoughts, discussion and new ideas, he told cattle feeders, and the TCFA board and committees have considered a lot of ideas on how to fix the current market situation.   "But the TCFA board and committees are trying to make decisions based on fact, not emotion or dogma."  He complimented TCFA's volunteer leaders for their efforts and their willingness to make tough decisions.

            Among the ideas to fix the cattle market is more government regulations.   "We need only to look at Mandatory Price Reporting to see the futility of further inviting the government into the management of our business," Engler told cattle feeders.  And that's not the only example of what can happen when the government gets involved in the cattle business. 

"Remember the Dairy Herd Buyout in April of 1986?  That was a devastating event for our market.  Then there was the retail price freeze of 1973 that precipitated the first major market wreck that we experienced in cattle feeding."

            As cattle feeders are trying to map their course, it's important to look at the market factors that worked to put some major potholes in the road the past year or two.  "Corn was cheap for much of the year, futures were maintaining premiums to cash for much of the time and the cost of replacement cattle remained high.  We responded by feeding cattle longer and putting off marketings as long as possible for lack of kill slots and cheap feed.  And we all know the result-record heavy live weights, record heavy carcass weights and record tonnage." 

            Then several other major events worked against cattle feeders.  "The false FMD rumor that caused futures to begin trending lower and at nearly the same time, the Russians stopped importing poultry, which resulted in an oversupply of meat in the domestic market and gave retailers tremendous leverage.  These events came on the heels of September 11 and BSE in Japan ." 

            The realities in the marketplace have been difficult to face, but they have certainly been real, he said.  "How do we fix this market?  If wish I could stand here and give you the answer, but I can't.  That's because no single solution exists to fix our problems." 

            Is group marketing the answer?  Grid marketing?  "I don't know.  But I do know this: we will survive, our industry will survive and TCFA will survive.  We will continue to look at new ways of producing and marketing cattle.  We will continue to move forward and make decisions in a manner that ensures we make the best possible decisions not just for today, but for a whole lot of tomorrows."