July 23, 2002  

For information, contact Burt Rutherford , TCFA communications director, at (800) 299-8232
or (806) 358-3681

 INDUSTRY ORGANIZATIONS TAKING PROACTIVE STEPS
TO ADDRESS CATTLE MARKET  

            "Market losses continue to hit cattle feeders hard.  That's why we're stepping up our efforts to address
the problem," according to Richard McDonald , president and CEO of the Texas Cattle Feeders Association (TCFA).  Speaking at a news conference at the Amarillo Livestock Auction in Amarillo today, McDonald reported on actions taken by TCFA and the National Cattlemen's Beef Association (NCBA) to address the depressed cattle market.  

            "Industry analysts say that in Texas alone, cattle feeders have lost nearly $550 million in equity in the last 18 months.  Nationwide, $2.5 billion in equity has been drained from our industry since 1999," McDonald said.  "These losses are significant and we've been searching for realistic, constructive solutions to the beef industry's marketing problems.  I'm glad to say that some concrete and proactive plans are in place to help cattlemen deal with the market situation they find themselves in." 

McDonald said that TCFA and NCBA have long had policies that support aggressive enforcement of antitrust and anticompetition laws.  "Earlier, we asked for increased surveillance of the futures market.  Last Saturday during the Cattle Industry Summer Conference, the NCBA Board of Directors took some bold steps by asking for a Congressional investigation in several areas.  These include: (1) impacts on producers from packer and retailer concentration, and (2) possible statutory changes to antitrust laws and anticompetition laws to give producers the same protection as consumers."

In addition, NCBA is working on integrating new mandatory price reporting information into formula and grid contracts as alternative base prices. 

            TCFA is working on several fronts.  "Based on TCFA's initiative, a multistate Marketing Improvement Team has been established and is already working to develop recommendations on actions that cattlemen and packers can jointly take to address the market," McDonald said.  "Their charge is to develop recommendations-not to form policies-and take those recommendations back to their respective state organizations for ratification before meeting with packers."

            Long term, TCFA initiated an industry-wide systems analysis of the beef industry, to be conducted by prominent business schools across the nation.  "This systems analysis will give perhaps the clearest and most insightful picture we've ever had of industry structure from producers to consumers and where profit opportunities for producers might be found," he said.  "While this is not a short-term solution to our immediate market problems, this analysis will give us the knowledge we need to remain viable and competitive as our industry and our market continues to change.  Most importantly, it will determine if the producer is getting a fair share of the consumer dollar." 

            There are several reasons the live cattle market is hurting so bad, McDonald said.  Record supplies of beef and competing meats, reduced business travel, limited confidence in futures markets and reduced exports have all combined to pressure markets lower.  That makes efforts to stimulate beef demand and move more beef through market channels important, he said.

 "To help move heavy beef supplies, the beef checkoff launched a summer grilling promotion.  So far 34 state beef councils have joined in to augment the $2.8 million national program conducted by the beef checkoff.  Nationwide, about 6,000 grocery stores are participating in the program that tells consumers that steak and ground beef make a terrific summertime grilling option." 

Checkoff collections will continue in spite of a South Dakota federal district judge's ruling that the beef checkoff is unconstitutional.  "This will allow producers, through the beef checkoff, to continue working to increase consumer demand for beef, build stronger confidence in U.S. beef, increase values for chuck and round, improve attitudes about the nutritional benefits of beef, and create a positive, long-term marketing climate for beef products." 

            Efforts to increase beef demand are important, he said, because every dollar that winds up in a producer's pocket from the sale of cattle starts when a consumer purchases beef at the grocery store or restaurant.  And producers support the beef checkoff.  A June 2002 survey showed that 66% of producers approve of the checkoff and that about 70% believe that the checkoff helps producers compete with the aggressive promotion programs of pork and poultry.

            "We still have a hard fight ahead, because there is no single solution that will solve our marketing problems," McDonald said.  It's important to remember, he added, that both pork and poultry production are setting new record highs in 2002.  And that's on top of near-record beef production.  "We will continue our efforts to identify opportunities for improving profitability, price discovery and cattle marketing systems," he said.  "We must continue to seek solutions that are market driven and that require less government and more consumer focus." 

(end)

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