Bill Bullard was hopeful President Donald Trump’s rhetoric about draining the political swamp would mean cracking down on powerful meat packing companies, too.
Bullard, the CEO of the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America, has for years preached against the federal farm policies he said benefited the nation’s big meatpackers to the detriment of ranchers.
He thought he saw a kindred spirit in Trump, when the president pledged a rewrite of the North American Free Trade Agreement. But the R-CALF USA leader from Billings parted philosophical ways with Trump on Tuesday as the U.S. Department of Agriculture abandoned Obama-era plans to further regulate cattle sales for fairness.
“What it means in Montana is we’ll continue to see a huge disparity between the price of cattle that Montana producers receive versus that wholesale price the packers receive and the retail prices consumers pay,” Bullard said.
R-CALF and its allies have for years rallied around reforms to the Grain Inspectors, Packers and Stockyards Act, or GIPSA. The objective was to require the reporting of cattle sales prices at all levels so that ranchers and feedlot owners knew the price they were offered wasn’t below average.
The reforms stalled for several years before being authored into rule by the USDA in the last weeks of President Barack Obama’s tenure. The Trump USDA put the rules on hold until finally abandoning them Tuesday.
In cattle country, the decision by Agriculture Secretary Sonny Perdue was hailed by ranchers comfortable with private contracts for their sold cattle.
GIPSA advocates had hoped for better policing of the nation’s four big meatpackers. Tyson Foods, JBS, Cargill Meat Solutions and National Beef control 80 percent of slaughtered U.S. beef.
That much market share allows the big four to set the price for American cattle. And sometimes the price set is just enough to cover the costs of feed, fuel and medicine with little profit margin in the balance.
It’s the middlemen who feel the pinch of the meat packer monopoly, said Jess Peterson, of the United Cattlemen’s Association. Calves like the ones Peterson was loading into stock trucks Tuesday near Custer are sold into feedlots, where they will be fattened up from 450 pounds to 900-plus.
“Fat cattle” are then sold to meat packers. It’s the final sale to the packer where GIPSA is needed, Peterson said. Although there are four meat packers, each works a different region of the United States, rarely competing against the others.
When a packer calls a feedlot to offer a price, it’s pretty much take it or leave it, Peterson said. GIPSA would have required meat packers to disclose the prices offered, which would have given feedlot owners a glimpse at prices outside their region and a good idea about whether they were being sold short.
“The bottom line for me is, we were taking a step in the right direction and we lost that,” Peterson said. “This lack of transparency isn’t going away now.”
It’s the fat cattle sales from feedlot to meat packer that present common ground for folks like Peterson and private sales advocates like Miles City rancher Fred Wacker.
At the ranch level, Wacker has more than one buyer for his cattle. He doesn’t see the need to disclose his prices to the federal government for the sake of transparency. There are small sales of 30 cattle or fewer, sometimes between neighbors or family, that don’t need to be reported. Sales between feedlots and large meat packers are a different story.
“I’ve always thought it infringed on the confidentiality of two willing parties,” Wacker said. “But on fat cattle, I think it’s fine that the packers, where there’s only four of them, have to report on the purchase.”
When Wacker sells cattle into the feedlot, he’s agreed in advance to raise those cattle exactly as the feedlot wants them raised. He’s used the vaccines the feedlot prefers right down to the brand. He’s fed the animals and bred the animals to the buyer's specification. When he buys cattle from other ranchers, he expects the calves to be raised to the same specification. He pays more for those cattle when those specifications are met.
As a result, Wacker said the price for his cattle transactions pay better than what a rancher selling cattle at auction could expect from whoever might be bidding that day.
“People who don’t follow all of my rules are not going to get the same amount of money. That’s crazy,” Wacker said.