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2019 beef news in review

Published on 22 November 2019

Tyson plant fire

The Aug. 9 fire that forced closure of the Holcomb, Kansas, Tyson Foods processing facility fueled a massive reaction in cattle markets through late summer, with feeders taking it on the chin with lower profit margins and processors reaping record prices.

Within one week of the blaze, profit margins at Tyson, Cargill and JBS USA jumped to $344 per head – a jump of almost $200 per head from the week previous. Simultaneously, feeder calf sellers saw their access to the markets blocked, and prices dipped almost in reverse course.

Weeks later, USDA Secretary Sonny Perdue called for an investigation into possible price manipulation, collusion or unfair practice resulting from the fire. Markets began catching up around mid-October.

Texas anthrax cases

Wet winter conditions followed by dry summer heat contributed to the spread of at least 20 cases of anthrax in areas of southwest Texas this summer. The Texas A&M Veterinary Medical Diagnostic Laboratory confirmed at least 20 positive cases of anthrax in animals. In an average year, that caseload is one or two animals.

When an animal is infected, anthrax can spread through bodily fluids, hide and meat. Vectors are known to spread the disease. Symptoms occur three to seven days after infection, with death possible within 48 hours of onset, according to the Texas A&M AgriLife Extension service. Carcasses must be disposed of by burning.

USDA halts traceability plan

In April, the USDA released a schedule that would have transitioned to mandatory radio-frequency identification (RFID) eartags for all reproducing beef animals over 18 months old and dairy animals of any age, by 2023.

In a statement released Oct. 25, the USDA’s Animal Plant Health Inspection Service (APHIS) said the agency would revisit the guidelines and removed a factsheet outlining the plan from its website, saying the factsheet no longer represented current ag policy. The statement cited executive orders from President Donald Trump highlighting the need for more feedback from the livestock industry before placing any new requirements on American farmers and ranchers.

Earlier in October, the Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA) filed a lawsuit seeking to block implementation of the USDA rule.

New CEOs for major players

Just four years after the National Cattlemen’s Beef Association and the American Angus Association both conducted searches for new CEOs, both organization went back to the well once more to find leadership at the stern.

Both NCBA and Angus came back with familiar faces.

Angus hired Mark McCully in June to replace Allen Moczygemba. McCully, most recently vice president of production for Certified Angus Beef, was a familiar face in Angus circles, having served two decades years before with the breed.

Colin Woodall, former NCBA vice president of legislative affairs, took the wheel as NCBA CEO in September after Kendal Frazier announced his retirement. Woodall has been with NCBA for 15 years, much of his work in the organization’s Washington D.C. office.

The fake meat trend continues

This spring, Burger King announced the launch of its “Impossible Whopper,” a plant-based alternative to the traditional Whopper advertised as “All Whopper. No beef.” But they weren’t the only restaurant chain to jump on the alt-meat bandwagon. Household-name chains including Red Robin and TGI Fridays, along with numerous smaller independent restaurants, also provide their own variation of the “Impossible Burger.”

In addition, the USDA and FDA released a formal agreement to clarify oversight, inspection and grading of food products “derived from cell lines of USDA-amenable species and required to bear a USDA mark of inspection.” The agreement was not a binding document, as many of the tasks still need to be encoded into law.

Hard winter, wet spring, wet harvest cuts forage supplies

Producers from the Dakotas to Iowa to Nebraska to Colorado and Kansas battled a tough spring due to the mid-March “bomb cyclone” storm. Rain and snow, combined with hurricane-force winds in many places, created catastrophic flooding in the middle of calving season and delayed planting for much of the Corn Belt.

Livestock losses from the blizzard and the flooding were estimated at $400 million and crop losses $440 million, with losses varying by state. Adequate forage supplies for the remainder of the year and into early next year remain a concern after the unusually wet spring in the Midwest, as well as the upper Northeast and Pacific Northwest’s delayed first-crop forage cuttings and plantings of corn silage. An unusually wet and cold harvest season has also impacted the quality and volume of this year’s crops and forage across the country.

USMCA yet to be ratified by Congress

Mexico was the first country to officially ratify the agreement in June. Canadian representatives have stated that the country will not ratify the agreement without affirmative action from the U.S. Canada’s federal elections took place in October, meaning the agreement will have to be reintroduced in the next parliament session.

In the U.S., the debate over ratifying the U.S.-Mexico-Canada Agreement (USMCA) has been contentious at best. Democrats in Congress – particularly those in the Democrat-controlled House of Representatives – have threatened to withhold their approval until their concerns about the labor conditions and environmental and enforcement provisions of the agreement are resolved. According to the Center for Strategic and International Studies, the longer negotiations between the Trump administration and Democrats drag on, the more likely the USMCA will be caught up in the 2020 election. The prevailing view is: If it is not voted on by the end of 2019, it will not likely be taken up until after the 2020 election, almost a year later.

Japanese beef tariffs to drop to 9% by 2033

President Donald Trump and Japanese Prime Minister Shinzo Abe signed a “limited” trade agreement – meaning it does not require congressional approval – with Japan in early October. The trade deal has been in negotiations since 2017, after the Trump administration opted out of the renegotiated Trans-Pacific Partnership, now the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The new trade deal will ideally put U.S. beef exports back on an even playing field with those from competing exporting countries, particularly Australia, Canada and New Zealand.

Under the new agreement, tariffs on U.S. beef will reduce from the current 38.5% to the 26.6% currently imposed on CPTPP countries. Both the U.S. and CPTPP countries will follow a schedule that will reduce beef tariffs to 9% by 2033.

Waters of the U.S. gone for good

The EPA and the Army Corps of Engineers announced Sept. 12 that they are repealing the Obama-era Waters of the U.S. rule that expanded the EPA and corps’ regulatory powers beyond the limits approved by Congress and the Supreme Court.

Prior to the repeal, 23 states were under Waters of the U.S. regulations. Twenty-seven states were protected by federal court orders issued in 2015 and 2017. The two agencies announced that they will revert to the regulations which existed before Waters of the U.S. came into effect until they can reach a more reasonable definition of “waters of the U.S.”

Trade wars with China continue

At the time of publication, China offered to buy $40 billion to $50 billion worth of U.S. farm products – a move some experts say is to stave off Trump’s threat to increase tariffs in October and later in December. Economic experts say this offer is “meaningless” considering soybeans, mostly used for hog feed, accounted for more than half of China’s $24 billion of ag purchases in 2017 (pre-trade war) and that the African swine fever epidemic has wiped out China’s hog population, eliminating the need for soybean-based feed. Also, China has spent the last few years fostering a steady soybean supply from Brazil.

If fully adopted, U.S. tariffs proposed and already levied will cover virtually all imports from China, worth about $550 billion, by Dec. 15. If the Dec. 15 tariffs are enforced, China will only have about $10 billion worth of $120 billion in annual U.S. imports untouched by tariffs.  end mark

Written by Progressive Cattle Editors David Cooper, Cassidy Woolsey and Carrie Veselka

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