Come together

Opinion
Jul 9, 2010

JBS packing announced last week that they intend on buying the largest cattle feeding company in the Southwest, McElhaney Cattle Company in Welton, AZ. This acquisition would add 130,000 head to JBS’ feeding capacity for a total of 968,000-head one-time capacity.

I know that Gary Oden, owner/manager of the feedlot, is ready to retire and this sale is simply about selling this portion of the family business. However, the idea of JBS buying another feedlot has our friends at R-CALF USA in an uproar and they have complained to the Justice Department. They wrote a letter to Attorney General Eric Holder to bring immediate enforcement action to prevent JBS from acquiring McElhaney Cattle Company.

R-CALF says they represent independent cattle producers, which McElhaney is. It’s been a family business since Sam McElhaney started it in the 1930s. I’m sure R-CALF wouldn’t have any problems with the transaction if it was anyone but JBS. But who?

It reminds me of when JBS first entered the U.S. beef industry and wanted to purchase Swift, Conti Beef, Smithfield Beef, Five Rivers Feeding and National Beef. The deal was allowed by the Justice Department, but National Beef was not to be part of the plan.

National Beef was primarily owned by Northern Plains Premium Beef, a group of independent cattle producers. These producers were ready to reduce their interest in National Beef. The folks at U.S. Premium Beef felt like they had the rug pulled out from under them. How would you feel if you were wanting to sell your business and an industry trade group claiming to represent independent producers was encouraging the Justice Department to ruin the deal?

There aren’t that many people out there who can buy a 130,000-head feedlot, just as there weren’t for Swift, National Beef, Smithfield, Five Rivers and Conti Beef. No company or person has ever made the kind of investment in the U.S. beef industry as JBS has.

R-CALF also announced last week that they support the Cattlemen’s Beef Board’s recommendation that the Federation of State Beef Councils (Federation) separate themselves from the National Cattlemen’s Beef Association (NCBA). This wasn’t a big surprise since R-CALF has been at battle with NCBA ever since they merged with the National Livestock and Meat Board and the Federation. It has always appeared that R-CALF’s objective has been to damage NCBA using the checkoff as a weapon.

R-CALF also jumped into the international trade arena and provided testimony to the International Trade Commission. They don’t seem to think that selling beef to China may be such a good deal for U.S. cattle producers. R-CALF CEO Bill Bullard said in a press release that "Increased exports should theoretically increase the value of cattle all along the beef supply chain. Empirical evidence however, shows this expectation has not materialized and historically, live cattle prices are highest when export volumes are at their lowest."

He also said, "Most, if not all, of any increased value derived from exporting cattle to China would be captured by beef packers, not cattle producers, and that conversely, if China expanded its own cattle industry to export beef to the U.S., the result could negatively affect the price paid for domestic cattle."

I’m not really getting his point for not trading beef with China but it appears to have quite a bit to do with the packing industry making a buck and competition issues. Sometimes it’s difficult to understand what R-CALF’s long term goals are. It seems that they are more likely to reverse the trends of the cattle and beef industry than to bring new constructive ideas forward.

The cattle and beef industries have a lot of important issues before them. Some of the petty issues, like the beef checkoff and NCBA, just shouldn’t be an issue. We now have issues that directly threaten the sustainability of the beef industry, such as the Food and Drug Administration antibiotic issue. And the Environmental Protection Agency is imposing a bunch of regulations which will directly affect the cattle producing industry, as well as all animal agriculture.

I know some folks will get angry if I talk about R-CALF, but I just don’t see how this group is going to improve the cattle and beef industries when they consistently try to tear the business down. There is nothing positive about the three issues I outlined.

We need some unity in this business, and the various groups representing the business need to get on the same page and prioritize what’s important and what’s not and work together. Keeping an investor out of the beef business, using the checkoff as a political tool, and not expanding markets because a meat packer might make a buck isn’t going to be good for anybody. What we need is real leadership. — PETE CROW

JBS packing announced last week that they intend on buying the largest cattle feeding company in the Southwest, McElhaney Cattle Company in Welton, AZ. This acquisition would add 130,000 head to JBS’ feeding capacity for a total of 968,000-head one-time capacity.

I know that Gary Oden, owner/manager of the feedlot, is ready to retire and this sale is simply about selling this portion of the family business. However, the idea of JBS buying another feedlot has our friends at R-CALF USA in an uproar and they have complained to the Justice Department. They wrote a letter to Attorney General Eric Holder to bring immediate enforcement action to prevent JBS from acquiring McElhaney Cattle Company.

R-CALF says they represent independent cattle producers, which McElhaney is. It’s been a family business since Sam McElhaney started it in the 1930s. I’m sure R-CALF wouldn’t have any problems with the transaction if it was anyone but JBS. But who?

It reminds me of when JBS first entered the U.S. beef industry and wanted to purchase Swift, Conti Beef, Smithfield Beef, Five Rivers Feeding and National Beef. The deal was allowed by the Justice Department, but National Beef was not to be part of the plan.

National Beef was primarily owned by Northern Plains Premium Beef, a group of independent cattle producers. These producers were ready to reduce their interest in National Beef. The folks at U.S. Premium Beef felt like they had the rug pulled out from under them. How would you feel if you were wanting to sell your business and an industry trade group claiming to represent independent producers was encouraging the Justice Department to ruin the deal?

There aren’t that many people out there who can buy a 130,000-head feedlot, just as there weren’t for Swift, National Beef, Smithfield, Five Rivers and Conti Beef. No company or person has ever made the kind of investment in the U.S. beef industry as JBS has.

R-CALF also announced last week that they support the Cattlemen’s Beef Board’s recommendation that the Federation of State Beef Councils (Federation) separate themselves from the National Cattlemen’s Beef Association (NCBA). This wasn’t a big surprise since R-CALF has been at battle with NCBA ever since they merged with the National Livestock and Meat Board and the Federation. It has always appeared that R-CALF’s objective has been to damage NCBA using the checkoff as a weapon.

R-CALF also jumped into the international trade arena and provided testimony to the International Trade Commission. They don’t seem to think that selling beef to China may be such a good deal for U.S. cattle producers. R-CALF CEO Bill Bullard said in a press release that "Increased exports should theoretically increase the value of cattle all along the beef supply chain. Empirical evidence however, shows this expectation has not materialized and historically, live cattle prices are highest when export volumes are at their lowest."

He also said, "Most, if not all, of any increased value derived from exporting cattle to China would be captured by beef packers, not cattle producers, and that conversely, if China expanded its own cattle industry to export beef to the U.S., the result could negatively affect the price paid for domestic cattle."

I’m not really getting his point for not trading beef with China but it appears to have quite a bit to do with the packing industry making a buck and competition issues. Sometimes it’s difficult to understand what R-CALF’s long term goals are. It seems that they are more likely to reverse the trends of the cattle and beef industry than to bring new constructive ideas forward.

The cattle and beef industries have a lot of important issues before them. Some of the petty issues, like the beef checkoff and NCBA, just shouldn’t be an issue. We now have issues that directly threaten the sustainability of the beef industry, such as the Food and Drug Administration antibiotic issue. And the Environmental Protection Agency is imposing a bunch of regulations which will directly affect the cattle producing industry, as well as all animal agriculture.

I know some folks will get angry if I talk about R-CALF, but I just don’t see how this group is going to improve the cattle and beef industries when they consistently try to tear the business down. There is nothing positive about the three issues I outlined.

We need some unity in this business, and the various groups representing the business need to get on the same page and prioritize what’s important and what’s not and work together. Keeping an investor out of the beef business, using the checkoff as a political tool, and not expanding markets because a meat packer might make a buck isn’t going to be good for anybody. What we need is real leadership. — PETE CROW

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