Feb 10, 2012
NCBA making business better

Since the middle of December, feeder cattle prices have shot straight up. Last week, August feeders were trading over $160. Can we really believe they could go much higher while fed cattle are languishing at $125? This market is simply amazing. Last week, National Cattlemen’s Beef CROW Association (NCBA) President Bill Donald said in his opening remarks at their annual convention in Nashville that he loved cattle feeders. “When these guys make a dollar, they turn around and spend two dollars replacing cattle they just sold. You’ve got to love these guys.”

It was a big week for NCBA. They had their largest attendance in history, with over 8,200 people attending. I will say that this was perhaps the quietest convention I have ever attended. There were no big issues to deal with; no big arguments between NCBA and the Beef Board or any of the government attendees. And they didn’t produce a lot of new resolutions or directives for staff and volunteers to follow.

Most everyone was focused on their committee business and getting the task at hand accomplished. This was a good, positive meeting for the industry and had the appearance of codifying all segments of the industry and allowing folks to realize they all need to work together to get things accomplished in Washington, D.C.

I was only able to stop in a few meetings, such as marketing and international markets. As usual, all the marketing committees had an issue with something. The marketing committee was in a debate over the fallout from Eastern Livestock. Many of the folks there were still owed money from the debacle and were told that they may only expect 25 cents on the dollar. The moral of the story was, “Know who you’re doing business with.”

But the topic of prompt payment was the hot issue in both the marketing and live cattle marketing committees. Everyone seemed to realize that a physical bank check has perhaps lost its place in livestock trade. The live cattle committee produced one of the few resolutions approved by the NCBA board, which reads: While the capital needs to feed cattle has increased dramatically and cattle feeders that wish to buy replacement feeders in a timely manner. And feeder cattle and feedstuffs are paid for automatically or overnight. Also the US postal service has recently announced that first class mail will get even slower and that packing companies use first class mail to send cattle payments. NCBA is directed to work with the packers to develop a more expeditious payment system on fed cattle.

This resolution was submitted by Texas Cattle Feeders Association.

A special task force in the marketing committee that was to focus on the Eastern Livestock debacle made some recommendations to expedite prompt payment and protect buyers and sellers. They proposed the use of a debit card, where buyers set up a line of credit and that credit would be extended through a buyer’s unique cattle only account. If the account is pinged, available funds can be displayed. Only cattle trades will be processed through these special accounts which are currently being beta tested.

Then they came up with Cell Phone Imaging system which could be used anywhere there is cell service. The buyer could transfer funds to the seller’s account and seller could wait to release cattle until he sees the funds in his account. There is more research required to implement this idea. Title transfer was another area of concern and the committee realizes that the capacity of the middleman is important relative to title transfer and that buyer and seller should ask if middle man is a market agent or dealer. But the easiest thing to do is ask for title disclosure at the time of the transaction if purchasing on the account of another person. They were also looking at an insurance program to guarantee payment.

After the Eastern Livestock wreck, it does make you wonder where the Packers and Stockyards Administration (P&S) was in this fiasco. Ironically, most market men have an extreme dislike for P&S, but this past year, they have been fairly busy checking up on livestock dealers and making sure their house is in order. And now it seems that NCBA may ask them for help in securing payment methods for livestock and assuring the credibility of those trading in the market. Still, the best advice is, “Know who you’re doing business with.” — PETE CROW