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Mr.
Queen:
I
really don’t feel the drought is going to affect us drastically. We
had large placements earlier in the year due to the drought and
wildfires out west. We did have a good many calves hit the market then
that would have been fall calves. Those calves have already been through
the system; there was a little glut, and we saw that it lowered the
market just a little bit…especially in the calf and feeder part of it.
The fat cattle industry dipped but we still stayed approx $10 a hundred
weight (/cwt) over the averages that everybody had anticipated for the
summer. With the feeder level staying high, it also left us with good
prices for our calves.
I
think as we go into fall we’re not going to have a glut of cattle in
the feed yards. As a matter of fact, I think we’re going to have a big
demand for yearlings and calves. If you look at the futures market, we’ve
got a tremendous market coming up the last quarter of this year and the
first quarter of next year. This is a result of not having enough cattle
and increasing demand. It looks to me that the cow/calf operator still
has a great opportunity despite the drought.
CFN:
Stored
feed (usually hay) is a major expense for cattlemen. In Alabama there
seems to be increased producer interest in finding ways to reduce stored
feed needs. Is this a long-term nationwide trend?
Mr.
Queen:
Here
in Alabama and the rest of the southern tier, you have a unique
situation in that you have the ability to graze cattle for longer in the
year than other parts of the country. I know that being from the
Carolinas, we don’t have that opportunity except in the eastern part
of the state; and we have to store feed for the winter. I know it’s
expensive to do but, you know, in my mind, it always pays to have a
little bit of insurance in stored feed, whether it just be in stockpiled
grass or in the form of hay. I don’t think it’s a national trend
that they store so much hay. Most people just store enough to get
through the winter and should always do that for insurance.
CFN:
Will
grass-fed beef be a "Southern" phenomenon, with our extended
grazing season, or will it be accepted in other parts of the country;
and what is your view of the future of grass-fed beef, organic beef, or
other such specialty beef products?
Mr.
Queen:
Certainly
here in the southern tier, as I mentioned, you do have an extended
grazing season. If there is a market, the Southeast will have an
advantage over the rest of the country. Grass-fed beef is a niche
market, along with all organic and all natural beef and that’s great…for
people that can afford its slightly higher price at the supermarket. We
need that in the industry because there are people out there who desire
that type beef. But, we also have the people that love that good
grain-fed beef that’s been so nutritious and so tasty for all these
years and has been proven healthy. I think that we’ve got a place for
all of it in our economy. I don’t think that it will overcome, by any
means, the magnitude of our grain-fed product.
CFN:
Recently,
there has been a sharp increase in the number of goats and goat
producers in the Southeast. Do you see this trend having any
implications (positive or negative) for the beef industry?
Mr.
Queen:
I
don’t think there are many implications there in any way. We do
produce the most tasty, nutritious beef in the world. Consumers in our
domestic market, as well as international markets, understand that. I
don’t ever see it affecting the good, choice, healthy cuts of beef
within our industry. Now, when you get down to some of the variety cuts
of beef, there is a chance that at some point in time it might affect
sales there. But, if we continue to grow population here in the U.S.
(and that was the secret of our survival after 2003), we can still
utilize most all the product we raise in this country. I don’t feel
that there will be any impact on the beef industry, negative or
positive, to come out of increased goat production in the U.S.
CFN:
Currently,
U.S. beef imports are banned in over 20 countries, including South Korea
and China. What negotiations, involving the NCBA, are going on to open
these markets?
Mr.
Queen:
As
you know, international trade is dealt with on a government to
government basis. We at NBCA, with our integrity in the industry and the
product that we produce, often have a seat at the table with the USDA
and the Secretary when it comes to how we feel the negotiations should
be conducted. We are asked for our opinion when it comes to dealing with
each country. What we feel really needs to happen in our country would
be an equal set of guidelines that would give everybody equal footing…an
international set of guidelines that we should be trading by, worldwide.
That
would mean cattle would have to be at least 30 months of age, removal of
SRM (Specified Risk Materials such as the brain, skull, eyes and spinal
cord) and bone in/bone out. We just opened the Japanese market the 27th
of July and within two weeks, U.S. beef was on the grocery store shelves
in Japan.
In
dealing with countries like Korea and China, what we’re trying to do
is to negotiate for fair regulations for us all to abide by. In Korea we’re
trying to arrive at a bone tolerance level. Early in negotiations the
Koreans were asking for a zero bone tolerance. It’s impossible to have
a zero tolerance in anything that has bones.
You
can go to any restaurant in America today and you may get a bone chip.
We have to come up with a tolerance that they will accept and, sooner or
later, we’ll arrive at a tolerance level that we both can live with.
We
have to have these markets…they are very, very important to us.
Perception is the biggest issue in international trade; perception that
we have an animal I.D. system. Even though it isn’t a beef safety
measure, it’s a tracability feature. In the minds of those people, if
you say you have an animal I.D. system in place, then they look at our
product as safer because we have a way of tracing back any disease that
may arise. We’ve had two cases of BSE in the United States, the
Canadians have had seven and the Japanese have had twenty-seven. Because
the Japanese government mismanaged their BSE issues, the general public
is very skeptical of what might happen. Because our friends to the north
in Canada have an I.D. system in place, the Japanese have never stopped
trading with them. It’s the perception of the Japanese people that
Canadian beef is safer than ours even though they have had more cases of
BSE.
Producer
relations is another issue. A Japanese producer gets nearly $4,000 for a
slaughter steer over there. They don’t want our product over there
because it’s going to lower the value of that steer. In the U.S.,
every time we import some lean beef from Australia or wherever,
producers jump up and down. But in 2003, when we stopped international
trade, we were a net exporter in terms of value to the tune of $1.4
billion. Our beef industry accomplished this by importing lean product
from those countries to mix with ours to make ground beef. Ground beef
is 54% of the product served in the United States. Otherwise, we would
have had to grind the chuck and the round to put in that fattier product
of ours to make an 80/20 blend that they use at McDonalds, Burger King,
etc.
We
have lost a big part of the international market but we’re turning it
around. We’ve got some product in Japan, we’ve got some product in
Vietnam…we’re asking the consumer to choose now. It’s out of the
hands of the government. It’s out of the hands of the producer. It’s
in the hands of the general consumer. We’ll let them decide if our
product is safe, if it’s tasty and if it’s nutritious. I think we’ll
win the battle.
CFN:
What
is the National Cattlemen’s opinion of the border beef trade with
Canada?
Mr.
Queen:
The
NCBA’s position on trade with the Canadians is that we continue the
trade as it is today with cattle being thirty months of age, bone
in/bone out SRM removal just like the OIE (Office International des
Épizooties, French for "International Epizootic Office") and
other international guidelines state. The USDA has taken the position to
where they’ve pulled the rule to accept over thirty month of age
cattle out of Canada due to the fact that they have not completed the
investigation of their last BSE case. We agree with the USDA. We feel
that this is a very prudent decision. We don’t feel that there should
be a rule that we accept product over thirty months of age given the
current situation. We know that 30 months and under is safe and this is
accepted internationally. Those are the rules that we abide by in this
country and we feel that we should trade on those guidelines alone.
We
had an eleven point directive presented at our national convention a
year ago and we have fulfilled nearly all of those directives from our
board of directors and from the membership. These included opening the
borders with Japan and resolving the blue tongue issue with the
Canadians. Things like that are not only bettering our relations with
Canada, but with all of our international trading partners. We have a
good ally in the Canadian feeding and packing industry and we’re proud
to be partners with them.
CFN:
What
is the Cattlemen’s opinion of the U.S. going to such lengths to entice
the Japanese into importing our beef again? Should we?
Mr.
Queen:
We
not only have to have Japanese trade, we have to have all international
trade. International trade prior to December 23, 2003, at 1.4 billion
dollars, added $15/cwt to the price paid to a U.S. producer for a
finished animal. This added up to somewhere between $175 and $225 per
animal. That’s how we ended up with such good prices paid to producers
in the early 2000s. Of that $225 in value added to what the producer
got, $150 to $175 of that we gained was for products that we don’t use
in America.
Foreign
markets, especially Japan, do use products like tongue, kidneys, liver
and offal. We normally grind it up and throw it away. That adds extra
value to a carcass. Japanese trade alone was $5 of that $15/cwt. When we
were at our traditional cattle herd size of not many years ago, nearly
100 million head, we had to export approximately 10% of our finished
product to hold the prices up. If we don’t have that market, we’ll
tend to go down in that low cycle and we’ll all be disappointed again.
Prior to re-opening the Japanese market, we were only utilizing 3.5% of
that 10% that we need. If we continue to increase our herd size we’ll
certainly need the international markets.
The
Australian government has changed their check-off this year from $2 to
$5 a head, the Canadian government set aside $100 million for
advertising in international trade; and we’ll be operating on a budget
in 2007 of $52 million…half of what the Canadians are doing and less
than half of what the Australians are putting in. To compete with the
world in international markets, we’ve got to match them financially as
we go through this trade battle. We’re good friends with these people
and there’s nothing wrong with what they’re doing. They know what it
will take and are willing to spend the money to properly advertise their
product. We need to do the same.
CFN:
When
and how will the National ID Program be implemented?
Mr.
Queen:
The
USDA has told us that it will be mandated in the year 2009. Because of
what the NBCA feels will be added value to our commodity, we have chosen
to be part of the USAIO (United States Animal Identification
Organization), which is a coalition of meat segment groups coming
together to form a private data base. Every farmer’s and rancher’s
information is confidential and will allow the government 48 hours to
trace back in the event of a disease or animal health emergency in our
country. In the end, those who choose to give their information to other
segments out of this private database will add value to their products.
Animal
ID should not be mandatory. Premises ID possibly should be. If the USDA
is going to mandate anything, it should be information on where the farm
of origin is. Here in Alabama the legislature just passed a rule that if
you entered your information in a database with the Cattlemen’s
Association, everything will be confidential, even your premises ID.
Hopefully we can get that done nationwide.
Going
back to the perception that our product is safe…an ID program will
certainly help. The ones that get on board first are going to reap the
biggest part of the harvest. We encourage everyone to come on, let’s
keep government out of this issue, off our farms and out of our industry
as much as we can. Limited government is one of the main things that we
stand by. This is an issue that needs to be voluntary.
CFN:
What
will the National ID Program mean to the small ranchers here in this
state (most of our farms have 25 head or less)?
Mr.
Queen:
I
think the average herd size in Alabama is 24. We’re a nation of small
farmers. 71% of cattle producers have less than 50 cattle on their farm.
80% have less than 100 head. The average herd size in the United States
is just 39. I think this is an opportunity for the small producers with
good genetics and good quality calves to co-mingle those calves that are
age and source verified.
Everybody
keeps those records already, my dad and granddad even wrote the cow’s
name down when they didn’t have a number on her. They wrote down who
sired a calf and what pasture they came from. We’ve all done that for
generations. We all do the record keeping, it’s just a different way
of record keeping in a different day and time.
An
animal identification system is so much quicker with the electronics we
have today. A small producer will have the ability to ID their calves at
the first point of commerce. There’s no sense in identifying an animal
if it’s not going to market because it’s not going to be consumed.
Once it starts that transition from one part of the industry to another,
it has to be identified. If you identify it at a sale barn or another
buying facility, where they tag them and weigh them, you will create
uniform load lots and will add value for that producer.
CFN:
How
will it be monitored?
Mr.
Queen:
The
way the USAIO is set up, the monitoring will be at the first point of
commerce. Every animal that sells will have to be identified
electronically, whether it be at the sale barn, an order buying firm or
an individual trade in the country. The buyer will be responsible for
identifying that calf. As it changes premises IDs, then the premises
that it goes to each time will be responsible for identification.
As
far as the government monitoring this information, they won’t unless
it’s a health issue or a disease outbreak. Then they have the right to
go into that information database just for that individual animal and
then trace back to identify from which premises it originated. That’s
the way animal ID works. As far as confidentiality for tax purposes, the
IRS won’t ever monitor these records. No feedlot, no packer, no one
can monitor where that calf came from other than that owner-producer.
CFN:
Since
it is proclaimed to be a consumer necessity - will the consumers pay for
this ID program or will it be tacked on to the cattle producer’s
expenses?
Mr.
Queen:
We
don’t want the government to pay for the ID program. Once we demand
that they pay for it, it ceases to be confidential. It becomes a
government project and that’s what we’re trying not to have. I can’t
tell you that the producer’s not going to pay for part of it and I can’t
tell you that the consumer’s not going to pay for part of it. I think
that both of them will pay a percentage of the cost.
I
think that the only cost for the producer will be the identification
button and whatever the minimal amount of labor involved. Now, the
infrastructure within the sale barns will change. Will they absorb this
cost? No. They’ll pass it back to the producer a few pennies at a
time. Every cost, whether it’s making a cow or making an automobile,
will be passed back to where the demand began. The consumer will pay for
some of this because they’re the one demanding that it be implemented.
The cost that anyone has to pay won’t be enough to detrimentally
affect the beef industry. McDonald’s will share, Burger King will
share, feed yards will share but, eventually, it will be paid for. |
