Livestock Meeting Cattle Feeder Cattle Hogs a

this is a livestock meaning path speeders and hogs and cattle and whatever good afternoon ladies and gentlemen this is the commodity meeting for the livestock which is fat cattle feeder cattle and the hog division 1983 national convention denver colorado once again welcome to the 1983 National Convention commodity meeting for the livestock division first here this morning I would like to introduce Gary Ellis which is the head of the or is the director of the feeder cattle division for the nice and farmers organization I've known Gary for many many years he has a full farm background he has a wonderful family and he's very dedicated to this organization yours and mine and with no other introduction I'm just going to turn this over because Gary has a little something I'm sure that we'd all been arrested and listening to thank you barrel I want to spend just a little bit of time here this morning going through some of the things we have done in the last few years in the organization what I feel that we have done that is working and what I feel that we have done that is not working and go through some of the things that I think we could do to make our feeder cattle programs work better for us out here in the areas and in the country I want to start off here with a overlay showing you what happened in the market in 1981 and again in nineteen and eighty-two and what we have done again I'll say to start correcting what is happening in the country in 1981 we started blocking cattle in the spring now my figures over here to side aren't going to make any sense to you they're an average nationwide price and also average deer in heifer price but this will go also I think to show you that whatever we do in this organization affects the price nationwide so we started out in the spring of nineteen and eighty one which is your crooked line here and we started blocking right about here for our fall delivery calves and as we started blocking even without making any sales the market level in the country moves up why because as we get into the country and start putting the production together to move we force the balance of the feeder cattle industry to get involved and try to get their share of the production and that in itself has always started us moving the market right here at this point we had well I guess it's real it was in February which would have backed us up to right here in nineteen and 81 at the midwinter convention in the state of Montana I was carrying an $84 offer to those people for feeder cattle you see our biggest problem probably was the same thing we ran through in 1972-73 the biggest problem we had was in 79 and I'll get to that later we had worked too and we had built a market on feeders up to $1 dollar $8 20 so it's hard to start out in the spring and want to be willing to accept 84 dollars for a set of cattle isn't it so we done our blocking and we pushed the market actually higher but at this time it still wasn't enough and I'm not here to argue with anyone whether it was cost of production or whether it was not in their given area the point is the market was here and we're going to get into a little bit of what we could have done to have taken it on up or at least health it steady but we were at any point at this time what we call uncontracted which simply means that nobody was willing to sell at the available prices there was four feeders so what happened in 1981 because of the inability to get together with the buyer and the seller and caused the market to be floored or stabilized it started moving down with still the idea in everybody's mind if what they had gotten the back two years before there was no sales and the market kept moving down and then you hit the point of no return as far as fall feeder cattle deliveries are concerned in September and when you hit that it broke even faster because of course deliveries started and cattle started flooding in on all the markets so she broke right on out for the balance of the year now we started again here in nineteen and 82 which is the straight line here and again we started and this was simply the blockers in the country in the different western states blocking together production and moving it on the contracts back to the office where we had the supply a cattle that were to be sold we ran into the first of March it become very apparent at that time that the majority of the cattle that could be signed up in the country for fall delivery from the membership was signed up and so with everybody coming in off of the road with the cattle supposedly all signed up the market starts to level off we immediately got concerned that what would happen was the same thing that happened in nineteen and eighty-one so you've heard a little bit here in this convention about a procurement team we sent our procurement team into the state of Montana and I believe also I might stand corrected on this but I believe we sent some into Colorado also in 1982 and we started working on non participating members non-members maybe some members that had not been contacted but simply again the idea that we were on the roads and blocking cattle and doing something the market started moving up again we reached this point here and again with no sales being made and the people coming back in off of the road we start back down again right here we had about three or four meetings in the state of Montana and explained to the people that if we had to do something we would decide what but anyway at this point we had to do something because we were on exactly the same downtrend that we were in 1981 in the market we did get about seven of the collection points to agree to put together one load of cattle a piece now what it amounted to and I think it may end up having to be started this way every spring but what it amounted to was one load at each point and I think maybe a couple of points put together two loads but they had like at the most five to ten head of cattle from any one owner and that the membership has got to understand you see the basic problem that we ran through in 80 81 82 no collection point one to be first to sell their entire block because they knew what would happen once the first block was sold the market would stop building and the members in their area would not get the benefit from building the market now there's a couple reasons why that isn't quite true we just don't handle it right you know if they would go ahead and sell and then start blocking for next year's production the market could the market could be helped but it's not been handled that way I'll go on through this one and then I'll explain it on out to you but with the selling of approximately seven loads of cattle out of the state of Montana the market level started moving up by the 1st of August we started then selling full blocks of cattle out of the state and we raised the market level here was 74 cents on a 500 pound steer calf but you see we raised the market so fast that everybody got a little starry-eyed and decided the market's going to be okay it's done this by itself you see we have a tendency folks to set on the inside looking out and we can't believe that we with our five head could have made this situation happen and I don't know what we believe it is but we believe that the market is moving up by itself and so again we get in that attitude that we want to see how far it's going to go we spent a full year here building this program and right here at this peak people that took five days with no sales at all and she went right back down the hill again and the worst part about the time of year here that we became uncontracted Isle was the fact again that it was right in this area of where we had trouble in 1981 it's the 1st of September and one we run to that point the buyers all realized that within a very short period of time those cattle are going to be coming anyway and they can buy a map whatever normally they feel like given once the run starts so for that reason you're dead in the water after you passed that first 2 September as far as forward contract and doing you any good now I'm not trying to stand up here people and tell you that there's no way that the organization can do you any good other than a forward contract program but I am telling you that if you want to build a market it's the truest form of collective bargaining that there is and it's the only way that we're going to have much effect on the feeder cattle market is going to be with the forward contracting program now you feel maybe that what I've showed you here for two years in a row is strictly a coincidence that what we've done really has nothing to do with what the market has done here's a graph that goes back to nineteen and sixty-three and you know the funny thing about it the market run along here and the only reason I didn't go back come back to the depression time is the market never varied that much probably the biggest variation you got right here but we ran up until 1968 and in 1960 eight something happened that changed the feeder cattle market forever we need to do a little talking again a little later whether that's good or bad and I'll tell you why we started the national farmers organization feeder cattle program blocking and selling feeder cattle and immediately the market went to as high as that ever been another year or two down the road with more blocking and finally in 1971 we started selling forward contracts on feeder cattle something completely new and it didn't take very long when we started that in 1971 to just skyrocket the market and what happened we're all aware of it I'm not going to go into that in detail other than to tell you that I was in some meetings with $84 money on feeder cattle the highest in history and people were standing around all over the room waving dollar bills and saying they're going to this and you know it and we know it and we're not selling and so they didn't sell on that market in 1972 instead what happened is they hung on to the calves until fall and here's the middle of the summer in 1973 and when they sold the calves that fall and into that winter and the spring of the following year there was calves brought 28 cents on heifers there was steer calves and the $30 and it could never happen because the market was on an upward jump and it was going to keep going forever and it was something that we the members of this organization had built and had caused to happen but again being on the inside we couldn't see the forest for the trees you see there's so many people out here throughout the country and you look at labor you look at a lot of the industries you even look at the government employees pick up your paper turn on the radio the TV every day you'll hear that somebody is using collective bargaining to get done what they want done and you people sitting right here in the room were the first ones to come up with that idea and it worked for you and it worked for you so well that they seen it and they copied it but we didn't realize we'd done it you had to cost your production plus a profit and feeder cattle in 1972 with some forward contracts on out ahead and accepting them that line can come straight across and work up but that's not the way we did it instead we backed off for more after we broke in nineteen and 73 and we started doing a little contracting in the summers which raised the markets but it really wasn't until 1977 that the people the thing got low enough and stayed low enough that everybody finally decided it's not going to get well by itself we've got to do something so they got to go in again on some forward contracting and some blocking programs and immediately the market started to react to it all over again and then we come up to the period in nineteen and seventy nine which I told you in 79 and 80 was the big problem that you couldn't contract any calves in 81 to so we got into problems again by not forward contracting and down the hill we went now we've had a very strange thing happen this year and I do not have a graph made on this 1983 is of this time but in a year when everyone in the industry and I'm going to tell you at least 99 percent of you producers told me in the meetings in the western states all over the country that I helped that there was no way that this feeder cattle market would hold this year that it would be a downhill slide from middle summer plumb through delivery time hasn't happened the people in the western states and I'm going to give Montana and South Dakota particularly credit for this got in and started finally moving some blocks of cattle again and they turned this thing around and we're setting here to looking at a higher feeder cattle market than you had in the end of July in August and September and that's something that nobody believed would have happened and it's something again that you people have caused to happen I'll tell you how we raise this and I think possibly it's the way it's gonna have to be done in the future because I understand that we're all people and I understand why no individual or no collection point wants to sell his entire block so the next one down the road can get a little bit more money for his I mean it's human nature that we want all we can get and we want as much as everybody else is going to get but if we will go into moving these cattle out of the points and on the first loader to have your producers put in five to ten head to build those loads it'll stop a lot of that and I don't think and I was talking to a fellow from Montana here a little bit ago I don't know exactly what you want to call it I don't prefer to I guess call it giveaway or whatever but you need to move some portion of that production to build the market for yourself the greatest thing that we have got to fear in the feeder cattle market is reaching that cost of production plus profit because we done it in 72 and we done it in 79 and when we done it we threw in the towel you see it can be brought on out across in a straight line simply by forward contracting more time down the road ahead it's got to be done in more than one given area we started last year and this year it got even bigger in Missouri in Arkansas in Oklahoma forward contracting feeder cattle and we've got it going in some areas that really have not done much of it ever before and they're liking it but that's what it takes it takes it year-round and it takes ever area becoming involved in it I know there's a lot of areas that have not done any forward contracting in the past but they are starting to come to it and we have affected these markets tremendously just by actually three or four major western states where they really get in trouble when the bad weather sets in and the cattle have to go those are the most important ones as far as forward contracting I doubt if anyone in this room ever got up in the morning and seen that it was raining and they were planning on working in the field that day or doing something else and when they seen it was rain and they decided you can't go to feel maybe I might as well sell the Hogs maybe I might as well sell the cattle I'll bet you everybody in this room has done that at least once at least once you spend 365 days a year producing that product and it almost bet you that you made that decision somewhere between 2 and 10 seconds that today is the day to market now I'm again not gonna stand here and tell you that I might not be able to do you some good but I'm not gonna be able to do for you what you want us to do for you on that basis I can't you need an inventory you see there's no time really people like when that phone rings and the guy on the other end in Iowa eastern South Dakota Minnesota says I want to buy a load of 500-pound calves through your organization there will never be a better time in world sell at man load cattle will there never because he's ready and he wants him if he didn't he had and wouldn't got on the telephone and called and without your inventory at that point I got nothing seldom an absolutely nothing as real pleased with the way all the forward contract way ups went this year they went really smooth we've got a lot of calls from both the members who ship cattle and also the buyers Friday right after Thanksgiving I was in the office and I picked up the telephone and it was a man that from eastern Nebraska here that bought 2,500 head of feeders from the organization this fall and he said Garriott you know I'd love to get on the phone here and tell you how rotten these cattle are and how bad they're dying and this nasty weather I got out here but he said you know that didn't true he said I've lost two head out of 2,500 and he said we're going to have to do this again and you see that's the kind of thing that it takes to build your program I've told a lot of you people I'm sure many times and I know a lot of you people in here seeing how this is a fat cattle feeder and hug meeting our probably cattle feeders but it doesn't matter to me what your cattle cost you going in your white and 21 and whatever and you can argue with me or whatever you want to do but it doesn't matter to me what they cost going in as long as they're what we said they would be because we'll work out the price but if they're not what we said they'd be then that's when we're in trouble that's when we're in trouble because we're going to lose you as a buyer and that's what we can't do we have got to make the cattle fit the way they've got to be I know that a lot of you guys in here are backgrounders or feeders and I know a cattle feeder doesn't want a 400-pound calf and I know a background or doesn't want a 600-pound calf so them have got to be split they can't go on the same loads and that's the reason that you have got to have blocks and you have got to have collection point runs there's very few people sitting in this room if it was absolutely full that could pull a full load of feeder cattle out of their herd and they'd be even enough to go to one or the other very few because it's tough to get the cows to calve in that length of time in it so that's the reasons that we work it the way we do that's the reason that we've got to have our program set up the way it is I want to tell you just a few things that over the last few years and I guess I'm going to tell you probably since I came back into the organization you see I work feeder or fat cattle until 1976 and I left the organization and come back in the spring in 1979 running working feeder cattle in the country and then an ad come back into the office but you know I just sat down and was thinking the other day of some of the things that I have seen changed how many of you in here I don't know how many feeder cattle people's in here but how many of you remember when we paid we paid an assignee to take our feeder cattle you bet you bet we did you know you look back on that now and that's the most ridiculous thing you ever heard of in it paying somebody to buy your cattle make you want to cry but we started out that way we really did then the next thing we done was we started selling a lot of cattle direct from your place to the feedlot and not even using an assignee and that's where it come in to having to get the right kind of qualified people who knew what they had to do to even out the loads and the color up the cattle or whatever to keep the buyers happy because that's all we was doing people with the assignee program we were running all the cattle into him out of one big run and he was just sizing him up in two loads and putting on his buck a hundred and going on into the feedlot why should we have to pay it you know we thought when we stopped paying the assignee we were doing great but he was still getting the maximum out of the middle when we were still going through him even though we weren't paying him he had to add on to the cattle to sell him on so it helps you on both ends we have started having feeder drives with this train procurement staff in order to get more inventory and more production moving through our programs we have added negotiators to help get the best prices available for the cows and we've added new people and done a lot of switching and staff in the country we have computerised our feeder cattle inventories and this fall would be the first time that those went on computer and I think the bugs are pretty well worked out of them and then that way the minute you've got a sale the buyer can be added right on the same line and everybody knows where everything's going and everything can be kept straight see it's been quite a change in the organization folks from the time when that whole run went to the assignee and then maybe you could get back what you wanted to go out here to one of your nfo feeders who wanted to buy some cattle and maybe you couldn't but they done all of the major book work in the feeder cattle program but my idea was that this would not work to get the total money back to the producer that he deserved and also on the other hand it was starting to get to the point where the assignees felt that it was their program and they could price the cattle wherever they pleased and that's the major reasons that we got out of the assignee programs there's some other small ones on the side like running 200 head of cattle and one of our collection points in North Dakota going to the assignee with him and then find out he sold out 400 head of your cattle that come out of North Dakota and I didn't like other cattle that come from somewhere else being sold back to the membership or to anyone with an NF o tag on them when they really weren't so that was the major reason for the stopping of that program with the assignees we have added a procurement program which I've talked about a little bit whereby we go out and send our teams into the country to help in your areas to block feeder cattle together for runs I know a lot of you have been involved in that and hogs and cows and whatever will help training sessions for our people right in a lot of these collection points so you're right there eyeball to eyeball with your employees and right on the cattle looking at them direct and this has brought a lot closer feeling between the staff in the country and the negotiators in the Home Office as far as what the cattle are when they're described in there to them so that's helped our program out quite a lot also there's one other little thing here I'd like to go through and then I've to get off here I'm gonna make you all late this time you know I've got a little story I'd like to tell units always hesitate a little bit about telling it but I I guess I kind of feel it's important when I got out of school and I always been involved somewhat in the farming operation but as far as the books and the selling and a lot of this I was not and I got out of school and I thought I'd best run to the big city and go to school a little more and get a job and always and so I left home and come out here and lived in Boulder Colorado for a year and a half went back to Missouri got a job at Dugdale packing company and sent Joe and when I quit there I come to Corning Iowa and I met Andy Newton and I was visiting with him about farming and Packers and this kind of stuff and and he said well come up sometime I'd like to talk to you so it did I went to work then for national farmers organization and I for some reason that first day when I went to work it hit me I wonder if my dad's still a member I should go down and talk to him and that weekend we were down at the farm I asked my dad I said uh say are you still a member of national farmers organization he said well said no you know really I'm not and I said well you know how come what's what's the reason you quit well he said you know I joined back in fifty eight or nine whenever it was they first come through the northern part of Missouri here and he said I belong to it eight or ten years and he said nothing happened so he said I just went ahead and signed out you know I've got all the respect in the world for my father but it you know it really drove the point home because he always was up early in the morning and he was always out late in the evening and he never went anywhere he didn't do anything but work his farm and I know the man never went to a meeting and I know he never made a call to ask anything and worse than ever I know he never even talked to one of the other neighbors about the organization so you know I guess it's not any surprise to me that it didn't work for him we have got to become involved to keep the programs ours I got a lot of more things I'd like to say but we're trying to get this into an hour and a half I'm going to cut it off and I'm going to introduce to you I guess Andy are you coming on next Andy knit sling of the slaughter cattle division and I guess I probably don't have to say a whole lot more about Andy than I already have since I told you that when I come to work for the organization originally he's the man who hired me but Andy's had a lot of background his family was in the packing business he's got a lot of packing house background behind him and he knows pretty well all the tricks of the trade but he become very involved in our organization and I know upon a time as I did he felt like maybe things weren't quite going like they needed to and was away from the organization for a while but he is back with us and I guess that's about all I can say Andy Newt sling thank you here there's a press release but sitting on the table it has reference to the concern of the cattlemen in relationship to the dairy cull cows I'm not going to read it I just want you to kind of look at it take your opinion on it and I'd sure request for you to if you get a little time to talk to me on it I'll kind of summarize it it just seems like in the last six months or so there's been a lot of Cattlemen's associations you name it there's health and food people concerned about the dairyman calling their cows on this deferred payment that the bill was just passed yesterday by the President of the United States well I'm concerned about the dairy cows myself the only thing different between these people and myself and the organization is we were concerned about the dairy cows 20 years ago and we've always known that the dairy cow and I shouldn't say dairy cows but cows in itself are the backbone of the total meat Marta the meat market you know that the dairy producer calls about two and a half million cows annually and the rancher calls around 4 million and taking into consideration the weights and so forth of the dairy cattle and some of the dairy produce sirs feeding the dairy steers they have a lot to lose by glutton the market and lowering the market I don't particularly believe that it is the amount of culling that we have to be concerned about it's the distribution and delivery of this and I feel that we have enough problems in our industry we don't need cattlemen fighting against cattle to destroy our markets so I'd like to have you read if you get the chance and make your comments we'll be in our booths this evening no doubt and tomorrow so if you pass by and have something to say I'd sure appreciate it I for one don't think there's going to be that many cows because I don't believe that the dairy producer today can't afford to call that deep that the government is considering that million head of cows so we're going to be ready for it when it happens but we want to see what happens and I want your opinions on it today I'd like to visit with you a little bit about the national farmers slaughter cattle division and how it relates to the packing industry the packing industry itself and talk a little bit about bargaining and marketing suppose that we could reach back and all of us would sit down 20 years ago and discuss how many of us were in the cattle business 20 years ago here sure see your short hands quite a few I see quite a few of you people were members at that time too but suppose that we sat down and discussed some of those events that would make lasting and significant difference between you and the packing industry the industry of sixty billion dollar a year business what changes do you think that we'd have guessed right on and what changes in this industry would what have we been wrong and how many of those changes would have taken place had it not been for the national farmers one of the main changes that I think have occurred over the last 20 years is the consumption levels that have have changed the the consumption level of protein for example since 1975 the shares of beef protein has dropped from 47 percent to 40 percent while pork shares have climbed from 28 to 34 percent and chickens shares of the market in protein have risen from 20 to 26 percent while production cost of courses continued to rise you know beef has been hit hard by these trends for an example feeder cattle the cost of producing feeder cattle has gone up 50 percent during the last five years and the cattle feeder himself has made profits for months in the last two years only four months while at the present time the cattle feeders losing 50 to 75 dollars a head beefs retail prices have gone up 60 percent during the last five years 20 years ago people 20 years ago would have we guessed that there'd be eight packing plants located in the southern plains all slaughtering over a half a million head annually and what if we guessed that there would be two packing plants in the southern plains within 60 miles apart that can slaughter over a half a million head annually what have we guessed that within the last four years that the increase in box beef would raise twenty four percent to seventy percent of all our steers and heifers slaughtered a lot of these things that have happened we would have had known I know idea of I just mentioned some of the packing plant skills kill capacity but how many of us would have thought 20 years ago that by nineteen between 1969 and 1970 79 35 percent of the packing plants in our nation would close its doors thirty-five percent and another fourteen point seven would fall in the early 80s there have been many more changes in this industry that directly affect you but let's discuss some of the changes in that cattle feeder himself the man who is behind the packing industry what have we said in 1963 that by 1982 there'd be only two thousand two hundred and forty one feed yards in this country that's not counting the small farmer feeder operation apparently that the government doesn't feel that they're worth counting for some reason of these two thousand two hundred and forty one feed feed Lots three hundred and ninety Lots supply 75% of all cattle slaughtered seventy five percent and a closer look at the feed yards will tell you 40% of all fat cattle in in the US are fed by two hundred and ten large commercial feed Lots ones with capaz cities of 16,000 hit or more 20 of these feed yards produced 26 percent of the nation's output and fed cattle and and of these 27 are associated with Packers and three are associated with grain companies Seoul says the Texas A&M an A&M University those are just a few changes that have taken place in our industry over the last two decades and you know the the picture that I have painted to you sure doesn't have a lot of bright colors to the average cattle feeder but on the other hand I know I know from experience that when enough people want to change no matter what that change is it can be attained perhaps we need an attitude of if you can't beat them join them and I hope to get into that just a little later on in our transparencies since we've looked at the packing industry and the cattle feeder how about a little look at the history of the organization