President John F. Kennedy was quoted as saying “The farmer is the only man in our economy who buys everything at retail, sells everything at wholesale, and pays the freight both ways.” It’s also true that when a farmer’s crop or a rancher’s animals are ready to go to market, they have to take whatever the market pays them, and right now prices for beef producers are in a slump. Pete Scarmardo is a Brazos Valley rancher.
“We’ve broke our live cattle which is our slaughter cattle, we’ve broke them about fifteen dollars a hundred, so when you relate that back to a thirteen hundred pound steer you’re talking about a lot of dollars.”
Scarmardo says when you do the math, that’s almost two hundred dollars less per animal.
“We’re getting to a point where the beef producer, the feed yards that sell their cattle every week to the packing entities, we’re getting to the point where we do not have the bargaining power that we’ve had at one time, so it’s making it harder for the people at the feed yard level to get the full value for our beef.”
Today four major beef packers control almost eighty-four percent of the beef market, and when ample supplies are coming out of the feed yards there’s less competition. The price the feed yard gets rolls down to the cow/calf producer.
“They’ve got ways of keeping captive supplies, keeping enough inventory around them to where they don’t have to get out and try to push the market and we have no way to change that or make it where we do get full value for what our product is actually worth.”
Scarmardo also says that today sometimes fundamentals don’t mean what they used to mean.
“We get people that speculate in our markets, all these big hedge funds or whatever that go in and they say cattle are going up or grain is going up or going down and they invest a lot of money in there and they put a lot of money into our markets. Sometime it makes it go up more than it should go up. Sometime it makes it go down more than it should.”
With both domestic and export demand continuing to be strong, Scarmardo is hoping for better prices.
“We are selling beef. We are selling a lot of beef to other countries, so hopefully if that stays up, then we’re going to be able to keep and sustain a more stable price for our product as we go here into the next few months.”