NFO-232 (AV10732) US Farm Report: Cattle Bargaining Report (Part I)

[music] hi everybody and welcome to us farm report this week's report as well as next week's us farm report we'll deal with this subject NFO's cattle bargaining program so it is only natural today that I should have here as my special guest mr. Gene Potter who is director of the meat commodity department of the National Farmers Organization Gene most producers pretty well accept the fact that NFO has been a prime influence it's been much higher than expected hog prices but what about cattle bill we have been involved in a cattle bargaining program that we called marketing arrangements since 1966 the actual finalization of the program after we've gone through the trial periods actually started in 67 to 1968 when following the 1968 holding action we were able to get our first real written contracts in cattle since that time we have continued to be able to make progress in updating the contracts improving the benefits to the members under the contracts and also increasing or the producers accepting increasing responsibility whereby the packer could afford to pay a higher price to the producer and thus develop a program which is mutually beneficial now among the benefits to the members I know that you are most pleased with the accomplishments of NFO representatives in packing plants across the country bill this is really the heart of any bargaining program particularly for the protection of the membership that participate in that program you can develop formulas and contracts that will return the producer a fair price but unless someone is there to see that his interest is interests are protected in grading the weighing of the carcasses the determination of any damage that might be on the carcass he has to be represented by a trained competent individual plant well a trained competent individual indeed is Lester Carr as you know at the Dugdale packing company in St. Joseph in fact on a former US farm reports show Lester was featured and we learned from Lester just exactly in detail what he does as the NFO representative there on today's show I am very happy to say that we're going to repeat at least a portion of that interview with Lester knowing that a lot of people are looking in today who perhaps missed Lester car on the show on which he was featured so we will go to the Dugdale packing plant in St. Joseph Missouri for that interview a little bit later on well as I was talking about a pricing formula it's one of Lester's jobs which I'm sure he'll mention in this discussion is not only to see that the proper grading is done that the cattle are handled properly in the plant but also to check the returns that go to the producer to see that they have been paid the price and then they should have been under the contract well Gene and cattle like in all other farm commodities price is still the name of the game now last summer for example we had a pretty fair cattle price a pretty good pretty good price coming in in the meantime that price has gone down do you feel that cattle producers missed an opportunity there and not being able to maintain that price level of last summer? Yes bill in one sense I very definitely do I think that as you've mentioned you can see a substantial difference between cattle price levels and hog price levels in the relative stability of the - mm-hmm that you had a widely fluctuating cattle market in the last few months in a very stable hog market and the outside factors affecting the two according to the supplies that were available and such there really wasn't a substantial justification for this so I do think that that the producers have really missed an opportunity because back in July when we had 55 dollar choice steer carcass meat we had many contracts that contained a floor price concept and had producers accepted the responsibility and moved this program as rapidly as they could have I feel we could have had substantially higher prices than what we do have but although we can say that there are things that we would like to do I still feel there has been a terrific effect and I'd like to show you something for a moment here and this is a as you can see it bar graph comparing prices and you see here on your left the relative price in the Missouri Valley area which is a heavy cattle feeding area and all areas moved approximately the same as this the price below the Chicago FOB delivered price was approximately 75 cents prior to 1968 but today the present the price in this level is running a dollar and 25 cents above the Chicago price so a relative improvement of two dollars a hundred week for cattle producers this is not only true in the Missouri Valley area bill but over the entire cattle feeding area where our members are participating in a bargaining program so although there are many things that could have been gained in price the members are having the protection of that contractual formula the man in the plant plus they have been able to improve their price is $2 per hundredweight and on an average-size steer carcass or heifer this is 12 to 15 dollars per head so this in itself is a substantial game well of course Gene the cattle feeder is having his problems now what must he do to solve those problems well first of all he must have used his production he must block his production production together and use it in an organized manner to gain the goals that he sets for himself it's like any bargaining program and we've discussed with regard to NFO many times that it does no good to talk about doing something you must put your production together and the power you have is that production this is the only way that can be done and yes you're right the cattle feeder is in real problems and it's been reported to us and observing the cattle markets what our members are telling us that cattle feeders are losing from 30 to 50 dollars a head in many instances right now this is a result of higher green prices and many of the grain producers have blocked their production together and had an effect on raising the price it's a result of higher feeder cattle prices the cattle the thief or the feeder puts in his lot to finish for market this has been a result to a great degree of the ranchers blocking their cows together and raising the feeder cattle market so the beef feeder the man who feeds cattle for market must do something or he's going to face a financial disaster understand that there's another factor in his dilemma and we might call it a social factor I'm talking about the social relationship between so many cattle producers and the people to whom they sell these people oftentimes they're very close friends aren't they and know they know each other socially and their families intermingle what doesn't this contribute to to a worsening of the price situation somewhat yes it does and I hesitate to to really discuss this possibly because we're not opposed to producers having a good relationship with the people that buy his production naturally not it has gone to the point in many instances that the cattle feeder himself is afraid to use his production to better his own business interest for fear of of making the buyer mad or harming a social relationship that they have and this goes back to part of what I mentioned earlier that the cattle feeder is going to have to use his cattle to gain a higher price and if that means selling them through a bargaining program to a company that the friend friend happens to be vying for a different company but selling them to someone that his friends not buying for in order to move the program forward and then it's going to be necessary and the business aspect of bargaining and marketing the cattle it must come before social relationships if the cattle feeder is going to make the gains that is economic situation dictate if he's going to stay in business Jean you've indicated the necessity for this cattle producer we're talking about to move his cattle now why not get into some kind of a program with his friend who is the buyer bill this is a very could be a very involved discussion with regard to the philosophy of bargain but very simply it amounts to this that if every producer was to maintain the same out less that he had in the past then there would be no change in the movement of production that the patterns would remain the same and of course to apply bargaining pressure a change must be made somewhere along the line you must move production to an outlet that it wasn't being moved to before so that the people that lost the production then need something they don't have and in doing that they tend to raise the price in an attempt to get that and if raising the price doesn't do it then they're willing to make bargaining concessions and sign contracts so you can get it down to the matter say there's only three plants in the United States and one of these plants happen to be represented by the friendly buyer we're talking about and that is possible that this could be the plant that the program would be developed with but if this plant refuses to sign a contract which grants the benefits that the producers can attain and deserve then you may have to go to one of the other two plants and if the other plant then signs an agreement which grants these benefits it's going to be necessary for the members of the organization and of this block we're talking about to take their production from the market so that it used to be and put it into the new channel under the contract in the block bargaining program the Gene what are the direct operational benefits to NFO members who sell through NFO well bill I believe the card that we showed while ago comparing the actual prices producers receive as opposed to a Chicago market shows some real benefits but of course these benefits most everybody is profiting from whether they're members of our organization or whether they're not so I imagine you're talking about the benefits that NFO members receive as opposed to someone who is not a member of his organization that's correct marketing cattle well first of all I have mentioned a pricing formula contained in these contracts well the pricing formula itself takes into consideration a national market or the general price level for cattle which is based and determined by the National provisioner which is quoted in Chicago but in addition to that the regional price is to taken into consideration because there are various prices in various regions or various differences from the Chicago market based on where the location of the cattle are and finally all of the contracts call for the fact that if the packer with whom the members are under contract to is required to pay a price to a non-member which is higher than the price under our contract then he must also pay that price for NFO [unclear] so this means then that the producer is protected from the standpoint of the national the regional and the local market price he always receives at least as much as the local market and in instances more and this of course is justified because of the services that he is performing and supplying than packer with cow there are attempts made by buyers to cause a member who is a part of this block of production to sell his production somewhere else and this can take many forms but a great many times it's a bid a price that may or may not be there but a hypothetical bid that in many cases is something over the market in an attempt to cause those who are part of that block moving this program forward to become dissatisfied there's no doubt that at times this does happen but those who are involved must remember that a quarter today can easily cost them many dollars tomorrow now there have been an awful lot of people talking about livestock marketing and in particular cattle marketing with regard to a grading weight selling program so-called experts market reporters that discuss this type of a marketing program you'll find that many times these people have very little actual experience and this end of the business and very little or not no actual technical training so the so-called experts in the past many times have been talking about things that they really were not in a position to authentically discuss as far as NFO's bargaining program is concerned our members have the benefit of the opportunity to come to the plant see their cattle see them handled and see that their interests are protected and in fact this is encourage the representative at the plant is there to assist these people when they come in show them around and make them feel welcome and know where to go to see what they would like to see fact the matter is a Gene at this point in today's show why don't we invite all of our viewers to meet an NFO representative at the Dugdale packing plant in St. Joseph Missouri mr. Lester Carr hello everybody we're greeting you today from the Dugdale packing plant here in St. Joseph Missouri Dugdale packing company is one of the largest independent packers in the whole country back the matter is this plant is a growing plant and I'm sure that NFO production is partly responsible for that because we're sitting here to show you something of its growth on the edge of some new cattle pens that are being built here to handle the influx of NFO cattle as well as cattle from other sources with me today is my old friend mr. Lester Carr who is NFO packing plant representative Les and I have known each other for a number of years Les has been a farmer around this part of Missouri for perhaps longer than he'd like to admit Les right how many acres are you farming about 225 well are you able to hold down this important role here and still run your farm without help or do you hire people- i hire some on specified time see like putting up hay and putting in some crops but I do the most of it myself on the weekends and like that all right and still come down here and spend the day here at Dugdale's now unless you have a specialized job here representing NFO members of this packing plant I presume that you have counterparts all over the country doing the same thing yes we do have in the United States yes we're set up in several different plants well now could you tell us in a detailed manner step-by-step exactly what you do here well my I'm representing the national farmers organization I book cattle for the members to be delivered to the plant at a specified time first the member in each County calls the County bargaining supervisor and tells them how many cattle and what time he wants to deliver and in turn then the County bargaining supervisor calls me day ahead of time when these cattle are supposed to arrive see and I booked them up and then in turn I contact the boy at the dock where they're being unloaded and we book them up that way so we keep an even flow of cattle coming to plant which is a great service to a packer him knowing exactly how many cattle he's going to have on the kill right right well you can anticipate the influx in here at any given time right for example that they you know exactly how many cattle are coming in here tomorrow right right that's right well now you follow these cattle Les as I understand it from the time the truck backs in here and unloads on to the killing floor and through the entire process right you tell us about some of your duties in these areas well I watch them unload the cattle and see if they're not crowding them and causing them to get bruising see cattle can be bruised when they're unloaded around [unclear] into the trucks in order to in the end gate and this is very costly while bruisers mean loss of of income because it downgrades the beef and the NFO farmer simply is making the money that he would otherwise- right so we we were very particular about the cattle here unloading operation as they go from from the truck into the scale to be weighed live and then put in the pens and then later on after they've rested we'd run them on the kill now you said the key word rested right as I understand it cattle in the process of being trucked and herded into a place like Dugdale get nervous and this can really affect the grade can't it? that's right- what do you do about that Les well what what we do is pen the cattle and let them rest let's say three or four hours such a matter maybe longer it depends on the cattle if there you can tell by looking them through nervous and nervous cattle just will not bleed out properly and this also affects the grading cattle because cattle are graded on the color of the meat as well as the amount of marbling in the loin- okay at that point then you follow them right onto the kill floor tell us about that right and I see if they're if they're booked up properly to go on the kill it at a certain time and by the way all cattle are killed in lot numbers like if a man brought twenty head of cattle in here and they're booked up twenty is gonna follow ten ahead of them and then maybe fifteen is gonna be behind that and that'll way we keep him separate those cattle will not get mixed up the only thing is get cattle mixed up at this plant is the farmer or the trucker that brings him in usually he has picked up Sam Jones's or somebody's cattle and he went over here and got some from somebody else and saying and he gets here at the plant he unloads and he says well I think those belong to so-and-so Sam Jones yeah but he's not too sure hey so he gets them mixed up telling the boy on the dock who's cattle's what, so there's there's the problem right there on a mixed-up load but whenever they are identified properly they go through here in a lot number and that is one thing is we're watching very particular now you on the kill floor and following following the beef then on you work with or at least you have an opportunity to observe and talk with government inspector right that they have federal meat inspectors in this plant and they inspect ever apathy has come down or every beef carcass in the plant and I can be in there and watch them and see what they're designated is a bruise to be cut off and question them on it see and therefore you know he can argue with them to a certain extent on it now as I understand it in this matter of grading you have the privilege of asking the grading people to wait to grade some beef in other words if if you feel that by waiting a few hours beef will get a better grade you have the privilege to bring that about as great see cattle that's being killed today would be graded tomorrow so therefore they would cool out for approximately 24 hours and when the greater starts of a morning raiding cattle why maybe they're not properly cool you can tell by feeling of the before that's firm enough and what what is the process is going on here is the cooling out of the of the fat in other words those it will show up and in other words they call it marbling in the in the loin [unclear] so when that's cool out properly why it'll all show up so the standard set up by the grader department they go by this to determine what grade it's going to be so therefore if we would wait let's say the grader was here grading like it in the morning say eight, nine o'clock and those cattle are not properly cooled out yet we wait till say two to three o'clock this afternoon to give a final grade on which might up the grade which does a lot of times here we go again we go the bucks right here and there so as you were saying a while ago yes 600 pound steer that would be twelve dollars there's a $2 difference in the good from a choice so that would mean quite a bit on a hundred head of cattle well now how is the price Dugdale pays for NFO cattle determined we got a pricing farmer arrangement set up with the Dugdale packing company and on the great Neal basis off of the yellow sheet price which is dressed meat market see so it's determined off of this Les are you sure that NFO members are getting this price? yes I am certain because I have Mr. Dugdale's secretaries to give me a copy of everybody's grade and yield sheet which I have right here so I take these sheets every day and I have the copy of the yellow sheet and I checked the price on the sheet here according to what the yellow sheet the grade going price is. well now would you list some of the advantages of selling on this basis? well is this cattle go through the plant they go through on individual merits if man ranked in 20 steers let's say and here goes one number one through and he's a choice steer well that's what he's gonna be because the government man is doing the grading strictly government its nothing to Dugdale has anything to do with. yeah right. and so therefore this was mean dollars and cents in the pocket well see so if you're buying them on foot there's more guesswork that way because if I was a buying cattle in which the buyers do to I was going to guess law so I would come out on the grade and yield which is the way they all wind up. there's no eye determination no guesswork involved in- right. well that makes for a good systemI would say. do you want represent here at Dugdale any members that are or rather any farmers that are not NFO members. no I cannot. Gene it seems to me the job that Lester Carr and his counterparts all across the country are doing our jobs that necessitate some training do they get it from NFO. that's right bill training these people it is very important and I feel we've been very fortunate to have a man come with us in the last few months that has had a great deal of experience and background in carcass training evaluation and plant operations to assist us in this training program he works in instructions with the plant people actually working right there in the plant with them on-the-job training so we are doing a great deal to train these people to do their job. well Gene his name is Andy Knightsling and Andy will be featured on us farm report next week when the title of our show will be NFO's cattle bargaining program part two Andy in fact will take us into the cooler rooms at Dugdale packing plant in St. Joseph Missouri where we all will deal with quality grading of beef cattle and the handling of carcasses to benefit the producer I hope that you'll be looking in next week at the same time our guest today has been Gene Potter Gene thank you for being with us Gene is the director of the meat commodity department of the national farmers organization US farm report is seen on this station each week at this same time until we meet again so long everybody [music]