Change is always around us in the beef industry, and 2021 has had its fair share of turns, dips and climbs. Transition in the nation’s capital, heat in the west, growing demand for beef around the world and more dollars in consumer wallets – these are just some of the big news from the past year.
New Biden administration
A new occupant entered the White House in January 2021, and President Joe Biden’s administration has not hesitated to leave its mark on federal executive policy.
Biden officials have pushed major spending programs, from pandemic aid to Americans to more stimulus, mask warrants for federal workers to prevent COVID-19 and the resumption of a new chapter in the wrestling on US waters
Colin Woodall, CEO of the National Cattlemen’s Beef Association (NCBA), recounts Progressive cattle there was a different tone compared to the Democratic administrations of the past.
“When you look at the first year of the President’s administration, we have to say that we were pleasantly surprised at the access we had. There is someone on our NCBA team who talks to an administration manager almost daily. The administration recognizes the role of the beef industry in sustainability and stewardship and goes so far as to recognize our role in helping to mitigate forest fires. While there are many proposals that we don’t like, to date we’ve managed to keep them all from being finalized.
“Overall, we are happy with our ability to work with them. We have a lot of challenges, but we are in the game to protect our interests. “
Beef market transparency
Going through the Tyson fire shutdown and the shutdown of COVID-19 with its long backlog, growers have raised their voices in 2021 on market disclosure. Complaints from cow-calf producers about packer margins and alternative marketing arrangements and the decline of cash markets have found sympathetic ears among lawmakers.
During congressional legislative hearings, the concerns won the sympathy of lawmakers. But some producers have warned not to throw out the baby with the bathwater.
“Please do not create regulations and laws that unintentionally interfere with value-based marketing,” Kansas cattle breeder Mark Gardiner said in testimony in June before the Senate Committee on agriculture. “It would undo many years of progress for producers like my family and those of our customers. Onerous legislation has the potential to lead to a reversal in quality that is simply unacceptable to consumers. “
New packaging facilities
Prolonged delays and closures of some of the country’s largest packaging facilities, largely due to COVID-19 outbreaks, appeared to temporarily cripple the country’s ability to produce meat to meet consumer demand in 2020 and 2021.
The aftermath of the pandemic and other black swan events, such as the Tyson fire in Holcomb, Kansas, has spurred interest in the action, as plans for several new slaughter facilities of different sizes are taking shape in several places in the United States. The facilities are the Sustainable Beef factory near North Platte, Nebraska, and the True West Beef factory in Jerome, Idaho.
Ongoing drought is depleting US cattle stocks
The United States started the 2021 growing season with the worst average pasture and range conditions on record and ends the year under the same conditions. Most of the western half of the country has suffered from extreme drought conditions for most of this year. Harsh drought conditions resulted in some liquidation of livestock. According to data from the US Drought Monitor, about 34% of cattle are found in areas with some level of drought. The forage shortage in an unusually dry year, along with the depletion of hay and other forage reserves before the winter months, forces producers to draw a harder line when slaughtering livestock . Beef production in 2021 is estimated at around 27 billion pounds, up slightly from last year, thanks to the liquidation of the dairy and beef sectors.
Exports maintain strong demand for beef
U.S. beef exports in August set a new record of 325 million pounds, an increase of 57 million pounds, or 21%, from a year ago. The increase in beef exports in August was mainly due to strong Chinese demand for American beef. Access to the Chinese market in March 2020, coupled with weak domestic supplies of pork from China and limited supplies of exportable beef from Australia, favored the United States. Since July 2020, monthly exports to China have reached a record high in 10 months. China is now the United States’ third largest destination for beef.
It’s also worth noting that South Korea is moving closer and may overtake Japan in the coming months as the largest US beef export market. In four of the eight months since the start of the year (January, February, April and May), monthly beef exports to South Korea have exceeded exports to Japan, whose share of exports since the start of the year amounts to 24.5%. South Korea’s share in total beef exports during the months of January to August increased from 20.6% in 2018 to 23.4% in 2021.
Taxes and expenses in Congress
Midway into 2021, the biggest fight emerging within the new administration was how to pay for a US plan for multibillion-dollar families and how much would be felt by those facing the death tax.
A key measure was whether Biden would eliminate the strengthening of basic policies in the tax code that exempt agriculture from large capital gains. The basic mark-up is the readjustment of the value of assets when they become inherited following the death of the owner.
As of October 28, Woodall said the fight had proven successful after the White House said “base augmentation is no longer being considered” for the withdrawal.
“It is too early to claim victory because the final agreement is not concluded,” he added. “We are in danger until the final vote is cast, so we continue to advocate for the preservation of the strengthened base because of what it means to keep the farm and ranch families on their land. We were able to get to this point by working with Democrats and Republicans in Congress to educate them on how eliminating the beefed up base will result in tax burdens that most farm families cannot afford.
“We have also made it clear to the Biden administration that the elimination of the reinforced base is contrary to their climate goals. If President Biden is to tackle climate change, he needs an open space that can grow grass that cattle graze. Our progress in this area shows that agriculture still has a huge voice and impact in DC ”
Rising commodity prices and increasing government payments to farmers will likely add billions of dollars in new income to farm income estimates for the coming year. However, concerns about potential changes in tax policy, coupled with higher food and fuel costs, cast a shadow over optimism. Despite relatively high commodity prices overall, farmers and ranchers are very concerned that farm input prices are likely to exceed profit increases in the coming months. Beef producers, for example, can expect higher costs associated with higher prices for corn and hay, which will weaken gains from higher prices for livestock and beef.
Rising feed costs have forced producers around the world to analyze every phase of their operations, from slaughter and weaning to workforce management.
In a year where an ongoing global pandemic continued to bring uncertainty to the beef industry at every turn, feed prices have done little to allay the concerns of farmers and breeders. Hay prices continued to rise steadily each month of 2021, with alfalfa, widely regarded as the barometer of hay markets, reaching levels near the $ 300 per tonne mark.
Complementary feed markets, including corn and soybeans with all associated by-product foods, were also strong in 2021, adding another level of concern for cow-calf producers. High prices for feeder and fat cattle to close the year, however, gave the industry cause for optimism.
Climate change policy
The Biden-Harris administration has not been secretive or subtle about its focus on climate change. In addition to devoting obscene amounts of government funding to climate change research and ramping up efforts to build infrastructure, the new administration is beginning to take more direct action in the area of conservation. Biden’s “Phase I” plan includes repealing as much as possible of Trump-era regulations and reverting to the Obama-era approach to environmental policy, including repealing changes to the regulations. rules of the National Environmental Policy Act (NEPA) of 2020, restoring the protections of national monuments.
At the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26) in November, Biden also presented a whole-of-government initiative to tackle climate change that costs $ 555 billion.
David Cooper, Paul Marchant, and Carrie Veselka contributed to this report.