News Update

News Update
Dec. 28, 2007

The rising demand for corn-based fuel — and subsequent diversion of corn from livestock feed — made ethanol the most significant topic of 2007, according to an unscientific web survey of Meatingplace members.

Other significant events or topics for the year included the surge in Food Safety and Inspection Service (FSIS) meat recalls in general, the Topps Meat Co. recall in particular, and the acquisition last summer of Swift by Brazilian beef giant JBS.

In rank order, readers chose the following as the top five topics of 2007:

Ethanol’s effect on feed prices
FSIS beef recalls
Topps recall/bankruptcy
ICE raids on meat/poultry plant workers
JBS-Swift acquisition

Ethanol’s effect

But among all topics, ethanol weighed heaviest. And with little surprise: Throughout the course of 2007, processors large and small have felt the effect of ethanol production on their bottom lines. And a federal energy bill, passed in early December, that mandates production of 15 billion gallons (gal.) of ethanol fuel by 2022, promises more of the same. Jesse Sevick, vice president of legislative affairs at the American Meat Institute (AMI), predicts that corn prices will average $4 per bushel for the next decade.

“Subsidized ethanol production caused an unfair advantage for one user of grains over other users of grains,” lamented one reader. “Cattle, hog, poultry and milk producers are now suffering with higher grain prices, and the consumer will eventually see higher prices than what they are seeing now due to production reductions.”

Many readers saw ethanol creating a cycle of cost: “Using subsidized ethanol to moderate rising fuel costs has increased feed costs,” said another reader. “Transportation costs have risen due to fuel costs, which is being moderated by subsidized ethanol. I consider this important because subsidized ethanol is self-perpetuating itself as a need to avoid even high food costs.”

Finally, one reader concluded that ethanol’s effect on the industry will be global. “The red meat industry is forever changed. Because of ethanol, the U.S. will see more competition from imported beef, shrinking margins and more livestock producers leaving the industry.”

Other events of significance

Those who voted for other events were no less passionate in their comments. One member, who selected the Topps failure as the year’s top story, called it “a big wake-up call for the industry. This shows that poor GMP’s can still destroy a very large processor.”

Still others focused on the big-picture effect of a surge of FSIS food safety recalls in 2007. “FSIS will never relent from now on,” complained one respondent. “The industry will see more pressure to comply when the problems occur in the feedlots. APHIS (Animal and Plant Health Inspection Service) should get involved and require [E. coli] O157 elimination BEFORE the pathogen reaches the slaughter and processing plants.”

But others saw the greater impact in its effect on consumer confidence. “Never has a topic resonated in the consumer media like this topic,” said one reader.

“The landmark beef recalls, without a doubt, will have the most long-term impact on consumer confidence, which could translate into an altered demographic for sales,” said another respondent. “When trust is eroded, the public scrutinizes all products from that section and then welcomes additional industry constraints.”

South Dakota Stockgrowers Plan Public Brand Law Meeting

South Dakota Stockgrowers Association will hold a meeting at the Stockgrower office in Rapid City at 10 a.m. Jan. 3, 2008. A member of the State Brand Board will be on hand to explain proposed changes in the brand laws. Anyone with an interest in the brand laws of South Dakota is urged to attend this meeting.

Some of the proposed changes involve “holds” such as an inspector placing a hold on a stray outside of a livestock market; the ability of the Brand Board to assess civil penalties; agreements with markets outside of the brand inspection area; an increase in the cap on both cattle and horse inspection fees; and a proposal to move some violations from a class 1 misdemeanor to a class 2 misdemeanor.

Stockgrower President Larry Nelson, Buffalo, S.D., stated “It is important for producers and anyone who has occasion to use the brand laws to understand the importance of these changes whether they agree to them or not.”

For more information contact Margaret Nachtigall at 605-342-0429 or margaret.sdsga@midconetwork.com.

Ranchers Invited to South Dakota Stockgrowers Area Meeting in Kadoka

South Dakota State Representative from District 27, Mark DeVries, Belvidere, S.D., will address cattle producers in the Kadoka community on Jan. 3, 2008, following a 6 p.m. dinner at Club 27.

According to Stockgrower Vice President Kenny Fox, Belvidere, S.D., DeVries will discuss issues in the upcoming 2008 S.D. Legislative Session.

“Several Stockgrower Directors will be on hand to answer questions pertaining to many issues of interest to ranchers, including Proposed Brand Law changes; National Animal Identification System (NAIS); country-of-origin labeling (sometimes referred to as COL or COOL); the OTM (Over Thirty Months of age) lawsuit; and updated information on the Farm Bill,” Fox says.

“We encourage local ranchers to mark Jan. 3, 2008, on their calendars, and make a point to be in Kadoka,” Fox adds. “Whether you’re a member of the Stockgrowers or have never heard of us, we hope you’ll spend the evening learning about issues that affect the bottom line of your business — your ranch. With all of the current issues, we can ensure that the meeting won’t be boring.”

Supper is compliments of the South Dakota Stockgrowers Association.

For more information contact Margaret Nachtigall at 605-342-0429 or margaret.sdsga@midconetwork.com.

— Compiled by Mathew Elliott, assistant editor, Angus Productions Inc. (API)