Beef Steak Bargains Upset U.S. Cattlemen

Press, Volume CIII, Issue 30445, 20 May 1964, Page 14

Beef Steak Bargains Upset U.S. Cattlemen

IFrom the United States Information Service)

Beef-eating Americans are feasting on the lowest-priced steaks and roasts in six years, but the meat counter bargains •are ohly prompting howls of anguish back on the ranch, says Robert W, Benedict writing in the “Wall Street Journal.”

Contrary to. Government predictions that beef prices would .rise about 10 per cent this spring and offer some relief to profitsqueezed . cattlemen, packers, now are paying an average of 20.50 dollars a hundredweight—2.2s dollars below last year and the lowest level in seven - years. Heavy meat imports and growing domestic cattle herds make it unlikely that the heralded price pick-up will develop soon, if at all.

While good news to consumers, the prospect of continuing beef bargains spells only more financial troubles for beleagured cattlemen. Some already have been forced out of business and others are prepared to fall by the wayside if prices do not improve.

“I’m liquidating the cattle now in our pens, and when they’re gone I’ll be closing down if prices haven’t im-. proved," says Mr Sid E. Moller, president of Union Feed Yards, Blythe, California. No small operator Mr Moller last year fattened some 100.000 cattle for Los Angeles slaughterhouses. He saiys that for him to remain in business, prices would have to rise about four dollars a hundredweight. Quotas Sought To help ease themselves out of the red, Mr Moller and other cattle men are discarding their long aversion to Federal aid and are asking Congress for a lift. Almost universally, they blame low-cost imported beef for their problems, and they are demanding that Uncle Sam puts mandatory quotas on such imports. Specifically,- the range men want future imports held to 7.5 per cent of average dome ; stic slaughter over the last five years; this would mean import limitations of around 800 million pounds annually, a stiff 26 per cent cutback I from 1963’s record 1100 [million pounds. The cattlemen ;have taken their case to the United. States Tariff Commission and its findings are expected to be turned over to the Senate Finance Committee for action in June.

Not Unanimous But there is far from unanimous agreement- on the reason- why cattle prices have dropped more than 33 per cent. in the last 18 months Agriculture Department officials argue imports are only a minor factor in the .price decline, and the agency is set against imposition of import quotas on foreign beef. It maintains the quotas are unneeded too. because Australia and New Zeland, the biggest shippers of foreign beef -to the United States already have voluntarily agreed to cut back shipments to the United States this year by 27 per. Cent. Instead, the Agriculture Secretary, Mr Orville Freeman, attributes . the weak cattle market to growing domestic herds. On January T ranches and feed- lots were bulging with a record number of cattle, a gain of 2.6 per cent from the year before. The herd may well grow again this year, despite a climbing slaughter rate at packing houses, because ranchers and feeders have said they expect this spring calf crop. to be about a million head bigger than last year’s record. . The Agriculture Department calculates that heavy domestic supplies of beef accounted for three dollars of the 3.70 dollars drop in cattle prices in 1963. Increased supplies of poultry and pork -brought on 20 cents of. the drop and rising beef imports were responsible for the rest of the decline, the farm agency says. Some meat packers side with the Agriculture Department op the question of imports. Mr Marvin.T. Gibson, senior vice-president of International Packers' Limited;' Chicago, charges imports hate climbed because “United States cattlemen have abandoned the hot dog and hamburger market" in favour of the higher-priced steak and roast market. He says the supply of better grade beef has doubled in the last 10 years while that of cheaper grades -has -failed to meet demand.

“The imports that have been reviled and maligned by cattlemen’s associations and subjected to' strong attack by the Congressmen • who stand for elections ip November have just filled the gap needed to keep the lower grades of meat in the same supply as 1954,” he said.

Pressure On President But cattlemen- generally remain unconvinced, and they are determined to put a lid on the imports. They are pressuring President Johnson—a part-time rancher himself—to reject the Agriculture Department view and throw his support behind the quotas. • The cattlemen’s bid could eventually,, pose a sticky political problem for the President since the Republican Party’s Agriculture Committee and | possible G.O.P. Presidential rival, Senator Barry Gold- . water, have come out for the ! quotas | In a conies first—the chicken or the egg” sort of

argument, the ranchers take issue with the Agriculture Department’s position on meat imports. Mr Ralph W. Cellon, a Gainsville. Florida, cattle raiser, concedes the growing American herds are a problem but says imports are much to blame.

“Due to low-cost imported meat, packers can’t afford to bid for cows and bulls culledfrom American herds,” he. said. “That means these [ animals.go back to the rangeto produce more calves or into feedlots to add to the surplus of cattle on feed.” He! said a year ago packers were buying about 600 culls. from i Florida herds each week “but now they're not buying any.” Turned To Cattle Further, ranchers say some of these culled animals that would normally go to market are being bought by farmers turning to cattle because of government planting restrictions bn crops. “In Oklahoma alone, about 12 million acres of crop land, mostly cotton and wheat acreage, have been converted to cattle pasture over the last 25 years,” says Mr William F. Brannan, Marietta, Oklahoma, rancher and president of the Oklahoma Cattlemen’s Association. “About half of the record four million cattle ,in the state on January ! were on small farms with fewer than 100 head each.” Until recently the brunt of the low cattle prices fell on the commercial lots and corn belt farms which fatten range animals for market. But now those who raise young steers and sell them later for fattening are being hard hit. Prices of these so-called feeder cattle now stand at an average of 19.75 dollars a hundredweight down 14 per cent from a month ago and 24 per cent from a year ago. “Nearly all feeders, whether farmers or commercial lots, lost money in 1963, and even with the prospect of reduced imports, this year could be as bad,” says Mr Erwin Dubbert, a Laurens, lowa, farmer and President of the National Livestock Feeders’ Association. “Some cattle producers are at the point they can’t get any more bank credit.” - Big Loss “Losses. to cattlemen in Colorado in the last 13 months have totalled about 40 million dollars,” claims Mr Robert Johnson, Fowler, Colorado banker and rancher.

Caught by the price nosedive are thousands of investors. including numerous movie stars and oil companies,who were lured into the cattle business by the prospect of . capital gains. “Our customers average losses of 30 to 50 dollars a head in mid--1963, and even with lower prices being paid for replacement cattle off the range, they’re still losing 10 to 15 dollars, a head on animals in the lots now,” reports Mr Earl Brookover, operator of a feedlot in Garden City, Kansas. . -

Rather than absorb such losses, some ranchers are simply going out of business. Mr George E. Light,, jun.. a Cotulla,. Texas, rancher whose family has been raising cattle for 146 years, recently completed liquidating his half interest in a 10.000 head herd he owned in partnership witli his. son.

“If you want to stay in agriculture,” he grumbles,

“you’d better go to some other country to raise cattle, or else [ grow something here you can get a subsidy on.” Ranchers, complain they cannot compete on equal basis with the low expenses for foreign beef pro- [ ducers who often get subsidies - from their Governments and frequently enjoy lower taxes. ! . Cushman S. Radebaugh. a rancher in Orlan, Florida, says “It costs us a minimum of. about 50 dollars to raise an[ eight-month-old calf, while an Australian rancher can raise a two-year-old steer for 6.50 dollars. Taxes and land costs are big problems, I’ve been chased out of two ranching locations in the last nine years, first by a missile base and then by a housing development. Similar condl-! tions are steadily raising the' cost of farm land all over the country,” Central America Such cost disparity is also influencing a few ranchers to compete with foreign beef producers on their own grounds. Mr N. V. Bunker, jun.. a Lake Village. Arkansas, rancher reports that he is shopping for a cattle ranch in Central America. “I was told in Guatemala that you can raise a two-year-old steer there for 5.25 dollars. There’s just no place in the United States where you can approach that kind of cost," [he says. Mr Bunker has cut I his Arkansas herd to 200 head from 2000 over the last two years and switched 5000 acres of pasture into soybeans. “Due to subsidies paid to United States framers and exporters. a rancher in Mexico can buy United States grown grain sorghum for as much as 90 cents a bushel under the prices I pay.” complains Mr Doyle McAdams, Huntsville, Texas rancher. “Then the Mexicans turn around and sell their meat in Texas at prices under those for United States beef.” Agriculture Department figures show that American exports of sorghum to Mexico last year were 24 times the total of two years earlier. Reluctant Despite the fact that most cattlemen regard a rigid control of imports as the answer to their headaches, some are worried about inviting the Federal Government to come to their rescue. “A little bit of government interference is like being a little bit pregnant.” says -Mr Earl Rocke-I feller, who breeds bulls at Morrilton, Arkansas, and operates an Oklahoma feedlot “I’d. hate to see a temporary crisis bring about permanent Government interference in the cattle business.” Mr Rockefeller, brother of New i York Governor Nelson Rockefeller, is a Republican , candidate for Governor of Arkansas.