The current market dynamics have led to many discussions in the industry as to what can be done to improve the situation in the short- and long-term. Although these issues are not new to the industry, they have been exacerbated by the coronavirus pandemic and all that surrounds it. KLA and NCBA have been fully engaged in these discussions from the beginning.
In early April, both organizations sent letters to USDA and President Donald Trump, respectively, requesting an investigation into the cattle market and the unprecedented spread between live cattle and boxed beef prices. Within six hours of receiving the letter from NCBA, President Trump had directed the Department of Justice (DOJ) to engage in an investigation, which now is underway. In addition, several state attorneys general have asked DOJ to investigate. Although Kansas Attorney General Derek Schmidt was not asked to sign on the original letter, he has communicated with DOJ and will participate in the investigation.
“While the investigation should be left up to the experts that have regulatory authority in this matter, we have requested a quick response,” said KLA Chief Executive Officer Matt Teagarden. “In the meantime, KLA will continue to focus on the work we can do to try and address the situation as an industry.”
Part of that work has centered around vetting potential options for increasing negotiated fed cattle trade, which KLA members support, as long as it is industry-driven, not government-mandated. Therefore, the KLA Cattle Feeders Council Executive Committee is pursuing a mechanism to negotiate the base price for value-based grids, increasing the negotiated trade numbers, while still allowing cattle producers to earn premiums on their high-quality cattle. Additionally, KLA is working with the NCBA Cattle Marketing Working Group to discuss industry-driven changes needed for better price discovery.