NCBA Cattle Marketing & International Trade Committee

Speakers cover topics ranging from ramifications of the MF Global bankruptcy to Japan opening markets to U.S. beef from cattle younger than 30 months of age.

by Troy Smith for Angus Journal

TAMPA, Fla. (Feb. 6, 2013) — The National Cattlemen’s Beef Association (NCBA) Cattle Marketing & International Trade Committee met during the 2013 Cattle Industry Convention in Tampa, Fla. The committee’s new chairman, Nebraska cattle feeder Todd Schroeder reminded attendees how the 2012 convention included much discussion regarding bankruptcy of the commodity brokerage firm MF Global and subsequent financial impacts to cattlemen. At that time, Bryan Durkin, chief operating officer for the Chicago-based CME Group, had spoken to cattlemen about plans for enhancing CME Group’s oversight of brokerage firms. Present for this year’s meeting, Durkin said again that every effort is being made to renew confidence in the marketplace.

“I assure you; it is our first priority,” stated Durkin. “I’m pleased to report, one year later, we have made significant strides.”

According to Durkin, CME Group now requires frequent reports on brokerage firms’ "segregated accounts," which include deposits by cattlemen customers. Frequent spot-checks or audits are conducted and CME Group is advocating for changes to the bankruptcy code that would protect customers.

“Our markets are safer today than before the MF Global failure,” affirmed Durkin.

Also on the committee’s agenda was Iowa cattleman Ed Greiman, who heads an NCBA working group investigating the decline in numbers of cattle sold on the cash market and the consequences for price discovery.

“We’ve been looking at whether the cash market is viable, but we’re recommending continued research. The cash market is growing thin, but we need to know how thin is too thin,” said Greiman. “We can’t tell (cattlemen) how to market cattle, but we need to know what could happen if we continue down this path.”

Colorado State University (CSU) economist Stephen Koontz presented a proposal to conduct research on price discovery in fed-cattle markets, suggesting a cooperative research agreement between CSU and NCBA. Greiman added that costs for the study would probably have to be covered by donations from NCBA members.

Shifting discussion to international trade issues, NCBA Trade Advisor Gary Horlick said a new trade agreement with Japan means that market will now accept beef coming from animals younger than 30 months of age. Previously, Japan had restricted the animal age to less than 20 months. The agreement should allow for additional U.S. beef sales worth $600 million.

Horlick said the U.S. is close to gaining additional beef export access to Europe and Taiwan. Access to Russia and China is less forthcoming, with negotiations hindered for political reasons.

“Trade agreements typically result in more beef sales,” stated Horlick. “They give us leverage to open more markets. We gain an edge over countries still paying high tariffs, when we pay lower tariffs or none at all.”

Committee members also advanced policy favoring USDA action to bring mandatory country-of-origin labeling (mCOOL) regulations in compliance with a World Trade Organization ruling by the May 2013 deadline.