Cattle Ranchers Look to Improve Market Conditions

Cattle prices are on the downswing and cattle ranchers are feeling the pinch. Many cattle producers say they are seeing the lowest prices in six years. South Dakota rancher Duane Keffeler fondly recalls 1990, which he calls his best year. "I sold yearlings for a big price. To get the same amount of money, I would have to sell almost twice as much," Keffeler says.

Part of the reason for low cattle prices is the lack of major meat packers. There are only three left. Fewer meat packers means less competition and, therefore, lower prices. There have even been accusations of collusion directed at the remaining major packers.

South Dakota Farm Bureau President Dick Kjerstad raises cattle near Wall, S.D. Kjerstad agrees that the low number of packers has stifled competitive bidding and price discovery. "When you have three major packers and one sets a price and the others don¹t bid beyond that, you don't have price discovery," Kjerstad says.

The collusion accusations have raised some eyebrows and roused calls for action on Capitol Hill. But Kjerstad, who testified before Congress on bills to help ranchers, discounts the collusion charges. "They don't have to get together," Kjerstad says. "One sets a price and the others fall in line."

While Kjerstad and many of his colleagues say they appreciate federal efforts to help them, they add they need to help themselves. Some ranchers advocate forming cooperatives and, in the process, perhaps operating their own packing operations. But Kjerstad advocates cooperation over cooperatives. "The benefit of cooperation will be that it creates quality and consistency," Kjerstad maintains, saying these are what consumers are looking for. Kjerstad says ranchers need to promote their product and get more involved on the retail end.

One of the problems on the retail end, Kjerstad says, is that consumers cannot always be sure of the quality they are getting. He says he wants to see a labeling and packaging effort supported by ranchers to let consumers know where their beef is coming from. Kjerstad says this would help nearly inactive packing houses come back on line and thereby create more packer competition, which would help drive up cattle prices.

Kjerstad, meanwhile, discounts predictions of continued tough times for cattle producers and of even fewer major packers. He says a continuation of current conditions is unthinkable for cattle ranchers.