SIOUX FALLS, S.D. (KELO) — A year and a half ago, Todd Wilkinson didn’t have a favorable outlook for America’s cattle industry.
Coming out of the summer of 2021, cattle producers were reeling from widespread drought and market disruptions from the COVID-19 pandemic. In the summer of 2021, KELOLAND News reported about busier than normal sale barns in Fort Pierre, Aberdeen and Worthing as producers thinned down herds.
That was a snapshot in South Dakota, where cattle outnumber people 4-1, but other states experienced similar impacts from the drought. Fast-forward to 2023, the U.S. Department of Agriculture reported cattle inventory at 89.3 million, the lowest inventory in 61 years.
“We’ve seen drastic herd reductions all across America,” Wilkinson told KELOLAND News. “I didn’t think I would ever see cattle numbers get quite this low in the United States. And the flip side, if you’re in the cow-calf business or the feeding business, that means you got a very valuable commodity. America has been continuing to eat beef and we’ve been continuing to export beef at record paces.”
Wilkinson just returned to South Dakota Thursday morning after testifying in front of the House Subcommittee on Livestock, Dairy and Poultry in Washington D.C. on Wednesday. Wilkinson, who works as a rancher and lawyer in De Smet, serves as the president of the National Cattlemen’s Beef Association.
On Wednesday, Wilkinson told members of Congress that cattle prices have significantly improved since he last testified to Congress in October 2021. In April 2023, future prices for live cattle hit $175.50cwt (price per hundredweight) up $50 from $125.27cwt in October 2021.
“The prices that you’re seeing now are historically high. In fact, we set some new peaks,” Wilkinson said. “That $50 per hundredweight price increase is a huge amount for the producer. In those two windows, you probably have a producer that’s losing money on the bottom end of that and now is making money on the top end of that.”
Those fine margins, faced by cattle producers every day, are a combination of market economics at work. Wilkinson highlighted in his written testimony the price improvements for cattle markets “occurred without the enactment of market-altering legislation.”
“Claims suggesting cattle market conditions would never again favor producers unless Congress intervened with massive government programs have been undeniably proven false,” Wilkinson’s written testimony states.
Wilkinson said there was a loud outcry for government intervention against four main companies – JBS, Tyson, Cargill and National Beef. Those companies, which have drawn the ire of President Joe Biden as well as Democrat and Republican lawmakers, operate 26 plants which process 80% of the beef.
“My point to Congress yesterday was: see what happens. You don’t need to get your fingers in this and get further government regulation,” Wilkinson said. “The market will work its way through. The market moved itself into a positive position and I think it’s going to be there for three, four or five years while that herd rebuilds.”
Wilkinson said cow-calf producers are now in a position of advantage because there’s less inventory and still high demand. That’s where beef consumers come into the picture and Wilkinson said demand for USA beef is high.
“The consumer wants to know where it comes from,” Wilkinson said. “In contrast to the 1970s, for instance, beef was more of a commodity thing. You didn’t have the quality of the product.”
He said consumers in the market will reward producers that invest in improving the quality of cattle and meat it produces. That’s why Wilkinson doesn’t want to see cattle looped in as “commodity cattle.”
“Some of these people that want to manipulate the market are going to end up pushing us back into where all cattle get priced the same way, everywhere,” Wilkinson said. “Then suddenly, there’s no incentive to improve your herd.”
2023 farm bill priorities
As the president of the NCBA, Wilkinson is representing a major voice in a multi-billion industry that is overflowing with a lot of different opinions and voices.
“I don’t represent just one segment of the industry. I’ve got cow-calf producers, I’ve got background operators, I’ve got feeders, we’re dealing with retail and even on the far edge, have discussions with the (meat) packers,” Wilkinson said. “Our clear line in the sand is we want that cow-calf operator and that feeder to succeed. We need to be able to talk to everybody to be able to make that operation work.”
Wilkinson said the three main focuses for the NCBA in the 2023 Farm Bill are opposing modifications to Packers and Stockyards Act, protecting animal health and preparing for animal diseases.
On the Packers and Stockyards Act, Wilkinson said changes would bring more and more litigation to the cattle industry.
“Frankly, cattle producers don’t need to be paying a whole bunch of attorneys over lawsuits about packers,” Wilkinson said. “We just want to be able to do our job and do it right.”
For animal health and animal diseases, Wilkinson said the poultry industry is a perfect example of how diseases impact the industry. Avian flu has caused million of birds to be killed.
Wilkinson said a major cattle disease outbreak would cost tens of billions of dollars as livestock movement would halt for three days.
“We need to build a vaccine bank to protect that and it’s costly,” Wilkinson said. “ If something happens, we have the vaccines to do it.”