Contact: Katie Olthoff, Senior Director of Communications and Membership, Iowa Cattlemen's Association, 515-296-2266
The Iowa Cattlemen’s Association (ICA) has heard many concerns from its members over the past few weeks as COVID-19 has severely affected the industry in a variety of ways.
“We began receiving phone calls in mid-March as live cattle prices dropped, and the challenges have multiplied since that time,” says Matt Deppe, ICA’s CEO.
ICA’s staff and board members have been actively seeking input from members and carrying their concerns and needs forward to the appropriate government agencies and elected officials throughout this time.
Unprecedented times call for unprecedented measures. The cattle industry has historically shied away from direct payments for producers, but the impact from COVID-19 has been so severe that many producers are struggling with cash-flow and longer-term viability of their operations.
Based on requests from members and approval from the board of directors, ICA requested that cattle producers be included in programs designed for small business owners, in addition to a direct payment program for cattle producers, who face losses up to $477.05 per head in the coming months, according to Iowa State University’s Center for Agricultural and Rural Development.
Agriculture was included in the Paycheck Protection Program (PPP) for small businesses as part of the CARES Act. However, the funding allocated to that program was distributed before many farmers, who are sole proprietors, were able to secure the low-interest, partially forgivable loans. ICA then advocated for additional funding for the PPP, which was then included in the April 24th coronavirus bill. That bill also expanded the SBA Economic Injury Disaster Loan (EIDL) program to include ag producers, which was another request from ICA.
In addition to these loan programs, the USDA announced a payment program for farmers as part of the Coronavirus Food Assistance Program (CFAP). Preliminary information states that producers will receive a payment for 85% of price losses that occurred between January 1 and April 15, and 30% of anticipated price losses in Quarter 2 and Quarter 3 of 2020. There is a payment limit of $125,000 per commodity with a cap of $250,000 per entity or individual.
ICA members have expressed several concerns regarding this program. Based on the continued losses expected, the organization has advocated for increased payment limits and a higher reimbursement rate for losses after April 15.
One of the chief concerns during this time has been the precipitous decrease in fed cattle prices while boxed beef prices have continued to rise. The spread between these two numbers has burdened feedlot operators while the processing sector seems to be benefitting from the higher beef values. ICA member Brad Kooima also had the opportunity to question Secretary Sonny Perdue directly about this issue on a recent teleconference.
ICA has also worked closely with the Missouri Cattlemen’s Association to write a letter to the Department of Justice (DOJ) and USDA formally requesting an investigation into the current market disturbances as well as those following the Holcomb plant fire last fall. Twenty state cattlemen’s associations signed on to the letter, which stated, “The nature of previous and current concern in both situations is extreme market degradation to the producer segment quickly followed by sharp increases and unseasonal profitability to the packing segment through boxed beef prices. The repeat nature of these market reactions absolutely emphasizes how the production sector of the industry is exposed to the highest potential for risk with little-to-no leverage to change that risk position.”
An investigation by USDA’s Packers and Stockyards Administration was launched following the Holcomb fire last fall, but the results have not yet been released. The long timeline of that investigation, compounded by increased spreads between boxed beef and live cattle more recently, led ICA’s board of directors to ask for a more intense investigation, this time overseen by the Department of Justice.
Due to employee illness and health concerns, many plants have had to slow their production or close temporarily. This has caused extreme challenges for Iowa’s cattle feeders with market-ready cattle.
For several weeks, it has been nearly impossible for Iowa’s producers to get a bid on their fed cattle from a processor. Cattle that have been contracted in advance are filling all the available slaughter space, leaving Iowa’s producers who traditionally negotiate cash bids struggling.
In these unprecedented times, ICA is asking processors to prioritize slaughter for the heaviest cattle. At the same time, we are encouraging packers to waive penalties for overweight cattle.
ICA appreciates Governor Reynolds’s dedication to continuity of business and efforts to provide increased testing to packing plant employees in order to get them back to work. Returning slaughter and processing capacity to pre-COVID-19 levels is not only important to cattle producers, but impacts food security for the entire country.
As the COVID-19 situation continues to affect the cattle industry, ICA has increased efforts to get feedback from members about challenges they are facing. Weekly teleconferences offer producers an opportunity to weigh in on the advocacy efforts ICA has been working on, and suggest new ideas.
ICA is also working closely with the Iowa Beef Center to provide education for producers managing fed cattle at this time. Webinars will be held Tuesday, April 28 at noon and Wednesday, April 29 at 7 p.m. Both will be recorded and posted for later viewing. Find more information at http://www.iowabeefcenter.org/news/FeedlotConsiderationsWebinars0420.html.
For more information about ICA’s work, sign up for emails and text messages at iacattlemen.org or check out ICA’s weekly podcast. It can be found on the website or various podcast directories by searching “Iowa Cattlemen’s Podcast.”
About the Iowa Cattlemen's Association: The Iowa Cattlemen’s Association represents nearly 10,000 beef-producing families and associated companies dedicated to the future of Iowa’s beef industry. ICA’s mission is “Grow Iowa’s beef business through advocacy, leadership and education.”