Latest / AG Bull / AG Squawk with Davis Michaelsen | Bill Bullard R-Calf

Transcript

AG Squawk with Davis Michaelsen | Bill Bullard R-Calf · AG Bull

• 0:10
  SPEAKER_00: A lot of the questions I have today have to do with timing.
• 0:14
  SPEAKER_00: Sometimes things just kind of happen when they do.
• 0:17
  SPEAKER_00: I'm I'm willing to accept that, but and I don't mean to stir the pot, but per usual I have questions.
• 0:26
  SPEAKER_00: And I've returned to my Rolodex in pursuit of answers.
• 0:42
  SPEAKER_00: From behind the big blue, bodacious microphone of Ag Bull.
• 0:46
  SPEAKER_00: Your pal Davis Michelson here for Ag Squawk.
• 0:50
  SPEAKER_00: A return visit.
• 0:51
  SPEAKER_00: I'm almost, you know, it was only two weeks ago when we had Bill Bullard from RCAF USA on, and we had such a great talk and left so much unsaid that I was ready to have a discussion with him at about any moment, anyway.
• 1:06
  SPEAKER_00: But over the last two weeks, a lot of things have come up.
• 1:09
  SPEAKER_00: Premium subscribers.
• 1:11
  SPEAKER_00: You know, I talked to Jim Wiesmeyer yesterday about Brazilian beef in Houston.
• 1:15
  SPEAKER_00: A lot of things.
• 1:16
  SPEAKER_00: There are other things that Jim and I could have talked about.
• 1:18
  SPEAKER_00: There are things today that Jim and I could have talked about, but we we narrowed our conversation and I did use, as promised, the uh the egg bull timer of time.
• 1:30
  SPEAKER_00: We held ourselves to like nine or ten minutes, which was it was a good discussion of a single issue.
• 1:36
  SPEAKER_00: But as I said, there's there's a bit of a theme, and it feels like timing is something that we need to be aware of.
• 1:45
  SPEAKER_00: I'm calling today's discussion with Bill since it comes just two weeks on the heels of our last discussion, maybe part two of that discussion.
• 1:56
  SPEAKER_00: It's a sequel.
• 1:57
  SPEAKER_00: It's a sequel, maybe a continuation.
• 1:59
  SPEAKER_00: Because I don't know if I'm a big fan of sequels always.
• 2:02
  SPEAKER_00: A continuation will say the conversation continues to roll with Bill Bullard from RCAF.
• 2:08
  SPEAKER_00: And if you've been paying attention to the cattle market at all, there have been a lot of policy shifts.
• 2:14
  SPEAKER_00: If you saw the program on Monday, I talked with Mike Castle from Stonex, and we talked about uh how the market was reacting.
• 2:24
  SPEAKER_00: It was a bit of a technical discussion.
• 2:26
  SPEAKER_00: It was a good one, but now I want to talk about it from the producers side and from the the cattle industry side.
• 2:35
  SPEAKER_00: So we've had the we've covered the market, then now we're gonna we're gonna talk about the production side.
• 2:40
  SPEAKER_00: Bill Bullard, as I said, looking for I got a whole list of notes here.
• 2:45
  SPEAKER_00: Whole list of notes.
• 2:45
  SPEAKER_00: And as you can see, my my head is it's it feels like it's fizzy inside here.
• 2:51
  SPEAKER_00: I can't wait to get to the conversation.
• 2:52
  SPEAKER_00: But first, let's talk about export sales.
• 2:55
  SPEAKER_00: Released uh earlier this morning.
• 2:56
  SPEAKER_00: Export sales for corn, soybeans, and wheat were solid, all right in line with expectations.
• 3:02
  SPEAKER_00: In fact, all three came in above the prior week with soybean export sales exploding to 2.5 million metric tons.
• 3:11
  SPEAKER_00: Now, maybe I've missed them, but I haven't seen quite the number of soybean daily sales that we did there for a while.
• 3:18
  SPEAKER_00: We had a real good stretch there for a while, and so maybe some of that business has gone here into the weekly sales.
• 3:25
  SPEAKER_00: And with that, let's get to the tail of the tape, talk about the markets.
• 3:28
  SPEAKER_00: Corn and soybean futures.
• 3:29
  SPEAKER_00: We're under pressure early in the session today with corn off five or six cents within the first hour of trade.
• 3:36
  SPEAKER_00: Wheat futures built on yesterday's solid gains with Chicago wheat leading gains.
• 3:41
  SPEAKER_00: Feeder cattle were sharply higher as fat cattle posted moderate gains and lean hogs mildly lower in early session trade.
• 3:49
  SPEAKER_00: Rounding into the lunch hour, corn and soybeans were off session lows.
• 3:53
  SPEAKER_00: Soybeans exploring positive territory.
• 3:56
  SPEAKER_00: Wheat futures continued to firm, pressing up against a dime higher by noon.
• 4:00
  SPEAKER_00: Livestock futures were off-session highs, but still notching pretty solid gains.
• 4:05
  SPEAKER_00: Before we get to the settlements, let me mention plus 500 software, that's plus 500.
• 4:10
  SPEAKER_00: Me and my crew use plus 500 T4 software to keep us on the leading edge of what's going on.
• 4:18
  SPEAKER_00: Real-time quotes, futures, options, a host of dandy features.
• 4:22
  SPEAKER_00: Plus 500, that's plus 500.
• 4:25
  SPEAKER_00: December corn 533 and one half at settlement, down three cents on the day.
• 4:31
  SPEAKER_00: After yesterday's move, I sure after the last couple of days of movement, sure.
• 4:38
  SPEAKER_00: Three three steps down.
• 4:39
  SPEAKER_00: We'll take that.
• 4:40
  SPEAKER_00: Perhaps a healthy setback is in order.
• 4:42
  SPEAKER_00: November soybeans up two cents on the day, 12.68 even.
• 4:47
  SPEAKER_00: Soybean meal and soybean oil, both higher on the day.
• 4:51
  SPEAKER_00: Chicago, December wheat, 760 and three quarters, up 12.12 cents on the day.
• 4:57
  SPEAKER_00: The KC up 13 and 1 quarter cents at 8.22.
• 5:03
  SPEAKER_00: And over to the livestocks.
• 5:04
  SPEAKER_00: Looks like we're in positive territory across the entire cattle complex.
• 5:08
  SPEAKER_00: October feeder cattle 318.07.5 at the settlement 382 and a half.
• 5:15
  SPEAKER_00: October fats to 1292 and a half.
• 5:19
  SPEAKER_00: That's up 215 even.
• 5:21
  SPEAKER_00: And then over to the lean hogs.
• 5:23
  SPEAKER_00: I have us mixed here, but it's just the October contract that was lower.
• 5:27
  SPEAKER_00: As we get out into the deferred contracts, we're higher across the border.
• 5:32
  SPEAKER_00: The October was down 27.5 at 80.62 and a half.
• 5:36
  SPEAKER_00: And I've been watching seeing if there's a little spread narrowing going on there.
• 5:42
  SPEAKER_00: And maybe that's what's happening because we've got the December at 71.20, and that one was up 22 and one half cents on the day.
• 5:52
  SPEAKER_00: All right.
• 5:52
  SPEAKER_00: With that, it gives me a great deal of joy to welcome back Bill Bullard from RCAF USA.
• 5:59
  SPEAKER_00: Uh, Mr.
• 5:59
  SPEAKER_00: Bullard, it's great to have you here.
• 6:02
  SPEAKER_00: You're very generous with your time with us.
• 6:05
  SPEAKER_00: I hope you'll be patient with my line of questioning.
• 6:08
  SPEAKER_00: But uh, welcome back to Ag Squawk.
• 6:10
  SPEAKER_00: It's great to have you here, sir.
• 6:12
  SPEAKER_00: Glad to be here.
• 6:13
  SPEAKER_00: Thank you.
• 6:14
  SPEAKER_00: Let's begin here, because as I mentioned in my opening rambles, that a lot has happened in the last two weeks.
• 6:23
  SPEAKER_00: Bill, is it that I'm just paying closer attention since you and I got to know each other, or is is the cattle business always this volatile?
• 6:32
  SPEAKER_01: Well, it certainly is now.
• 6:34
  SPEAKER_01: And as you said, a lot has happened in just the last two weeks.
• 6:38
  SPEAKER_01: So, and it's creating a lot of um uncertainty and and instability within the marketplace itself, lack of predictability, and none of that is good for independent livestock producers who who need uh some uh certainty in terms of how the markets function and and what they respond to.
• 6:57
  SPEAKER_00: Yes, and and that's that's the direction that I would like to go because Bill, in in the markets, if we're talking the futures markets, if we're talking the board, sometimes volatility can create opportunities for us, but we're not talking about that kind of volatility, although there is a measure of that to be sure this week.
• 7:18
  SPEAKER_00: We're talking about on the policy side.
• 7:20
  SPEAKER_00: I just want to start knocking them down with you and and get your thoughts, get our calf's thoughts on these items here.
• 7:27
  SPEAKER_00: We haven't talked about, and it seems like so long ago, but it was only Friday, less than a week ago, President Trump announced a 90-day suspension of out-of-quota tariffs on up to 300,000 metric tons of beef destined for grinding, paired with a claim that the product will be sold at 25% below current market prices.
• 7:47
  SPEAKER_00: Now, we'll dig deeper into this, but uh maybe you can take me back to Friday, Monday, Tuesday.
• 7:56
  SPEAKER_00: Your initial reaction to this policy announcement, sir.
• 8:01
  SPEAKER_01: Well, the policy announcement was based on the president's desire to lower beef prices to consumers, particularly ground beef prices, and to encourage the U.S.
• 8:11
  SPEAKER_01: cattle industry to begin the slow process of rebuilding.
• 8:15
  SPEAKER_01: And so the idea that we could accomplish both by increasing the supply of imports is contradicts each other.
• 8:25
  SPEAKER_01: In fact, what the president is doing is increasing the supply of lean grinding product or uh 90% lean beef trimmings, with expectations that that will lower consumer prices.
• 8:38
  SPEAKER_01: And in a in a purely competitive industry, that would be the expectation.
• 8:43
  SPEAKER_01: But we have a highly concentrated industry, and in fact, uh the industry has been buying these 90% lean beef trimmings from South America for the past couple months at about a 25% discount to domestic prices.
• 8:57
  SPEAKER_01: So merely increasing that supply will certainly have an adverse effect.
• 9:03
  SPEAKER_01: Those who are selling a beef product that contains 90% lean beef trimmings.
• 9:08
  SPEAKER_01: And so we have a product coming in the United States that will compete head-to-head with a domestic product, and yet the consumers who are purchasing beef without knowing where it comes from will not know whether the beef that they are buying is subject to this 25% deduction from the market price, or if they're buying USA beef.
• 9:31
  SPEAKER_01: And so consumers are being kept in the dark.
• 9:34
  SPEAKER_01: The supply is going to increase.
• 9:36
  SPEAKER_01: That supply is competing head to head with our domestic production, and it's likely to reduce the price of live cattle, which will disincentivize the industry to begin the rebuilding process of this decimated cattle herd, which is now at a 75-year low.
• 9:52
  SPEAKER_00: Yeah.
• 9:53
  SPEAKER_00: It seems so long ago that you and I were talking about MCOOL two weeks ago today.
• 9:59
  SPEAKER_00: Right?
• 10:01
  SPEAKER_00: Okay, a couple of questions there.
• 10:04
  SPEAKER_00: Let me let me start here broadly because one of the other things that you and I had highlighted at the point, people were starting to get the memo that imports were far out exceeding exports.
• 10:18
  SPEAKER_00: And my question that I that I didn't get a chance to ask, when we talk about just trade in general, let's say it's let's say it's soybeans to China.
• 10:31
  SPEAKER_00: We want to keep that relationship with China alive and healthy because if we upset them and they decide, well, we're just gonna get our soybeans someplace else, that demand is sort of set somewhat in stone.
• 10:51
  SPEAKER_00: We lose that market share, and it's very, very difficult to get back.
• 10:57
  SPEAKER_00: Bill, maybe I'm living in a in fantasy world here in Crazy Town, but I guess my question to you would be is given that we've got such high imports right now on the beef side, and now we're adding to it and using that to try and fix our own domestic ills, is there risk that the US import system becomes addicted to imports of beef and of cattle?
• 11:28
  SPEAKER_00: And pretty soon there's really no incentive for the the grower to grow?
• 11:33
  SPEAKER_01: That's exactly the problem we're experiencing, and we've been experiencing it for the last three years.
• 11:38
  SPEAKER_01: What the multinational meat packers want is to be able to import increasing volumes of imported beef and then sell it to unsuspecting consumers as if it were a domestic product.
• 11:49
  SPEAKER_01: And in the process of doing so, they have reduced opportunities by displacing domestic product for our U.S.
• 11:56
  SPEAKER_01: cattle industry to expand.
• 11:58
  SPEAKER_01: And so the meat packers are right now reconfiguring their operations in order to operate in this new paradigm, a new paradigm that represents an emphasis on imported supply dependencies and a de-emphasis on domestic slaughter and domestic production.
• 12:16
  SPEAKER_01: And that's why we've seen two of the largest big four packers have begun to close shutter packing plants.
• 12:24
  SPEAKER_01: It's because they are they are re-engineering themselves in order to operate in an environment that has an increased dependency on imports.
• 12:34
  SPEAKER_01: And that's absolutely bad for the U.S.
• 12:36
  SPEAKER_01: cattle industry, and certainly bad from a national security perspective, because what we need to do is maintain the ability to be self-reliant in the production of what we view to be the most important dietary protein, and of course, that's beef.
• 12:50
  SPEAKER_01: But instead, we're dismantling our competitive infrastructure within the beef industry supply chain, and it will be difficult to rebuild, particularly if we just keep doubling down on what it was that caused our industry to shrink in the first place.
• 13:05
  SPEAKER_01: A major contributing factor to the contraction of the U.S.
• 13:09
  SPEAKER_01: cattle industry is the excessive imports that have displaced our domestic production.
• 13:16
  SPEAKER_00: And without labeling, there's no way to be able to tell.
• 13:19
  SPEAKER_00: You mentioned self-reliance.
• 13:20
  SPEAKER_00: That's one of the absolute pillars of.
• 13:23
  SPEAKER_00: I remember back in college, we talked about the core of discovery, Lewis and Clark, the the fierce independence of the American spirit.
• 13:34
  SPEAKER_00: We're headed in the wrong direction there, it sounds like on the on the processing side and how we we package and distribute beef.
• 13:45
  SPEAKER_00: What what changes that?
• 13:47
  SPEAKER_00: What what do we need to do to flip the pendulum into the other direction?
• 13:52
  SPEAKER_01: We need a long-term coherent strategy in order to begin rebuilding our domestic beef supply chain.
• 14:01
  SPEAKER_01: And we need to start that by providing independent producers that are producing cattle from which the beef is derived, providing them the space that they need to begin recapturing some of the lost market share that uh they've experienced over the past several years.
• 14:18
  SPEAKER_01: About 22% of the beef sold in America today is derived from either imported uh beef commodities or imported live cattle that are converted to beef here in the United States.
• 14:30
  SPEAKER_01: And that's more than double what it was just a few decades ago.
• 14:33
  SPEAKER_01: And so we are headed in the wrong direction.
• 14:36
  SPEAKER_01: We do not have a long-term strategy that will preserve and protect competitive markets for independent producers and protect them against the adverse effect of these imports that are brought in far below the domestic production costs because of the clear advantages that some of these South American countries, for example, experience in their production chain.
• 14:58
  SPEAKER_01: They do not have to meet the identical standards of those producers in the United States.
• 15:03
  SPEAKER_01: And as a result, they are able to displace our production.
• 15:07
  SPEAKER_01: So the long-term strategy is a solution.
• 15:10
  SPEAKER_01: And one way to do that is to say, for example, if we want to increase domestic production by 1 billion pounds of beef, we consume about 28 billion pounds.
• 15:19
  SPEAKER_01: We're only producing about 24 to 25 billion pounds.
• 15:23
  SPEAKER_01: If we want to increase our market share by a billion pounds, then put a tariff rate quota that would limit the volume of imports by one billion pounds to give our industry the space it needs to begin the expansion process.
• 15:35
  SPEAKER_01: And of course, it takes about three years to begin that process because of the long biological cycle of cattle.
• 15:40
  SPEAKER_01: So we need a coherent strategy.
• 15:43
  SPEAKER_01: We do not have one today.
• 15:45
  SPEAKER_00: Can you explain to me?
• 15:46
  SPEAKER_00: And I'm asking, probably asking you to speculate, although maybe it's spelled out somewhere.
• 15:52
  SPEAKER_00: How does a 90-day suspension of out-of-quota tariffs encourage domestic production?
• 15:59
  SPEAKER_00: I don't understand, I don't understand it.
• 16:01
  SPEAKER_00: Well, it doesn't.
• 16:02
  SPEAKER_01: And again, that product will compete with the it's it's a perfect substitute product for what we produce right here in America.
• 16:10
  SPEAKER_01: It's going to reduce the value of those cows that have been used to produce the very same type of beef product.
• 16:17
  SPEAKER_01: That is not an incentive to begin the expansion process.
• 16:20
  SPEAKER_01: In fact, it's a disincentive to do so.
• 16:23
  SPEAKER_01: Because if producers see that each time that the price point for their cattle reaches the level that would trigger a herd expansion, the policy position is to increase the imports in order to depress those cattle prices, you will not see the expansion.
• 16:38
  SPEAKER_01: And of course, in this concentrated marketplace with a highly concentrated beefpacking sector and a retail sector, we see that the retailers, for example, are receiving increased margins at a time when the president is trying to reduce the cost that consumers pay for beef.
• 16:54
  SPEAKER_01: And our position is we need to determine how much of this increased price of beef is attributed to anti-competitive practices on the part of the monopolistic retailers and beef packers.
• 17:06
  SPEAKER_00: Wow.
• 17:07
  SPEAKER_00: Wow.
• 17:08
  SPEAKER_00: I mentioned at the top of the show there are some timing issues that I'm very curious about.
• 17:14
  SPEAKER_00: It feels like it could emerge as a theme, but if we're talking about this 90-day suspension, we're we're smack dabbing the November through September through November period, which as I understand, I'm not a big cattle guy, but as I understand, I mean that's a that's a huge moment for producers to be marketing uh spring calves and the and to sort of figure out what do I want to sell, what do I want to retain.
• 17:43
  SPEAKER_00: I'm curious if you can speak to the timing of this as well, please.
• 17:47
  SPEAKER_01: Well, the the timing couldn't be worse because not only do we have the longest biological cycle of any farmed animal, but each cow produces generally one calf.
• 17:56
  SPEAKER_01: And as a result, cattle producers' entire annual income may be derived upon the sale of the calf crop.
• 18:04
  SPEAKER_01: And that typically occurs, particularly in the northern tier of the United States, beginning around late September and running on through November.
• 18:11
  SPEAKER_01: So you've got producers who are now bringing, uh will soon be bringing their entire annual production to market.
• 18:18
  SPEAKER_01: And they're doing so at the same time that increased imports will put downward pressure on cattle prices.
• 18:25
  SPEAKER_01: And so what we could see is uh significant uh declines in revenues on the for the part of these cattle producers.
• 18:33
  SPEAKER_01: And of course, those would be the producers who are actually maintaining a cow herd and then selling a calf each year.
• 18:39
  SPEAKER_01: But within our multi-segmented live cattle supply chain, we have producers who are paying these nominally high or historically high nominal prices for cattle at uh mid-weights, for example, buying these calves at 600 pounds, expecting to feed them until they weigh about uh 800 pounds and then deliver to a feedlot.
• 19:00
  SPEAKER_01: They're margin operators.
• 19:01
  SPEAKER_01: And so when you have the volatility and instability in the marketplace that we're experiencing today, many of these people midway in the supply chain are going to find themselves in financial difficulties.
• 19:13
  SPEAKER_01: And that is precisely why we have lost so many family-scale independent feeders in this industry.
• 19:19
  SPEAKER_01: It's because of the tremendous volatility that has occurred in the Fed cattle market that has affected those producers who are margin operators, now not cow calf producers, but those who are actually paying these record prices for calves and expecting uh to recover their costs of gain when those cattle are ready for sale.
• 19:39
  SPEAKER_01: But when when policy intervenes and causes uh a at least a psychological impact on the marketplace, as we have seen cattle prices begin to fall, this will have an adverse effect on the ability of independent cattle producers to remain profitable.
• 19:58
  SPEAKER_00: Boy, so either, and I don't even know if this is possible.
• 20:01
  SPEAKER_00: So either you you get your calves off to market here as quick as you can, down to the sale barn, you take a loss for some lighter calves, or you wait and roll the dice on what this is gonna mean for November, September or September November prices.
• 20:19
  SPEAKER_00: I uh neither option sounds good to me.
• 20:22
  SPEAKER_00: What what's a what's a producer to do?
• 20:25
  SPEAKER_01: Well, so the producers are dealing with the vagaries of weather as well, and in some instances, widespread drought where they don't have the grass, they're gonna be marketing their cattle early, their calves early.
• 20:36
  SPEAKER_01: Some will, of course, try to maintain the semblance of a normal operation, even despite that, and buy additional feed.
• 20:43
  SPEAKER_01: One thing about the cattle industry is uh we know that there is a demand for beef, that we've got incredible beef demand.
• 20:50
  SPEAKER_01: What we don't understand is why all this volatility within the pricing structure of the industry itself.
• 20:57
  SPEAKER_01: We need stability, we need predictability, and again, that falls right in hand with the need for a long-term strategy to begin the rebuilding process rather than these piecemeal efforts that have, from our perspective, damaging effect on the cattle producer, will likely having little effect on the price of beef that consumers are paying in the marketplace.
• 21:22
  SPEAKER_00: Bill, that uh you mentioned you mentioned the psychology, the psychological effects on the the family producer, the the smaller rancher, or even the mid-sized rancher, these impacts have got to be tough.
• 21:35
  SPEAKER_00: I mean, I I can say hang in there, but doggone it, the this this looks like hard harder times ahead.
• 21:44
  SPEAKER_01: Well, it certainly is.
• 21:45
  SPEAKER_01: When when you do not have stability in a marketplace and the ability to second guess, if you will, or predict the outcome of certain policy decisions, when those policy decisions come fast.
• 21:58
  SPEAKER_01: And the marketplace, which is in the cattle industry, is a relatively thinly traded market.
• 22:04
  SPEAKER_01: As a result, small changes can be magnified.
• 22:07
  SPEAKER_01: And when you have Announcements about increased supplies, which will directly impact the value of cattle, you have a lot of concern amongst cattle producers about the future of their industry.
• 22:20
  SPEAKER_01: And when we see that the these meat packers are starting to retreat and reduce packers' capacity and then centralized in the south and south central part of the United States, all of this suggests that the industry is headed in the wrong direction and changes need to be made if we're going to have a promising future for new entrants into this industry and for current cattle producers to remain profitable.
• 22:47
  SPEAKER_00: Do you have a sense for I I ask this question about grain operations, and I think about it an awful lot.
• 22:57
  SPEAKER_00: At some point, yeah, you can extend more credit, you can you can go back to the bank, you can, you know, there are there are little patches kind of that you can put on your operations finances, but but at some point the well has to run dry.
• 23:12
  SPEAKER_00: Unfortunately, this is not a an enjoyable thing for me to say, Bill.
• 23:18
  SPEAKER_00: I wonder, do you have a sense for how the the ranch finances are out there for these smaller operations that we're talking about?
• 23:26
  SPEAKER_00: Can they can they weather a storm like this financially?
• 23:29
  SPEAKER_01: Well, what we didn't talk about was the increased input cost that ranchers are experiencing with increased fuel and feed costs, for example.
• 23:38
  SPEAKER_01: But what we do know uh is that the 2022 census showed that during the period from 2017 to 2022, we lost an additional 106,000 beef cattle operations from the United States.
• 23:53
  SPEAKER_01: That means 106,000 ranchers exited the industry.
• 23:57
  SPEAKER_01: And if we go back further over in the last 40 years, we've actually lost over half of them.
• 24:03
  SPEAKER_01: So our industry continues to contract in terms of the number of producers and the size of the cattle herd, and it's contracting at the same time that we're seeing increased imports, and we're seeing the uh the multinational meat packers uh sh contract their operations and reconfigure their operations to depend more on these imports.
• 24:25
  SPEAKER_01: So this is a challenge for independent producers, and I'm afraid we're gonna continue to see uh the loss, the net loss of independent producers, and the net loss of our independent cattle feeders who are right now experiencing the negative effect of a price depression based on policy pronouncements.
• 24:45
  SPEAKER_00: Boy, you hate to see that.
• 24:48
  SPEAKER_00: It's quite the uh the basket that we're weaving here between all these issues.
• 24:53
  SPEAKER_00: You mentioned some of the some of the big players, and I wanted to run this by you.
• 24:59
  SPEAKER_00: Maybe this is a tinfoil hat issue, but I talked to to Jim Wiesmeyer, our own Jim Wiesmeyer from AGBO here yesterday about Brazilian beef, some of it connected to JBS arriving in Houston just as the president was announcing the import program, the 90-day suspension.
• 25:14
  SPEAKER_00: Wiesmeyer notes there's no malfeasance evident.
• 25:17
  SPEAKER_00: I I want to be clear on that.
• 25:19
  SPEAKER_00: He was unable to detect any malfeasance.
• 25:22
  SPEAKER_00: But but Bill, it it feels a little sketchy there.
• 25:26
  SPEAKER_00: There are some ties between the Trump administration and the JBS leadership, ownership there.
• 25:32
  SPEAKER_00: I wonder if if you have any thoughts on the Brazilian beef that arrived in Houston just at the right time for this announcement.
• 25:41
  SPEAKER_01: Well, obviously that would be pure speculation on my part.
• 25:45
  SPEAKER_01: Uh but what is clear is that the multinationals have long been advocating for increased imports and the more access to the U.S.
• 25:54
  SPEAKER_01: market, and with the promise of uh lowering consumer prices and providing consumers with more choices.
• 26:01
  SPEAKER_01: Of course, as we've seen these record imports, however, neither of those outcomes have proven true.
• 26:07
  SPEAKER_01: Consumers have been paying record prices of beef, and they're getting no choice because they can't even tell from what country the beef is produced.
• 26:14
  SPEAKER_01: So I would expect that these uh South American countries that have been penetrating the U.S.
• 26:20
  SPEAKER_01: market would be anticipating an opportunity to bring more in into the United States, and particularly since uh President Trump hinted that he may relax our overquoted tariff rates in the future.
• 26:33
  SPEAKER_01: In fact, after that earlier announcement several months ago was made, it appeared he may have backed off of that effort.
• 26:40
  SPEAKER_01: But perhaps these Packers uh have have a crystal ball that they've been watching and signal signaling to them that they will soon have an opportunity to increase their penetration into the US marketplace.
• 26:53
  SPEAKER_00: Bill Bullard from RCAF USA is my guest.
• 26:56
  SPEAKER_00: RCAF USA.com.
• 26:58
  SPEAKER_00: Is that the correct web address to uh to get in touch with your operation over there?
• 27:03
  SPEAKER_01: It's r dash r-c-a-l-f USA.com.
• 27:08
  SPEAKER_01: There's a dash between the R and the C.
• 27:10
  SPEAKER_00: Very good, very good.
• 27:12
  SPEAKER_00: All right, let's let's move on to what may be an even bigger issue.
• 27:17
  SPEAKER_00: Uh came out yesterday.
• 27:19
  SPEAKER_00: Donald Trump, President Trump, opened another front in his effort to address high beef prices Wednesday.
• 27:25
  SPEAKER_00: Yikes.
• 27:26
  SPEAKER_00: One of the scariest phrases that I've that I'm reading lately, Bill, saying his administration should consider changing federal regulations governing beef processing.
• 27:36
  SPEAKER_00: Is this more help for small processors that's involved with this announcement?
• 27:51
  SPEAKER_00: President Trump opened another front in his effort to address high beef prices Wednesday, saying his administration should consider changing federal regulations governing beef processing.
• 28:01
  SPEAKER_00: And I wondered if this is more air quotes help for the smaller processors.
• 28:08
  SPEAKER_01: Well, that's an issue that we've been involved with for many years, and that is trying to have scalable regulations for meat packers, because our current regulatory regime is based on having uh very large beefpacking plants.
• 28:24
  SPEAKER_01: And that was after we lost many of our local and regional plants back during the 80s.
• 28:30
  SPEAKER_01: Well, now that we are making a concerted effort to try to increase capacity through the development and establishment of smaller and regional packers, that they need some relief from a regulatory system that was designed for extremely large plants.
• 28:47
  SPEAKER_01: They need regulations that fit their operations, that allow them to be flexible, and that are less costly.
• 28:54
  SPEAKER_01: Some of the food safety uh records that need to be established in applications, are extremely expensive and designed to be so and very detailed.
• 29:05
  SPEAKER_01: And yet it is overboard for the smaller regional packers to have to comply with some of those current regulations.
• 29:12
  SPEAKER_01: And the other issue is that for many, many years, these uh local and regional plants, particularly those that were inspected by state inspectors, were prevented from marketing their output across state lines.
• 29:24
  SPEAKER_01: So we have been pushing for interstate shipment of state inspected beef and providing or allowing more flexibility for inspectors to ensure that our regional and local plants can be profitable.
• 29:37
  SPEAKER_01: So if we intend to create competition uh for the big four packers, then we do need to look at some regulatory reforms to incentivize and to not only incentivize the establishment of new packing systems, but to allow these current uh smaller packers to be profitable in this industry.
• 30:00
  SPEAKER_01: So yet another problem they face is the inability to sell their byproducts, where the largest packers are able to sell the byproducts for a for a profit.
• 30:11
  SPEAKER_01: Many of these smaller packers have to pay disposal costs to get rid of the hides and other awful, for example.
• 30:19
  SPEAKER_01: So there are many challenges that the small to regional packer faces that uh have simply have been ignored because our regulations were focused exclusively on the largest of packers.
• 30:31
  SPEAKER_00: So is what he announced yesterday truly aimed at trying to rectify that situation a little bit?
• 30:43
  SPEAKER_01: So we don't know.
• 30:44
  SPEAKER_01: We've been talking with the Congress and with the administration on the need to reform the environment for these smaller packers, regional packers.
• 30:53
  SPEAKER_01: And I I don't have enough details from what the president said to be able to apply that directly to some of the efforts that we've undertaken.
• 31:02
  SPEAKER_00: Yeah, yeah, absolutely.
• 31:03
  SPEAKER_00: Well, if we keep an eye on r-cafusa.com, as you as you find things out, I'm I'm certain that you'll uh you'll put it there.
• 31:11
  SPEAKER_00: Fair.
• 31:13
  SPEAKER_00: Sounds good.
• 31:14
  SPEAKER_00: Yes, yes, yes, sir.
• 31:15
  SPEAKER_00: Okay.
• 31:16
  SPEAKER_00: Another one here.
• 31:18
  SPEAKER_00: We're I'm gonna ask you what's the good news in a little bit, okay, Bill.
• 31:22
  SPEAKER_00: We gotta we gotta bring out some good news here.
• 31:24
  SPEAKER_00: But cattle from Mexico trickling across the border.
• 31:28
  SPEAKER_00: Not a not a whole lot of them.
• 31:30
  SPEAKER_00: Uh I think I I heard a count somewhere in the neighborhood of of two, three thousand so far have made it across, maybe not even that many, but they're starting to come across.
• 31:41
  SPEAKER_00: From what I hear, they're sending over some pretty heavy cattle without much margin left on them for finishers.
• 31:48
  SPEAKER_00: When you talk about these margin, you know, people who who rely on the margin to make a buck to make a profit, these cattle that are coming in aren't doing much to help them.
• 32:00
  SPEAKER_00: Is that the case?
• 32:02
  SPEAKER_01: Well, so some of the larger feedlots down in the south that had that whose business model depended on these imports, uh, when the imports uh were shut off, it created a void, and part of that void has been filled with beef on dairy.
• 32:18
  SPEAKER_01: So some of these feedlots have changed their operations in order to accommodate the beef on dairy animals.
• 32:26
  SPEAKER_01: And so now as these new imports are beginning to re-enter the United States, it may reduce the profit margins, but yet these cattle are bringing being brought into the United States at a price less than what our domestic production costs are.
• 32:42
  SPEAKER_01: And so there would certainly be an advantage to those feedlots to continue that process of bringing these imports in.
• 32:49
  SPEAKER_01: But the concern that we have for these imports is the reason the border was closed in the first place was because Mexico has had outbreaks of New World Screwworm.
• 32:58
  SPEAKER_01: And our position has been that all mitigation measures that the United States has undertaken should be strengthened and maintained until such time as Mexico can demonstrate that it has pushed the New World Screwworm back south of its southern border.
• 33:16
  SPEAKER_01: And that hasn't happened.
• 33:17
  SPEAKER_01: In fact, uh, the two states in Mexico that were deemed to be safe because they did not have active cases of New World Screwworm have since had active cases of New World Screwworm.
• 33:29
  SPEAKER_01: And so the U.S.
• 33:30
  SPEAKER_01: Department of Agriculture is somewhat taking the position that it doesn't matter how many new cases we have, every case will demonstrate that our mitigation measures are successful.
• 33:40
  SPEAKER_01: We had five instead of eight, for example.
• 33:43
  SPEAKER_01: And as a result of that, we think this is a high-risk venture, one that could create uh additional outbreaks in the United States.
• 33:51
  SPEAKER_01: And so our industry is risk averse in terms of animal health, and we view this to be a contradiction in our goals to maintain the safest and healthiest livestock herd in the world.
• 34:19
  SPEAKER_00: I haven't heard as much about it as I did maybe a month, two, three months ago, other than the border was going to be open.
• 34:28
  SPEAKER_00: And I did read that, I think that there was another case in Texas reported just this week.
• 34:32
  SPEAKER_00: But had why has it gotten quiet on that all of a sudden?
• 34:36
  SPEAKER_00: Have they taken their foot off the gas?
• 34:38
  SPEAKER_00: Are there things, you know, are they doing everything that they can, or are are we just sort of concerning ourselves with other things now, Bill?
• 34:47
  SPEAKER_01: Well, we have to give USDA credit for taking the steps that they have taken, closing the border, increasing the production of male sterile flies, which is the means by which to depopulate the New World Screwworm population, and to try to convince Mexico to cease the northward movement of cattle within their country from the southern areas where the screw worm is endemic, up to the northern sectors.
• 35:13
  SPEAKER_01: But as a result of those mitigations that have been put in place, I think we minimized the impact that this New World Screwworm would have on the United States.
• 35:22
  SPEAKER_01: We've had relatively few uh detected outbreaks in Texas and one in New Mexico, for example.
• 35:29
  SPEAKER_01: But that we don't yet know the extent to which this may be in the wildlife.
• 35:34
  SPEAKER_01: And we haven't seen any results or any reports, and I don't know how you would even know.
• 35:39
  SPEAKER_01: So what we do know is uh when Mexico has exterminated this pest, then we can breathe easily.
• 35:48
  SPEAKER_01: Right now we remain concerned.
• 35:50
  SPEAKER_01: What if there was a weather anomaly such as a hurricane?
• 35:53
  SPEAKER_01: How might that disrupt uh what appears to be a relatively uh safe position for us?
• 36:00
  SPEAKER_01: So we think that uh it's premature to reopen that border because there are factors that we have no control over yet.
• 36:07
  SPEAKER_01: And in fact, we haven't, we are, we are currently not producing the sufficient number of male sterile flies to combat a full-blown outbreak of this pest in the United States.
• 36:19
  SPEAKER_01: And we think that should be an absolute prerequisite to beginning to read the relaxation of our mitigation measures.
• 36:26
  SPEAKER_00: Here's here's a question you may not know.
• 36:28
  SPEAKER_00: I don't know.
• 36:29
  SPEAKER_00: I'm an Iowa boy.
• 36:30
  SPEAKER_00: I think of in terms of uh I when I would do any deer hunting, it'd be uh second season shotgun, which is usually early in December.
• 36:39
  SPEAKER_00: Are there maybe hunting seasons coming up down south in in Texas, New Mexico, in that area down there, that that maybe hunters can get out there and maybe pull in some specimens for us?
• 36:52
  SPEAKER_01: Well, then I don't know.
• 36:53
  SPEAKER_01: I don't know what the hunting season is down there, but we do we do know that they have quite a feral hog population down in the southern areas and and clearly other wildlife.
• 37:05
  SPEAKER_01: So I don't know if the hunting season is going to contribute to our body of knowledge as to how far this New World Screwworm has advanced in Texas, if it has at all.
• 37:15
  SPEAKER_00: Right, right.
• 37:16
  SPEAKER_00: Have you ever eaten wild boar?
• 37:18
  SPEAKER_00: I have not.
• 37:19
  SPEAKER_00: I haven't either.
• 37:20
  SPEAKER_00: I've I have the sense it's delicious.
• 37:22
  SPEAKER_00: I don't know why I think that, but uh, I bet it's got to be pretty good.
• 37:25
  SPEAKER_00: I've got I've got one more question, and this one may sort of come out of nowhere for you, may not have anything to do with anything, and if so, I can handle it.
• 37:39
  SPEAKER_00: But I'm I'm speaking to Sean Haney tomorrow afternoon on the program.
• 37:42
  SPEAKER_00: He's from Canada.
• 37:43
  SPEAKER_00: I want to talk to him about the Canada trade stuff, which is a whole nother issue.
• 37:49
  SPEAKER_00: I wonder if if there are any impacts that we need to consider with our souring relations with Canada that may have a direct or indirect impact on U.S.
• 37:59
  SPEAKER_00: ranchers.
• 38:01
  SPEAKER_01: So we maintain a significant trade deficit in the trade of cattle and beef with Canada.
• 38:08
  SPEAKER_01: And we have asked for reforms to resolve this, but we are actually importing from Canada about three times the volume of beef that we export to Canada.
• 38:19
  SPEAKER_01: And as a result, this has the effect of depressing domestic prices.
• 38:24
  SPEAKER_01: And of course, those additional imports coming from Canada are the tools by which the concentrated meatpackers can transmit their buying power upon domestic cattle producers.
• 38:37
  SPEAKER_01: They can use the increased volume of imports from Canada, for example, and Canada is a major importer into the United States, and the meatpackers are able to use those imports in order to leverage domestic cattle prices down, and they have for years.
• 38:52
  SPEAKER_01: So we have sought better balance between our trade uh flows with with Canada, but they have they they've won the trade war with the United States and the cattle and beef industries for years.
• 39:04
  SPEAKER_00: Boy, there's how how much of the trade imbalance that we've discussed earlier this afternoon is is related directly to Canada.
• 39:12
  SPEAKER_00: You said we import way more from Canada than than we export.
• 39:17
  SPEAKER_00: When we talk about that wide gap between imports and exports, how much does Canada contribute to that?
• 39:22
  SPEAKER_01: Well, they contribute greatly to that.
• 39:24
  SPEAKER_01: Canada, Canada, Australia, and Brazil are now our top importers or countries importing beef into the United States.
• 39:33
  SPEAKER_01: They are a major supplier of beef and cattle because we also import live cattle from Canada.
• 39:40
  SPEAKER_01: And of course, Canada has screamed the loudest about not wanting to disclose to American consumers beef produced in their country.
• 39:49
  SPEAKER_01: They believe that even their live animals brought into the United States should be eligible for a USA label.
• 39:56
  SPEAKER_01: And our position is consumers deserve to know the truth, and they the label should denote exactly from what country the animal was born, raised, and slaughtered.
• 40:06
  SPEAKER_01: And that's a contentious issue between us and Canada and has been for a long time.
• 40:11
  SPEAKER_00: Yeah.
• 40:12
  SPEAKER_00: Lots of contentious issues, Bill.
• 40:15
  SPEAKER_00: This I just feel like we're we're just sort of making spirals through this conversation because everything seems so interconnected, and none of it really seems to add up in favor of the producer.
• 40:28
  SPEAKER_01: And that's why we've lost so many producers.
• 40:31
  SPEAKER_01: I said earlier we've lost over half in the last four decades, and we've lost the competitive infrastructure within our industry, we're losing opportunities.
• 40:40
  SPEAKER_01: But what we have today that we've never seen before is an intense focus on the beef industry, an acknowledgement by an administration that says this is a national security issue.
• 40:51
  SPEAKER_01: And though we haven't gotten it gotten it right yet, uh, we're in the process of making proposals, offering ideas, solutions, and I think ultimately we will uh arrive at a long-term strategy with which to preserve uh for U.S.
• 41:09
  SPEAKER_01: consumers a strong, viable beef supply chain here in the United States.
• 41:14
  SPEAKER_01: We're we're in some rocky territory right now, though.
• 41:18
  SPEAKER_00: I'm gonna I'm gonna call that the the good news, the the rainbow at the end here, the the little pot of gold at the endbook end of our conversation.
• 41:26
  SPEAKER_00: The Trump administration does view the national food system and and beef as a as a big part of that, as America's favorite source of protein as a national security issue.
• 41:39
  SPEAKER_00: That's one thing that that I think is important to keep in mind.
• 41:42
  SPEAKER_00: I'm really glad that you mentioned that.
• 41:44
  SPEAKER_00: Would you have any any closing thoughts for us as as we wrap this up and and head for the shoot?
• 41:50
  SPEAKER_01: Well, I think the most important thing that could be done right now, immediately, is for Congress to pass mandatory country of origin labeling.
• 41:58
  SPEAKER_01: So U.S.
• 41:59
  SPEAKER_01: consumers can decide if they want their purchasing dollars to be supporting the strengthening of America's beef supply chain, or if they would simply choose to continue supporting foreign producers.
• 42:12
  SPEAKER_01: They don't have that opportunity today.
• 42:14
  SPEAKER_01: The multinational meat packers do not want them to have that opportunity.
• 42:18
  SPEAKER_01: We believe consumers have the absolute right to know from what country their beef is produced.
• 42:25
  SPEAKER_00: Well said.
• 42:26
  SPEAKER_00: Well said.
• 42:27
  SPEAKER_00: I think with that, what what we'll do is uh is move on.
• 42:31
  SPEAKER_00: Last time I talked to you, I asked you about the weather.
• 42:34
  SPEAKER_00: I said, Bill, if you look out your window, what do you see?
• 42:37
  SPEAKER_00: And you turned your head and looked out the window, and you said it was hazy, smoky from some wildfires there.
• 42:43
  SPEAKER_00: Would you turn your head once again and and tell us what's outside your window today?
• 42:49
  SPEAKER_00: Sunny and partly cloudy.
• 42:51
  SPEAKER_00: All right, I like the sound of that.
• 42:52
  SPEAKER_01: The smoke must have cleared then, did it?
• 42:54
  SPEAKER_01: We've had some rain that has kind of cleansed the skies, so it's better today.
• 42:58
  SPEAKER_01: Much better.
• 42:59
  SPEAKER_00: Very good.
• 43:00
  SPEAKER_00: We're much cooler here in Kansas City as well.
• 43:03
  SPEAKER_00: You know, a fair amount of beef is passed through through Kansas City.
• 43:06
  SPEAKER_00: Some of it's straight onto my plate.
• 43:08
  SPEAKER_00: I'm I'm a fan.
• 43:09
  SPEAKER_00: I'm a big fan.
• 43:10
  SPEAKER_00: You slather a little barbecue sauce on it, you cook it for a few hours.
• 43:13
  SPEAKER_00: Boy, howdy, you got something going.
• 43:15
  SPEAKER_00: The National Weather Service says dangerous heat will persist across the southwest United States through Friday with daytime highs 110 to 115.
• 43:23
  SPEAKER_00: Heat across the southern plains will briefly ease to near normal by late week.
• 43:28
  SPEAKER_00: Strong to severe thunderstorms may produce damaging wind.
• 43:31
  SPEAKER_00: Hail, a tornado or two.
• 43:32
  SPEAKER_00: Heavy rain and flash flooding across parts of the mid-Atlantic and Northeast.
• 43:36
  SPEAKER_00: Heavy rainfall threat continues across the Gulf Coast.
• 43:41
  SPEAKER_00: And Bill, before I cut you loose here, just a few items of mild interest.
• 43:45
  SPEAKER_00: In 1859, good lord, Mr.
• 43:48
  SPEAKER_00: Ford, what have you done?
• 43:50
  SPEAKER_00: Petroleum discovered in Titusville, Pennsylvania, leading to the world's first commercially successful oil well.
• 43:58
  SPEAKER_00: In 1913, Swedish engineer Gideon Sundbach of Hoboken, New Jersey applies to patent an all-purpose zipper.
• 44:07
  SPEAKER_00: The zipper's been around uh just a little more than a hundred years.
• 44:11
  SPEAKER_00: I thought maybe they'd have come up with that before that.
• 44:13
  SPEAKER_00: And finally in 1965, the Beatles spent an evening with Elvis Presley at his Los Angeles, California home speaking about the event to Mick Jagger.
• 44:24
  SPEAKER_00: Ever disillusioned with everything, John Lennon reportedly advised never meet your heroes.
• 44:31
  SPEAKER_00: I don't know what took place there in that meeting between Lennon and Elvis, but apparently John Lennon walked away disappointed.
• 44:39
  SPEAKER_00: Bill Bullard, doggone it.
• 44:41
  SPEAKER_00: I I sure appreciate you hopping on here so quickly after we spoke with you before we didn't even get into sheep.
• 44:48
  SPEAKER_00: Someday we're gonna talk about that.
• 44:50
  SPEAKER_00: I I promised you last time off off there that we were gonna get to it, and there's just so much going on.
• 44:56
  SPEAKER_00: I I appreciate that you were able to put put a bright light on it and talking about the the beef system is viewed by our administration as a matter of national security, and I I think that's gonna be a tremendous help to us.
• 45:11
  SPEAKER_00: Bill Bill Bullard from RCAF USA.
• 45:15
  SPEAKER_00: Any closing thoughts for us, Quick?
• 45:17
  SPEAKER_00: Nope.
• 45:18
  SPEAKER_00: Just have a great day and uh we're gonna keep at it.
• 45:21
  SPEAKER_00: All right, all right, sir.
• 45:23
  SPEAKER_00: Well, if things if things come up that I just gotta know about, you're you're kind of my go-to guy.
• 45:28
  SPEAKER_00: So I I may hit you up for more information if this news cycle doesn't slow down.
• 45:34
  SPEAKER_00: Are you game?
• 45:35
  SPEAKER_00: You bet.
• 45:36
  SPEAKER_00: Outstanding, sir.
• 45:37
  SPEAKER_00: Well, and may I uh direct you to trade the news for keeping my squad updated on the news that moves the markets.
• 45:43
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• 45:56
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• 46:00
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• 46:07
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• 46:12
  SPEAKER_00: Jed Sidwell back first thing in the morning to get you set up with a taste of that Ag Bull intel.
• 46:17
  SPEAKER_00: And then I've got the Alberta Breeze tomorrow afternoon.
• 46:20
  SPEAKER_00: Sean Haney for the view from up north.
• 46:24
  SPEAKER_00: Should be another really great conversation.
• 46:26
  SPEAKER_00: Bill Bullard, uh, thank you so much for being on the program.
• 46:29
  SPEAKER_00: Come back tomorrow for more XQL, everybody.
• 46:31
  SPEAKER_00: We appreciate you.