Local Cattle Producers ‘Not Happy About It’

EYE ON AGRICULTURE

President Donald Trump kicked a hornet’s nest this week, telling American cattle ranchers they “have to get their prices down,” while touting his tariffs and a loan deal with Argentina. He said the United States is going to start importing some beef from the South American country.

But how much would import beef impact the prices consumers are paying at the grocery store?

Local rancher Vic Choate has been raising cattle his entire life, and says he and fellow producers have some definite opinions on the subject.

“Well, we’re not happy about it,” Choate said. “Nobody over here is, and, you know, honestly, nobody can keep track of what Trump’s trying to do tariff-wise.

“You know, one day it’s a hundred percent, the next day it’s ten percent.

“He’s trying to make individual deals with every single country, and nobody can follow him. Nobody knows what’s going on.

“The rural people, by and large, the farmers and ranchers and everybody, they were for him nearly a hundred percent, because, you know, they couldn’t take the Biden group, and they thought they were doing the right thing.

“But lo-and-behold, nobody can keep up with him.”

Putting Things in Perspective

Choate said there’s plenty the American people don’t know about how the livestock industry operates, and understanding how the market works helps put everything into perspective.

“They made a statement today, they’re going to let 80,000 metric tons into the country,” he said, “And that’s quite a lot of Argentine beef.

Now, it’ll be frozen, and it’ll be ground beef, basically. It’s not going to be the rib-eyes and all the better cuts, because those are generally fresh, and they’re done here in the United States.

“So, what that ground beef is going to do is dilute the value of our old packer cows, and our packer bulls, and keep the ground meat cheaper.”

Policies That Help the People

Choate said he feels like the United States has forgotten some important policies that helped put American agribusiness on top, and made life more livable for everyone.

“For the last 60 to 80 years, we’ve had a cheap-food and cheap-fuel policy in the United States,” he said, “And Washington can placate 80 percent of the population by just keeping those two things relatively inexpensive.

“And then everybody else can sort of get by and make a living, that sort of thing — they can’t choke ’em out.”

Choate talked about how everything is connected, noting that cheap fuel helps farmers produce and deliver affordable food.

When it comes right down to it, it’s all about survival, and while it may seem like ranchers are making bank right now, Choate said you have to look at the long-term conditions of their business to see how lean years and fat years barely offset one another most of the time.

“All we’re asking is to get even, and make a little money,” he said.

A Perfect Storm

Choate talked about the forces currently impacting the cattle market.

“What we have here is a coming together of a lot of absolutely incredibly-difficult things at one time,” he said. “With drought and high cost of production and that sort of thing. So it’s kind of a perfect storm, which has led to the higher beef prices.”

“Our numbers are the lowest since 1951 — cow numbers, across the nation — many of us in the business could see it coming.

“We would always watch, and listen to the government reports saying these cow herds are only 1-percent lower.

“We heard that for the last seven years, and that was baloney. We knew it.”

This is a Beef Town

Choate explained how the slow attrition of the herds has played out, talking about the slaughter end of the business.

“We had one of the two best packing plants in Texas right here in San Angelo,” Coate said, “Over at Lone Star [Beef], golly, for years and years and years, they were killing 1,200 to 1,400 [head] five days a week.”

Choate said lack of available grass made putting new heifers in the pasture seem like a losing proposition, but taking so many cows out of the production stream without replacing them created new problems.

“We were running out of cows,” he said.

Choate said that while some ranchers threw in the towel, the ones that didn’t tightened their belts just to stay in business, barely scraping by while they waited for conditions to change.

“All of a sudden, and within a year’s time, we’ve seen all-time high prices,” he said. “Well, we’re supposed to, in a free and open market.

“So, suddenly, we’re getting along pretty good for a change, and selling some calves and that sort of thing, and then all of a sudden, the president and the congress wake up and say, ‘Whoa — wait a minute! Y’all make too much money. We can’t have that.'”

Interfering with the Market

Choate said this isn’t the first time he remembers an administration putting their thumb on the scales, recalling when they imposed a price ceiling in early 1973.

“I was around when Nixon did this in the 70s,” he said, “Nixon decided beef [prices] got too high, because we were out of cattle, and so he put a freeze on beef, and it diluted the value of our product.

“They did this early in the year, and along about June or July, they said, ‘OK; we’re going to lift the freeze in August.’

Choate said in the confusion that followed, ranchers with fattened cattle in the feed yards held on to their cows, hoping prices would rise.

“They said, ‘Well, as soon as this freeze is off, the price of beef, it’ll go straight up,'” he recalled.

“What happened was we had too many fat cattle held back that should have been marketed.

“All of a sudden, as soon as the freeze was off, everybody wanted to sell their cattle at the same time, and the market went straight down.”

Choate said in his experience, the market rarely responds in the way the government expects it to.

“The government has no business in business,” he said. “They’re not business people. They’re government people.

“They don’t have any business in our business. And now Trump wants to be in everybody’s business, and lo-and-behold — it’s not good.”

He said ranch producers talk about this all the time, and most are in agreement on this point.

The Big Picture

Choate said nothing is going to happen with the Argentina deal overnight, and in fact, it’s going to take quite a while for that situation to develop.

“It’s not going to show up for the next six months,” he said, “It’s going to take a while to get all the infrastructure and stuff back in line.”

Choate talked about the cattle market in Argentina, pointing out the slaughterhouses in that country already have customers, so in order to make a difference in the United States market, they would need to cut back on deliveries elsewhere.

He said it seemed like a lot of trouble to go to just to prop-up a foreign economy.

“We loaned them $20 billion, which is quite a lot, trying to prop up their dollar,” he said, “I don’t think it’s going to work, and we’ll end up losing that money.

“Trump thinks we can offset it by taking all their meat.

“Well, it doesn’t work that way. What it’s done … it’s sort of depressed our market over here.”

On the Cattle Market

Choate talked about how modern cattle sales work, dependent on the commodities market, and how buyers and sellers feel about their positions in the market, also known as “futures.”

“Futures are insurance,” he explained. “All the insurance in the world is exactly like futures — only it’s on bigger levels.

“The futures market is where one guy says, ‘I’ll take a position,’ and another guy says, ‘OK, I’ll let you.’

“One guy’s got his money on the market going down, and I’m betting it’s going to go up.

“What’s happened here, for about the last eight months, we’ve had really, really strong buyers — hedge funds and people like that — and they are real bullish on cattle; the beef market.

“More so than pork, chicken, or anything else.

“Pork and chicken can be produced so much faster than beef; beef is slow, and it’s become a premium item ever since COVID.

“So, it’s really the futures running our markets way up, and we’ve been able to benefit from it.

“But now here [Trump] comes in and says, ‘We’re going to import thousands of pounds of ground beef into the United States’ … anyway, it sounds to me like we’re doing the same thing every other politician does; we’re just trying to buy votes.”

Vic Choate is a graduate of San Angelo Central High School and Angelo State University. In high school he served as president of The Future Farmers of America, and after college, he spent two years in Africa, teaching the livestock marketing business to the people of Tanzania.