Tag Archives: Nebraska Farm Bureau

The cattle market from late 2019 to 2020 has experienced two black swan events. The first being the fire at the Tyson packing plant in Holcomb Kansas in which live cattle futures plummeted the following day. Whole sale beef prices, on the other hand, quickly shot up. A very similar reaction happened when COVID-19 started to disrupt the meat supply chain and as the calendar nears June, several live cattle futures contracts are still trading below $100.

The black swan and volatile market have acted as gasoline to an already burning fire among cattlemen about fed cattle marketing and price discovery in the industry. Senior Economist for Nebraska Farm Bureau, Jay Rempe, wrote about the topic in a recent publication of “Agriculture Economic Tidbits”.  Rempe pointed out that negotiated purchases continue to be fairly strong in Northern states but Southern states are almost non-existent in cash trade.

The article cites that, “Nebraska averaged 41 percent of total transactions between 2016-2020 on an annual basis according to the U.S. Cattlemen’s Association. In contrast, cash purchases in the Texas/Oklahoma/New Mexico region accounted for 9 percent. Weekly and monthly data will vary quite a bit around these averages. Negotiated purchases in Nebraska between 2014-2018 accounted for 37 percent of the total U.S. negotiated transactions, according to research by agricultural economists at Kansas State and Iowa State. The researchers also found 85 percent of negotiated purchases nationally were for a 0-14 day delivery and 15 percent were for 15-30 day delivery. Nebraska and Iowa accounted for 63 percent of the deliveries in the 15-30 day window. In his research of fed cattle markets, Dr. Stephen Koontz of Colorado State concluded, “Price discovery in the national fed cattle market displays no problems.” However, cash markets are doing less than half the price discovery they once did. Problems appear at the regional level, particularly in the southern plains. As a result, cash markets in the northern plains, Nebraska, and futures prices are becoming more prevalent in price discovery.”

The lack of cash trade have many cattle producers concerned about market manipulation by the highly concentrated meat packing industry. The cry for reform has reached all the way to the US Senate with Senator Grassley (R-IA) and Senator Tester (D-MT) introducing the 50/14 plan that would require packers to purchase 50% of their kill in the cash market and slaughter those cattle within 14 days.

In an interview with the Rural Radio Network Rempe said, “This could be the first of its kind legislation that would require a business to purchase its raw materials in a certain market setting.” Rempe noted anytime legislation like this is presented, it is good to look at both sides of the story and ultimately decide what is best for the cattle industry.

You can hear Rempe’s full thoughts and what other options may be available for fed cattle marketing here:

LINCOLN, NEB. – The Nebraska Farm Bureau is urging the Small Business Administration (SBA) to modify the agency’s Paycheck Protection Program (PPP) to allow more farm and ranch businesses experiencing COVID-19 financial pressures to utilize loan assistance offered through the program.

“According to analysis conducted by the American Farm Bureau Federation, only 1.3 percent of PPP program funds were distributed to the agricultural sector of the U.S. economy. The low level of funding is likely due to PPP rules preventing farmers and ranchers from participating in the new program,” said Steve Nelson, Nebraska Farm Bureau president. “Agriculture, food, and related industries account for roughly 5.4 percent of the U.S. gross domestic product so it would seem the percentage of PPP funding to the agricultural sector would be higher.”

Current rules mandate PPP borrowers must spend 75 percent of loans on worker salaries, yet a large share of farm and ranch family businesses are organized as sole proprietors who either have a small number of employees or in many cases are self-employed. The 75 percent threshold prevents many of those businesses from being able to take full advantage of PPP loan forgiveness provisions.

“We’re encouraging SBA to reevaluate the worker salary threshold to mitigate this barrier to program utilization,” said Nelson.

While the SBA recently allowed farmers and ranchers to utilize Schedule F tax returns to reflect payroll to themselves for purposes of calculating PPP loans, many farm and ranch families filed negative Schedule F tax returns as a result of multi-year agriculture commodity price declines and last year’s devastating flooding throughout the Midwest.

“We appreciate SBA’s actions to recognize Schedule F returns to help farmers and ranchers participate in PPP, but we encourage SBA to find another way to account for payroll expenses for small businesses locked out of PPP because of a negative Schedule F tax filing,” said Nelson.

In comments to the SBA, Nebraska Farm Bureau also urged the agency to increase the amount of loans that could be allocated for rent, in addition to broadening the type of business utilities that qualify for loan forgiveness.

“The purpose of the PPP is to aid small businesses in the face of the pandemic. Broadening loan eligibility parameters as it relates to payroll costs will make PPP much more helpful to farmers, ranchers, and other main street businesses that involve the self-employed or those with few employees,” said Nelson. “It’s our hope SBA will make these changes to expand participation opportunities for our members and others seeking much-needed assistance.”

LINCOLN, NEB. – U.S. Rep. Jeff Fortenberry has been designated a “Friend of Agriculture” by NEFB-PAC, Nebraska Farm Bureau’s political action committee. Fortenberry, who is seeking re-election to the U.S. House of Representatives in Nebraska’s First Congressional District, received the designation based on his ongoing efforts to advance the well-being of Nebraska’s farm and ranch families, said Mark McHargue of Central City, chairman of NEFB-PAC and first vice president of Nebraska Farm Bureau.

“Congressman Fortenberry has worked on several key issues of interest to our members. He’s been supportive of expanding market opportunities for agricultural products through new and specialty markets. He voted to support major tax reform to help lower the tax burden on Nebraska’s farm and ranch families. He’s also been a leader in working to find solutions to skyrocketing health care costs that have created significant financial hardships on farmers and ranchers,” said McHargue.

As a member of the House Appropriations Committee, Fortenberry has played a critical role in funding essential federal initiatives, while working to bring fiscal responsibility to Washington.

“Congressman Fortenberry has continued to demonstrate a strong commitment of service to agriculture. We’ve greatly appreciated his efforts and are proud to count him among those receiving our “Friend of Agriculture” designation,” said McHargue.