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Equity Cooperative shares reports, examines lingering livestock issues

March 24, 2014 | 0 comments


Increased cattle and calf numbers and strong prices at its auction barns and in other marketing channels were the highlights for the 2013 business year, members of the Equity Cooperative Livestock Association learned at the district III annual meeting.

Equity vice-president for finance Nancy Bilz reported that 757,088 cattle and calves — an increase of 4 percent from 2012 — were sold through the cooperative during 2013. But hog and feeder pig numbers were down by 8.5 percent to 54,286 and the total of sheep and goats was off by 4 percent to 46,509.

Payments to livestock shippers for those animals topped $507.465 million compared to $488.103 million in 2012. From those transactions, Equity earned a net operating revenue of $13.862 million — an increase of 5.45 percent from 2012.

Bilz pointed out that Equity realized an average income of $16.16 per head on the 857,883 head of livestock sold through its markets during 2013 while the cooperative's costs were $14.30 per head, leaving a net margin of $1.86 per animal.

Equity's operating expenses of $12.267 million for 2013 represented an increase of 8.8 percent from 2012. Bilz attributed more than 80 percent of this to the addition of employees and the extra work hours for handling the growth in cattle and calf volume.

For the net proceeds from operations, however, Equity had a decrease of $291,000 from 2012 for a total of nearly $1.603 million in 2013. Thanks to a strong stock market during 2013, which boosted the holdings in the cooperative's defined benefit plan by $1.175 million, Equity was able to report a comprehensive income of $2.587 million for 2013 compared to $1.458 million in 2012.

Related topics

In addition to the market volume and economics, there are other topics that deserve attention, Equity chief executive officer Charles Adami remarked. He listed them as the fate of the long-stalled federal legislation on Country of Origin Labeling (COOL), antibiotic residue in cattle sent to slaughter markets, the livestock checkoff fee, animal welfare, and the efforts to define and pursue "sustainability" in agricultural production.

Regarding "sustainability," Adami said it is a word or concept that lots of parties are jumping on the band wagon for though with very differing definitions for it. He listed such entities as JBS USA (a major meat packer), Wal-Mart, Elanco, McDonald's, and the World Wildlife Federation as members of that group.

The only thing that's "sustainable" about the exercise is the attempt to find a common definition, Adami remarked. He cited Webster's dictionary for its definition of "sustainable" as being a method of using resources so they are not depleted or permanently damaged. If that applies to protecting the environment, social responsibility, and economic viability, then that's something that the Equity cooperative has been doing for many years, he stated.

Not so COOL

Adami traced the legislative, judicial, and international sparring history of COOL from 2002, when it was authorized in the Farm Bill but then was not funded for implementation. At the moment, its fate resides in the World Trade Organization's (WTO) effort to resolve suits by Mexico and Canada to force the United States to comply with the COOL stipulations for tracing the origin of livestock with labels on retail meats, he explained.

Arguments in favor of COOL centered on the belief that consumers want that information while opponents have focused on the cost and practicality, Adami pointed out. He noted that COOL would not apply to retailers selling less than $230,000 in meat products per year, to restaurants, or to processed meats.

If the WTO ruling is in favor of Mexico and Canada, they could be eligible for cash payments from the United States or they could retaliate with higher tariffs on imported products from the U.S., Adami observed. His take on the issue is that a lot of money would be expended in order to generate the information and for placing COOL labels on retail packages of meat.

Antibiotic residues

While Wisconsin had a clean record during 2012 in terms of not having a single repeat violator shipper of a bovine with antibiotic drug residue in its meat, that record is not clean any more, Adami reported. He noted that there were eight repeat violators in the state during 2011 and seven in 2013.

As a middleman for some of those livestock, Equity is getting an increasing number of calls — in equal numbers from both dairy cow and bob veal calf slaughter plants — about potential or actual violations, Adami indicated. He said the number of those calls has increased from an average of 14 per month to 21 in more recent months.

Adami explained that Equity is required to provide the name of the animal shipper in those instances. He noted that members of the Wisconsin Veterinary Medical Association have participated in about 200 meetings during recent years in an effort to educate farmers and others involved in the administration of antiobiotic drugs to cattle on how to prevent drug residue incidents.

Beef checkoff

"You're like Congress" about not being able to get anything done was the comment made by U.S. Secretary of Agriculture Tom Vilsack to representatives of an agricultural coalition that is trying to find ways to "enhance" the marketing checkoff program on cattle sent to slaughter, Adami indicated. He is a member of that group, which he agrees "has made no progress in two years."

Adami noted that the beef checkoff rate, which applies to beef and dairy cattle sent to slaughter, has been at $1 per head since it was instituted in 1985. He said members of the coalition have had trouble even defining whether "enhance" means increasing the fee or changing who administers the funds and runs the beef promotion programs.

Beef market resume

In a special presentation at the meeting here, Reedsville area dairy farmer Randy Geiger, who is one of three Wisconsinites on the National Beef Cattlemen's Association's (NCBA) 100-member board of directors, pointed out that 50 cents of the $1 goes to that organization while the other 50 cents goes to state or regional groups such as the Wisconsin Beef Council.

The NCBA, which receives frequent criticism from some sectors in part because its membership includes representatives of meat processors, has about a $40 million annual budget, Geiger stated. He said it pays $250,000-$300,000 per year to the U.S. Department of Agriculture as a fee for overseeing the appropriateness of its operations and that it is steering much of its spending on promotions to the social media in order to reach the 20-34 year olds.

Dairy animals provide about 25 percent of the nation's beef supply but they have been accounting for about 90 percent of the drug residue violations, Geiger indicated. He said beef is at somewhat of a disadvantage on consumer preference in part because it takes longer to prepare than chicken or pork.

The market outlook for 2014 in the United States suggests a 3.5-percent reduction in beef supply and consumption compared to increases of 3.7 percent for poultry and 1.6 percent for pork, Geiger reported. He cited concerns about the toll that a virus is taking on the hog population in the United States and other countries and about the possibility of a shutdown of beef slaughter plants because beef farmers are gearing up for higher production by keeping more of their females.

Animal welfare

Adami warned that animal rights groups will not relent in their efforts to uncover instances of livestock abuse and in trying to influence others in the food chain to stop consuming meats. He said Equity is getting calls from other parties in the industry about this issue.

For its part in addressing consumer concerns, Equity has formally launched an animal welfare program at its facilities, according to executive vice-president and chief operating office Tod Fleming. He said this will involve daily and weekly self-checks by employees along with observations and audits performed by members of the cooperative's executive team.

Equity has begun a corporate training program for its employees on proper animal handling practices and on observing the federal Occupational Safety and Health Administration's standards regarding employee safety, Fleming reported. He noted that several of the auction barns are being upgraded with lighting, the addition of skidsteers, and waterers for the safety of employees and to ensure the welfare of cattle while at the facilities.

District III director Steve Schleis reported that the directors held meetings during the summer of 2013 at the facilities in Richland Center and Waukon, IA in order to get a first-hand look at them. He noted that Equity facilities were bursting with cattle volumes at times and that a new computer program is being installed to service the market system.

Local market resume

Reedsville auction market manager Greg Cummings assured members that the auctioning process boosts the prices for their livestock, hay, and machinery in sales at the facility. He indicated that a steady annual increase in the cattle and calf volume at Reedsville is due in large part to the vibrant dairy sector in the region.

The 40-55 loads of hay brought to the weekly sale on Thursdays at Reedsville is probably the highest number for any such sale, Cummings suggested. He noted that reloading services are available for hay buyers. He announced that a machinery consignment sale is scheduled for Saturday, April 26.

Cummings is pleased with interest shown by the school and other youth groups who have scheduled visits during livestock auction hours. He reported that an annual party sponsored by the Reedsville market raises $1,800-$2,400 that is contributed to youth groups such as 4-H and FFA, many of whose members are not from farm families.

'A Good Way to Grow' Project

To support 4-H and FFA programs in Wisconsin, Iowa, and Illinois, Equity is donating 10 cents for each animal sale through a venture titled "A Good Way to Grow" that will continue through the end of June. At its halfway point, that project has raised more than $45,000.

Meeting guest Brenda Scheider, who is the director of development for the Wisconsin 4-H Foundation, noted that of the 350,000 4-H club members in the state about 60 percent live in metropolitan areas. She said the organization will also be launching a "Friends of 4-H" program, which will appeal to alumni for support.

To draw more attention to its support of 4-H and the FFA, Equity devised a 24-part questionnaire about those two organizations that it asked its members to answer during the 10 district meetings held from March 13 to 26.

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