Market Closeout
By cattlemen for cattlemen.
The industry is evolving and changing. Most of those changes can be classified as either positive or inevitable, but not all the changes are inherently good for the commercial cow-calf business. Our industry has always been based on the concept that a rising tide raises all boats. The cow-calf industry is the most diverse and the most fragmented of all segments of the industry. As a result, we do not have the dominant players or concentration of capital that other segments do. Necessity has forced us to work together. Whether it be extension and the land-grant university models, the checkoff or even breed associations — we learned quickly that together we were much more effective.
We tend to be an independent bunch. That makes our commitment to work together for the benefit of all even more impressive. With that said, the marketplace is moving very rapidly and creating more opportunities and challenges in the process. This has led to a lot of entities entering these areas. Free enterprise is a wonderful thing, but there are some disturbing trends that we need to be cognizant of as an industry, as well.
We tend to be an independent bunch. That makes our commitment to work together for the benefit of all even more impressive.
In the marketplace today, there are two distinct ways to garner premiums: 1) Create more value for the entire system, or 2) Create scarcity by limiting market access to all but a select few individuals. Both have merit, but limiting market access may benefit a few while harming the overall industry and adding additional costs. I believe in capitalism and the concept of creative destruction, and I don’t know of any business that wouldn’t jump at the concept of exclusivity and eliminating competition.
However, from an industry perspective, it is important that we provide a countervailing force to some of these initiatives. I believe the industry has an important role to play in helping to establish a framework in which private entities can compete that facilitates continuous improvement — not eliminating competition, but making sure that everyone has access to compete.
Market access and a level playing field are important going forward, whether we are talking about the overall marketing system, or issues like sustainability or information systems. Dominant firms working together can expand margins for themselves by limiting market access, but in the process lead to even more concentration and consolidation.
That is one of the things that excites me about the programs offered by the AngusLinkSM program. They were not created to be profit centers. Rather they were created to expand opportunities and margins for all producers by giving them access to markets and programs. They are designed to bridge the gap between the haves and the have-nots in the marketing system, and to allow everyone the opportunity to create value and capture additional margins.
Certainly, Angus breeders created these programs with their self-interest in mind. Helping commercial cattlemen become more profitable helps them to sell more bulls and to be more profitable, as well. Still, I think it is important that producer-driven and producer-controlled entities are helping to shape the direction of these programs, as it is increasingly obvious our objectives are significantly different than publicly traded companies who are more concerned about generating profits from cattlemen than increasing the profitability of cattlemen.
Editor’s note: Troy Marshall is the director of commercial industry relations for the American Angus Association.
