An age-old pearl of wisdom in the auction business still glitters fresh with truth: The more cattle you have to sell, the more buyers will show up to bid on them. And, the more buyers there are to bid on the cattle, the more cattle you get to sell next time. In other words, competition is a self-fulfilling reality, just like the lack of it.
A new cattle marketing pearl seemingly just taking shape, however, may prove just as worthy to contemplate: Markets you are used to selling your cattle through will likely lose or gain significant price competition in the near future.
Here's why. Philosophical bickering among individuals and groups within the beef industry appears to be scrawling indelible lines of belief in the sand. Sooner rather than later, crossing and not crossing these lines will likely impact the market.
For example, there's a camp represented by groups like the Livestock Marketing Association (LMA) and the Ranchers-Cattle Assistance Legal Fund (R-CALF). They seem to disagree with many of the trends afoot in the industry, trends like free international trade and capitalism without the benefit of legislation.
LMA has an ongoing legal battle to have the beef checkoff declared unconstitutional. And, both organizations publicly support legislation to ban packer ownership in the cattle feeding industry. That's even though economists predict passage of such legislation would immediately drain price and equity from the industry, both short- and long-term.
In addition, both trumpet the joys of mandatory country-of-origin labeling, something that may sound warm and fuzzy but likely also necessitates mandatory national cattle identification as a precursor.
On the other side of this philosophical divide you have the National Cattlemen's Beef Association (NCBA) and the Cattlemen's Beef Board, which administers the beef checkoff. Along with them are many state organizations and producers who rarely agree unanimously on anything. But they ardently believe in keeping government out, letting the markets determine who aligns with who and how come, and helping themselves through individual competitive spirit and collective self-help programs like the checkoff.
By now, if you're not at least irritated as you read about one group or the other, then you don't care. And if there's one thing both sides of this debate have in common it's that they care and believe strongly in what they believe.
Here's where allegiance as an emerging economic force comes in. Given the increasing division in the industry over fundamental economic principles and value beliefs, how long before buyers and sellers begin choosing service providers and suppliers based on which side of the fence they call home?
In fact, this reality was emerging long before construction of what many would argue is its most visible by-product thus far. A group of livestock marketers recently founded the Livestock Marketing Council (LMC) beneath the NCBA umbrella (see story on page 56).
The true reason and official word may indeed be that LMC offers marketers an alternative membership organization in a segment of the industry dominated for the past five decades by LMA. However, it's also true you can find current and former LMA members plumb giddy about having the chance to join an organization that not only represents them as individual marketers but also their collective value beliefs within the cattle industry.
So, how long before a feedlot won't buy from this sale barn or that order buyer because of the crowd they run with? How long before a cow/calf producer will sell to one buyer over another based on philosophy as much as price? Bet on it.
When the worm turns, and if it squirms even close to the apple described above, competition within and between these respective markets — separate industries, really — will shift dramatically and fast. Doors of former opportunity will be closed for some, while others will see them open wider.
Sell in a market where there used to be plenty of competition, and it may have fled. Ride with the “right” side, and you win big. Bounce along with the “losers,” and you might still win, but it will probably be on a whole 'nother whale-versus-water bug kind of level.
Spun differently, the philosophical fission at work in the industry may prove to accelerate the division of the cattle business into the distinct — rarely if ever shall they meet — commodity and value-added camps many industry players have long predicted.