Ag Tribes Report: Bill Bullard CEO of R-Calf

Vance Crowe [00:00:00] The Ag Tribes report is brought to you by Farm Test, a field trial design, execution, and analysis service that makes it easy to ask your fields which management practices perform best to start your field trials, visit farm test, ag and Legacy Interviews, a service that video records individuals and couples telling their life stories so that future generations have the opportunity to know their family history. Here's Legacy Interviews customer Zach Smith describing why he purchased the service for his father and the value it brings to his family. Been following your podcast and I saw this service that you were starting to offer, and I thought that's kind of an interesting idea. This might be a really cool thing, not only for my dad, for his 70th birthday, but for our family and our lineage to come for a long time. And I told other people about the idea. They're like, I would give anything to be able to go back and watch a video of my mom or my dad, and to be able to show my kids who never had the opportunity to meet 'em, my own children, I think question who I am or why I am the way I am. But when you can see that in a generation before from like grandpa or grandma, and it starts to connect the dots across multi-generations about who we are and, and why we are who we are. I couldn't be happier with the investment. I told you this before, I'd pay double, at least probably for the value of what I ascertained. It's, it's an investment, but it's an investment that will stand the test of time. So thank you.

Vance Crowe [00:01:37] Welcome to the AG Tribes report, a breakdown of the top stories affecting the culture of agriculture with your host, Vance Crowe. The report begins in 3, 2, 1. Let's begin. Welcome to the Ag Tribes report. I'm your host, Vance Crowe. Each week I bring a co-host to represent the perspective of one of the many ag tribes that collectively make up US agriculture. This week I am joined by Bill Bullard. Bullard serves as the CEO of our calf, the nation's largest cattle trade association, exclusively representing independent cattle producers, formerly a cow calf producer in South Dakota. He is known for his advocacy and legal and policy arenas to protect US cattle producers from what he perceives as unfair trade practices and market control by meat packers. Bill, welcome to the Ag Tribes report. Glad to be here. Thank you. This week we're gonna discuss the North Dakota's fierce wildfires, the USDA's new Market competition rules, McDonald's lawsuit against major meat packers and the Onaga County. The Onaga nations got some land return to them after several hundred years. We've got only 30 minutes to cover the news and hear Bill's perspectives, his Peter Thiel paradox and his worthy adversary. So we're gonna jump straight into the headlines Before I talk about any stories, I, I do wanna mention I ran into Will Wisner on the, on my way outta the building today, you might recall for, he's a past podcast guest that is a former military veteran, and he went down to North Carolina to work with some of the people that are suffering from the flooding.

Vance Crowe [00:03:20] He says it is absolutely catastrophic that the news is not covering it, and that there are hundreds of school children missing and he believes up to thousands of people that are either missing or dead. And so our hearts go out to them. This is not a story we're covering today, but I do think a very serious thing, and one that I definitely didn't understand until I talked to Will, just how bad it was. So now moving on to the headlines. This first story was suggested by Bridget Riddel, north Dakota's fierce fight against ramp paging wildfires. North Dakota is currently grappling with several wildfire fires that have led to significant impacts across the state, particularly the western regions. The extent of the damage over the past few days is over 90,000 acres, and many of these fires have resulted in at least two deaths and eight injuries. The, there is some positive news as four out of the six fires are contained. However, the battle against the remaining fires continues. As one fire is covering 77,000 acres is only 16% contained. Bill, you are from the area that can get wildfires and all of this sorts of craziness. What are you hearing about these wildfires and are we anywhere near the end of wildfire season?

Bill Bullard [00:04:40] Well, the fires are devastating and they're on top of a widespread drought that the Western North Dakota is experiencing in Western South Dakota and Eastern Montana and Wyoming. And much of this area is a flame right now as a result of these fires. And until we get the snowfall rainfall, and, and if we can, we probably aren't going to contain these fires. But what's exacerbating the problem is high winds. There has been reports of 75 mile an hour winds, you know, that are really pushing these prairie prairie fires. And the effect of these fires could be to drive independent cattle producers out of business. They're, their feed costs may be astronomical this fall. They may lose cattle in the fires. And so this is just devastating for independent cattle producers and the communities that they support. Yeah,

Vance Crowe [00:05:32] Gosh, I hadn't even really thought about that. But it's gotta be alfalfa fields and just regular pastures just burned up and now you've gotta pay for that in order to fatten the cattle up and it's gotta be just a, just a huge burden. What, what do cattle producers do in a situation like this?

Bill Bullard [00:05:49] Well, so oftentimes, unfortunately, they'll liquidate if they're unable to pay the high feed costs and the trucking costs to bring the feed to their cattle. It depends on the severity of the fire damage on their respective operations. Some may move their cattle to other pastures if they have them, but I'm afraid that, that because these fires are so widespread, we're gonna see a lot of producers exit the industry. And we've already lost too many producers. In fact, the last census tells us we've lost 107,000 beef cattle operations just in the past five years. That's a loss rate of about 20,000 a year. So our industry really can't afford to lose anymore, and nor can consumers because it's the disaggregated independent cattle producers that are providing them food security for a very important aspect of their diet. Of course. And that's protein

Vance Crowe [00:06:40] Bill. That's a, a staggering number. I like, I had absolutely no idea. I mean, you, you see dairy farms going outta business. You see, you know, sometimes people stop their grain operation and a new farm comes in to replace it. But this is, I mean, the, the skillset, the, the capital investment to have this as a great decentralized system, it's really the only livestock system that's decentralized in our entire economy.

Bill Bullard [00:07:06] That's right. We view our industry as the last frontier because it is not vertically integrated and controlled by the meat packers like the poultry and hog industries are. You know, if we go back just over a generation since 1980, we've lost 655,000 beef cattle operations. That means we've lost more than five of every 10 cattle operations that were in business just 40 years ago are gone today. Well,

Vance Crowe [00:07:28] That brings us to other issues that we should talk about. Headline two, Joshua. This comes from Joshua Beth Ridge of Farm Futures. The USDA announces their initiative to increase competition and lower food prices. The USDA announced a series of steps this week aimed at increasing market competition and lowering food prices. Those steps include establishing a framework for seed competition, providing access to new retail report, and issuing an executive order to address issues in the livestock market. So Secretary Tom Vilsack says the announcements are part of a broader effort of the Biden Harris administration to help farmers, small businesses in rural communities get their fair shake. Bill, give us a little bit of an overview. What is going on, what is this initiative and what do you think can adding rules make markets more free?

Bill Bullard [00:08:21] Well, here's the problem. Over a hundred years ago, Congress passed the Packers and Stockyards Act to prevent unfair, deceptive and unjustly discriminatory practices by the highly concentrated meat packers. We have four meat packers controlling 85% of the fed cattle market in the United States, and they inherently possess tremendous market power. And what the rule that's included in the announcement that you just read, what this rule will do is essentially reform the tools that the meat packers had been using for decades in order to leverage that abuse of market power that they possess against independent cattle producers. So we praise the Secretary of Agriculture on this issue. These rules are absolutely necessary if we are to restore a competitive marketplace for the remaining cattle producers that we have in the industry. And the specific problem that this rule is to address is the cattle procurement tool, which is called a formula marketing tool or alternative marketing arrangements. And how these work is, they allow the meat packer to shift large volumes of cattle out of the competitive price discovery cash market. They take the cattle out of the cash market and they place them in forward contracts without ever negotiating a price. So they're unpriced contracts. And ultimately down the road when those cattle are finally priced, the meat packer will use the average price in this, what is now an ultra thin cash market to establish the base price for a hundred percent of the cattle.

Bill Bullard [00:09:52] The effect of that is it's to lower the price of cattle for cattle producers. And this has been going on for decades, and we've been asking the USDA for the past 20 years to reform this because this is an inherently anti-competitive procurement practice. And so it is only now that we're seeing this advanced notice of proposed rulemaking to address this specific issue. And we view this as the holy grail. If we are to sustain an independent cattle industry consisting of these disaggregated family farm and ranch scale operations, then we have to restore competition to the marketplace that has been purged because of unprecedented levels of concentration in the industry as well as globalization where the meat packers, every time we see cattle prices start to rise, the meat packers will bring in more imports in order to depress prices. But we have a disconnect between the value of cattle and the price that consumers pay at the grocery store. We've never seen such a spread. So consumers are paying astronomical prices for beef while cattle producers have been receiving depressed prices. This went on for years until the drought shortened the supply of cattle, tighten the supply and driving prices up. And so now cattle producers are receiving higher prices and then they're, they have to experience drought and fires like we just described, as well as inflationary costs of all of their inputs, feed costs, fuel costs and and such. So our industry is in a state of crisis, and this rule is a critically important step to improve that. The second part of this has to do with a, an investigation in the retail market because what the USDA did after COVID, after we bel found that we had too few meat packers in the nation, everything was centralized and the distribution system was skeletonized.

Bill Bullard [00:11:35] The USDA began to throw money at the industry to help small regional packers spring up. The problem that these small and regional packers are having is they can't, they can't find an outlet for their production. So they'll produce beef, try to market it into an existing grocery store, and the grocery store will say, no, I've got got a long term contract with one of the big multinational meat packers. We can't accept your beef. This, this report is identifying those specific anti-competitive problems that include perhaps price rigging as between the meat packer and the distributor and the retailer. And this is really the first time in the past many decades that there has been a serious unbiased look at what's happening within this highly concentrated food structure that has now been proven to be vulnerable to shocks like COVID or, or a climatic conditions. So we welcome these rules and we view them as being critically important to the future of our industry.

Vance Crowe [00:12:32] So what do you think is driving these rules forward? How is this getting done right now?

Bill Bullard [00:12:38] We, we've been pushing each administration for the past 20 years to do the rules. We've been encouraging Congress to introduce legislation to address these very issues, and they have, but we haven't had the, the massive support in Congress necessary to actually pass laws. But we continue to provide producers who have individual complaints and we brought 'em to USDA and we filed a request with the USDA to conduct investigations. And then in 2019, because we weren't getting a sufficient response from the government, we independently filed what is a class action antitrust lawsuit against the largest four packers in the United States. And we're alleging that they have unlawfully colluded to artificially depressed prices to pay to cattle producers while simultaneously inflating the cost of beef to consumers. And it is that lawsuit, I think that has helped to spur additional awareness and interest on the part of the government. We have an ongoing investigation by the US Department of Justice into the conduct of the packers in the beef pack industry. And now we have SDA that is working aggressively and effectively to finally implement these 100-year-old rules that the meat packers have been successful at pushing back. They've not allowed any administration to go forward. And so what we commend Secretary Ack for taking this initiative, and again, we view this to be the holy grail, we have to restore competition to our industry.

Vance Crowe [00:14:03] Well, speaking of lawsuits, there was a huge lawsuit announced this week from Reuters, McDonald's sues top meat packers for allegedly colluding to inflate the price of beef. McDonald's is suing the US meat Packers Big four Tyson, JBS Cargill, and the National Beef Packing Company alleging a price fixing scheme for beef. Specifically in the federal complaint filed on Friday in New York, McDonald's accuses the company of anti-competitive measures such as collectively limiting supply to boost prices and charge illegally inflated amounts. Bill, as I understand it, one of the biggest issues our calf has with groups like the National Cattleman's Beef Association is that they're the same organization as the meat packers. So now you have McDonald's lining up against the meat packers. Where does the lawsuit leave the American cattlemen?

Bill Bullard [00:14:59] Well, this, this lawsuit is critically important and as I mentioned before, it was, it was April of 2019 that we filed the initial lawsuit alleging that the meat packers were colluding in order to periodically reduce production to reduce supply of cattle. And, and they have done that by reducing the demand. And so they've, we alleged that they've made sure that there was never any more demand for cattle than there was supply. Once we filed that lawsuit. Many segments of the beef supply chain have joined. We've seen consumers join, we've seen distributors join and we've already had several large retailers join this suit. And now we have McDonald's entering the fray. They're alleging the same cause of action as we have alleged. And that is, they're alleging unlawful collusion on the part of the, the largest four meat packers that control 85% of the market. They're alleging that the meat packers have reduced production. And of course, from our perspective, from the cattle produ producers perspective, they have reduced demand that has effectively reduced production and thus put a choke point within the supply chain and causing as, as alleged by McDonald's and others, causing them to have to pay an inflated price for beef. So we welcome this suit, and again, we think this is running parallel with the US Department of Agriculture and US Department of Justice's efforts to reform the marketplace to provide opportunities once again for independent cattle producers.

Bill Bullard [00:16:32] You know, the average age of the farm in the United States is over 58 years old right now. We're having trouble to attract new entrants into the industry, particularly in the cattle industry. And the way we reverse that is we have to restore a potentially profitable industry for them. We have to make it enticing. And the only way to do that is to restore competition because the cattle industry, unlike many other agriculture commodities, lives and dies in a competitive marketplace. We don't receive government price supports for cattle. And so it is the market that is the, the most important and critical aspect of the survival of this industry. And it's that that market that has been distorted by the concentration and also as McDonald's is alleging, and we have all previously alleged that there is collusion by the dominant meat packers in the industry.

Vance Crowe [00:17:22] What is the meat packer's defensive? This what's, if you were gonna steal man their argument and give the best view of it, what are they saying? No, it's not happening.

Bill Bullard [00:17:33] Well, so because I'm in a lead plaintiff in Rcap is the lead plaintiff in this lawsuit, I'm not privy to talk about the merits of the case or the position of the defendants in the case. I apologize.

Vance Crowe [00:17:48] Fair enough. So I'm gonna just make brief mention of the final headline today. This comes from Christina Hudson Kohler who pointed out that there's big news up in upstate New York, ancestral lands return to the Onaga nation up there. The on nation has regained a thousand acres of its ancestral land in upstate New York. A tiny portion of the land members say was unjustly taken from them by the state in the early 18th century. So this is a result of a Superfund site and Honeywell International had gotten accused of dumping mercury in some lakes. And as a part of unwinding that, they said, well, why don't we hand over this land to the Onaga community because the, some of the, the remit, the efforts to be able to clean it up, we are not going to get engaged in. So we're just gonna give this land back. Bill, what do you think everyone's land was taken from somebody else? If Onondaga Nation has presented this as they're getting their land back to its original owners, what do you think about that?

Bill Bullard [00:18:57] Well, I have empathy for the Native American tribes who have entered into treaties with the US government only to have those treaties abandoned. And so I view this to be as potentially positive per certainly for the tribe. And it's a rather unique settlement through the Superfund issue. And so I think, you know, that's not an issue that I work on in, in my official capacity, but personally, it, it intrigues me. I'm interested in it and, you know, I I think, I hope the tribes make best use of that, that land that they have retrieved.

Vance Crowe [00:19:35] Yeah, I think it's a fascinating thing. When I first heard about it, I thought there was like a state decree, but the fact that it was a part of that whole Superfund issue made it very interesting. I think they're doing a great job of doing PR to try and continue to raise awareness of these issues. There are other communities that have the same issues. So I I think it's definitely worth re reporting on. So that's gonna do it for our headlines today. I want to thank the people that sent me things to bring up on the AG tribes report. If you have anything that you wanna post, definitely send it to me on XI am at Vance Crowe. Moving on to the Bitcoin land price report. This is where we make a comparison of the land prices not just in US dollars, which as the value of the dollar goes down. It hard, makes it hard to know what is land really worth, but actually pricing it in Bitcoin, something that has no ability to be printed more of. So just like land, you can't make more land, you also can't make more Bitcoin. So Bill, what county are you coming in from and what is a, a good acre of land cost out there?

Bill Bullard [00:20:42] So I'm from Yellowstone County, Montana, and I looked up what the average per acre price of land was, and it was $2,722 per acre.

Vance Crowe [00:20:51] It is astounding to me as a guy that grew up in Illinois that now acreage is, you know, 19, $20,000 to hear that Montana, you know, the, this place of wide open spaces that you can get an acre for $2,722. If we price that in Bitcoin, it is 0.04 Bitcoin per acre. And that would mean that if you had one Bitcoin, you could exchange it for 23.2 acres of land. Bill, how does it sit with you to price land? Bitcoin? Bitcoin?

Bill Bullard [00:21:24] Truthfully, I do not understand Bitcoin. So, but, but I think land prices, unfortunately land prices have inflated to, to an extent that you can no longer pay for the land through production. And that's what's made it extremely difficult for new entrants into our industry. As much of this land is being purchased by investors and taken an out of production and the opportunities for aspiring farmers and ranchers are becoming limited.

Vance Crowe [00:21:54] Well, I think that's where you and I are aligned, and I actually think the cattle ranching world would do very well to understand Bitcoin because I think Bitcoin gives people a way to store the value of their money without having to buy land. And we, if we can get that happening where hedge funds instead of investing into land, buy Bitcoin, then we get the price of land back to its utility value. So then you can have producers and the people that own the land are the ones that are working on it. So I think Bitcoin interesting and cattle ranching go hand in hand and we can, we can talk more about this. I think it's an important thing. Okay, turning now as we keep with the clock to the Peter Thiel paradox, this is where I ask my guest, bill, what is one thing that you believe that almost nobody in your tribe agrees with you on?

Bill Bullard [00:22:41] Well, so I represent about 4,000 family farmers and ranchers that raise cattle. And so I think what they would disagree with me on is occasionally I like to eat chicken.

Vance Crowe [00:22:55] Fair enough. I am, I'm gonna give you a, a 6.0 for style humor. Got you outta that one. In Bill's defense, I actually didn't tell him about the Peter Teel paradox until right before we went on camera. So actually that gives us plenty of time for us to talk about the next subject, which is you're worthy adversary as the CEO of R calf. You have a reputation that precedes you as somebody that brings up cases, is willing to take on fights. Some people don't agree with you, some people think that you are really helping out the larger cattle industry, but it's good for me to ask you, who is a worthy adversary, somebody that you respect, but you totally disagree with out in the world right now.

Bill Bullard [00:23:41] Well, and it would be Secretary of Agriculture, Tom Vilsack in part, and there's a paradox here because just moments ago I praised him for shepherding this new rule that will help restore competition to the marketplace. On the other hand, we intend to file a lawsuit against him very soon because he has issued a mandate that will, that will require cattle producers who want to ship adult cattle across state lines to affix those cattle with an R-F-I-D-A radio frequency identification ear tag. And in order to purchase those RFID ear tags, they have to register their premises. And so we view this to be an infringement and an evasion of their privacy. And we believe this to be overreach on the part of Secretary of Agriculture, Tom Vilsack. And so we have been unsuccessful in trying to convince him to back off of these rules during the public notice and comment period. And so we are now left with our very few options. We're working in Congress trying to overturn his rule, but if that fails, ultimately we're going to the third branch of government again, and we will use a judicial system to allege that Secretary of Vilsack has issued a rule that he had no constitutional authority to issue and that he's issued a rule that is not in compliance with the o with his own rules and regulations under the Administrative Procedure Act. So he's a worth adversary, but we disagree with him on many issues.

Bill Bullard [00:25:12] But the, the one that we certainly agree with him on is his work under, under the Packers and Stockyards Act rulemaking process.

Vance Crowe [00:25:19] Yeah, it would seem to me that a lot of the power of the USDA should have been sucked out by the Chevron deference case where they were saying you're no longer allowed to just come in as a bureaucracy and make laws. Did that have any bearing on, on the RFID case at all?

Bill Bullard [00:25:35] Well, we're gonna find out because the lawsuit that we file will certainly cite that case in support of the arguments that we make.

Vance Crowe [00:25:45] And one of the interesting things about that RFID is that from what I hear, the the people that are defending it, they're saying, look, it's, it's only if you're moving your cattle across state lines. If you're just keeping your cattle in your own state, no big deal. What's wrong with that argument?

Bill Bullard [00:26:02] Well, nothing is wrong with that argument, but for the fact that the US Department of Agriculture is publicly announced that they intend to require a mandatory tracking system from, for animals from birth to slaughter, this is merely phase one. In fact, the rule that has been issued will not accomplish the disease traceability improvements that USDA is asking for. And the reason for that is, the only thing the rule does is impose an imposition on departed cattle producers to purchase in a fixed the most expensive form of animal identification onto each of their animals that they do ship across state lines. And, but they do not require that electronic information to be read or transferred by anybody in the supply chain. So what what is essentially happening is this is how you boil a frog. This is an incrementalism where the government starts small and will soon grow larger and larger. We've seen this before and they've already told us what their plans are. So if we do not stop this now, we will have a tremendously hard time stopping it if we wait until the secondary second rule comes along to actually implement the first and to expand the scope. And the the first expansion is going to be to require every feeder of cattle, every, every light calf that's sold in the United States will most likely have to be, have to bear these expensive RFID ear tags. And incidentally, we believe all of these chips are made in China and that's, that's problematic for us as well.

Vance Crowe [00:27:28] Well, I wanna thank you for connecting the dots on that. That's been a big issue among my listeners, so I'm glad you talked about that. For a complete list of worthy adversaries, you can find that on x. I'll also include it in the show notes. So as we wrap up, I want to say thank you to Bill Bullard for coming on the podcast. Bill, what, where can people find out more about R af your organization and the work that they're doing?

Bill Bullard [00:27:55] They can go to our website at r dash CALF usa.com or they can visit the Facebook for R calf usa.com.

Vance Crowe [00:28:06] Thank you so much for coming on. Also, thanks again to our sponsors, farm test.ag, which allows you to test your fields, what's being used on those products that you put out there, the seeds. And find out scientifically verified, does this work in my field and is it worth the cost And Legacy Interviews? This is where we record your loved ones so that future generations have the opportunity to know their family history in a video that captures them as they are. Thanks. We'll be back next week for another Ag Tribes report and as always, feel free to disagree. Ah.