2021 top news stories

New Biden administration

A new occupant came into the White House in January 2021, and President Joe Biden’s administration didn’t hesitate to make its imprint on executive federal policy.

Biden officials pushed major spending packages, from pandemic aid to Americans through more stimulus, mask mandates on federal workers to prevent COVID-19 and resuming a new chapter in the fight on Waters of the U.S.

National Cattlemen’s Beef Association (NCBA) Chief Executive Colin Woodall tells Progressive Cattle there’s been a different tone compared to Democrat administrations of the past.

“When you look at the first year of the president’s administration, we have to say that we have been pleasantly surprised at the access we have had. There is somebody on our NCBA team that is talking to an administration official almost on a daily basis. The administration recognizes the cattle industry’s role in sustainability and stewardship and go so far as to recognize our role in helping mitigate wildfires. While there are many proposals that we don’t like, to date we have been successful in keeping them all from being finalized.

“Overall, we are pleased with our ability to work with them. We have plenty of challenges but are in the game to protect our interests.”

Beef market transparency

Going through the Tyson fire disruption and the COVID-19 shutdown with its lengthy backlog, producers became more vocal in 2021 about market disclosure. Cow-calf producers’ complaints about packer margins and alternative marketing agreements and the decline of cash markets found sympathetic ears among lawmakers.

In congressional legislative hearings, concerns gained sympathy from lawmakers. But some producers sounded a warning not to throw the baby out with the bathwater.

“Please do not create regulations and legislation that have the unintended consequence of harming value-based marketing,” said Kansas cattleman Mark Gardiner in June testimony to the Senate Ag Committee. “Doing so would undo many years of progress for producers such as my family and those of our customers. Onerous legislation has the potential to result in a reversal of quality that is simply unacceptable to consumers.”

New packing facilities

Extended delays and shutdowns of some of the nation’s largest packing facilities, due in large part to COVID-19 outbreaks, seemed to temporarily cripple the nation’s ability for meat production to keep up with consumer demand in 2020 and 2021.

Consequences of the pandemic and other black swan events, such as the Tyson fire in Holcomb, Kansas, spurred interest into action, as plans for several new slaughter facilities of varying sizes are taking shape at several locales across the U.S. Perhaps most notable among the planned facilities are the Sustainable Beef plant near North Platte, Nebraska, and the True West Beef plant in Jerome, Idaho.

Ongoing drought depletes U.S. cattle inventory

The U.S. began the 2021 growing season with the worst average pasture and range conditions on record and ends the year in the same condition. Most of the western half of the country has suffered extreme drought measures throughout most of this year. Harsh drought conditions led to some cattle liquidation. According to U.S. Drought Monitor data, approximately 34% of cattle are in regions experiencing some level of drought. Forage shortage during an exceptionally dry year, along with depleted hay and other forage supplies headed into the winter months, is forcing producers to draw a harder line when culling cattle. 2021 beef production is forecast at roughly 27 billion pounds, up slightly from last year, thanks to liquidation from both the dairy and beef sectors.

Exports keep beef demand strong

U.S. beef exports in August set a new record of 325 million pounds, an increase of 57 million pounds, or 21%, from a year ago. August’s increase in beef exports was driven primarily by China’s strong demand for U.S. beef. Gaining access to China’s market in March 2020, coupled with China’s low domestic pork supplies and Australia’s limited exportable beef supplies, has favored the U.S. Since July 2020, monthly exports to China have been record-large in 10 months. China is now the U.S. third-largest beef destination.

Also of note, South Korea is closing on and may surpass Japan in the next few months as the largest U.S. beef export market. In four of the eight months so far this year (January, February, April and May), monthly beef exports to South Korea have exceeded exports to Japan, whose year-to-date export share comes to 24.5%. South Korea’s share of total beef exports in the months of January to August has increased from 20.6% in 2018 to 23.4% in 2021.

Tax and spending in Congress

Midway through 2021, the biggest fight emerging in the new administration became how to pay for a multitrillion-dollar American Families Plan and how much would be felt by those facing death tax.

A key measure was whether Biden would eliminate step-up in basis policies in the tax code that exempt agriculture from heavy capital gains. Step-up in basis is the readjustment of asset values when it becomes inherited following the owner’s death.

As of Oct. 28, Woodall said the fight was proving successful after the White House said “step-up in basis is no longer being considered” for removal.

“It is too early to claim victory because the final deal is not done,” he added. “We are at risk until the final vote is cast, so we continue to advocate for preservation of the stepped-up basis because of what it means in keeping farm and ranch families on their land. We have been able to get to this point by working with congressional Democrats and Republicans to educate them on how elimination of the stepped-up basis will cause tax burdens that most farm families can’t pay.

“We have also made it clear to the Biden administration that the elimination of the stepped-up basis is contrary to their climate goals. If President Biden wants to address climate change, he needs open space that can grow grass that cattle graze. Our progress on this shows that agriculture still has a huge voice and impact in D.C.”

Inflation continues

Higher commodity prices and increased government payments to farmers are likely to add billions of dollars of new revenue to estimates of farm income for the coming year. However, concerns over potential changes in tax policy, coupled with higher feed and fuel costs, cast a long shadow on the optimism. Despite relatively high commodity prices across the board, farmers and ranchers are very concerned that agricultural input prices will likely outpace profit increases in the coming months. Beef producers, for example, can expect greater costs associated with higher corn and hay prices, weakening any gains from higher cattle and beef prices.

Geed prices Feed prices

Rising feed costs forced producers everywhere to analyze every phase of their operations, from culling and weaning to labor management.

In a year where an ongoing global pandemic continued to throw uncertainty at the beef industry at every turn, commodity feed prices did little to ease the concerns of farmers and ranchers. Hay prices continued a steady climb each month of 2021, with alfalfa, generally considered the bellwether for hay markets, reaching levels near the $300-per-ton mark.

Supplement feed markets, including corn and soybeans with all the associated byproduct feeds, have also been strong in 2021, adding another layer of concern for cow-calf producers. Strong prices for feeder cattle and fat cattle to close out the year, however, have given the industry reason for optimism.

Climate change policy

The Biden-Harris administration has not been secretive or subtle about its focus on climate change. Aside from throwing obscene amounts of government funding at climate change research and boosting efforts at building infrastructure, the new administration is beginning to take more direct steps in the conservation arena. Biden’s “Phase I” plan includes repealing as much of the Trump-era regulations as possible and reverting back to the Obama-era approach to environmental policy, including repealing the 2020 National Environmental Policy Act (NEPA) rule changes, restoring national monument protections.

At the U.N. Framework Convention on Climate Change Conference of the Parties (COP26) in November, Biden also presented a whole-government initiative to combat climate change that comes with a price tag of $555 billion.