Hackney: Source verification warrants caution

Nebraska – Based on his experiences in the swine industry, Walt Hackney says American cattlemen should proceed toward source verification with caution. Hackney is known as a cattle industry analyst, specifically for the feedlot sector.
    “I find no legitimate reasoning for the packing industry to have access to the actual source of feeder cattle,” says Hackney. “It would seem the only advantage in supplying that information to the packing industry is to give them first-hand access to superior grading and superior performing cattle in the feedlot.”
    Hackney says, “As a result of my thinking, I feel it will be within a year or two, if they attempt to legally enforce source verification or USDA makes it some sort of market preference that a cattle feeder has to comply with, that the packer will have his own representative at the source of supply.”
    While Hackney predicts initial contracts will be offered at a premium to ranchers with the better cattle, he doesn’t expect those contracts to maintain their premium value long-term. After offering a two- to three-year contract to a rancher, he says, “When that contract runs out that rancher is going to find out he only has one game in town as a marketing source.” With just one buyer left, the packer, Hackney says, “That buyer, knowing he has a strong lever, will come in with a totally different type of sales program.”
    “I saw it happen in the late-90s in the hog industry,” says Hackney. Saying there’s a distinct parallel between the hog industry and the cattle industry, he says many of the companies are the same. “It’s just different divisions,” he says. “The difference being that the packer doesn’t want, nor can he afford, the capital expense of buying cowherds and land like he was able to buy and build hog-producing units. He’ll do what he can to put the rancher under a supply contract.”
     While the packing industry doesn’t want Country of Origin Labeling that would allow consumers to determine source, Hackney says they do want source verification and he wonders about the reasoning.
    Jennifer Womack is managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.