Captive Trade Boycott Extended,
Information Forum Set This Week

GRAND ISLAND, Neb. — Cattle feeders who launched the so-called "captive boycott," originally set to run for two weeks, have extended it indefinitely and will conduct an educational forum here late this week to discuss the impact of captive cattle trading.

The boycott began in Nebraska and quickly spread to Kansas and Colorado, eventually enlisting more than 200 feedlots representing an estimated 2.5 million head of pen space. It united feedlot operators disgusted with their own industry for allowing packers to amass such a large weekly inventory of non-negotiated cattle purchases that they could easily hold sway over the cash market.

Critics of the boycott dismissed it as preaching to the choir and insisted that most participating feedlots didn’t deal in captive trades anyway. They confidently predicted it would have little or no impact on the market.

The first days of the boycott, however, saw fed cattle prices that had been plummeting weekly arrest their decline and rise $1; the second week’s price increase was $2.

For its forum on captive trading, set for 1 p.m. Friday at Fonner Park, the Nebraska Cattlemen association has arranged a slate of speakers including a floor trader from the Chicago Mercantile Exchange.

Speaking will be Les Messinger, a floor trader of live cattle futures at the Chicago exchange. Messinger will analyze the effects of non-negotiated sales on the live cattle market.

Also speaking will be Chris Dinsdale, a Palmer-area feeder, on an overview of the Cattlemens' efforts to promote cash bidding; Brett Gottsch, an Elkhorn-area feeder, on marketing practices and fundamentals that made the Cattlemen seek a return to cash bidding; Jay Wolf, an Albion rancher and feeder, on the role of cow-calf producers in non-negotiated marketing; and John Roberts, a Lexington-area feeder, on fed cattle marketing and a marketing alternative to non-negotiated sales.

Also scheduled is Dick Monfort, former president of Con-Agra Red Meat Co.

Greg Ruehle of the Nebraska Cattlemen said unity in the ranks on marketing matters is a rare sight among people who pride themselves on their independence.

"If this manifests itself in the form of changing the beef industry, it would be a monumental, history-making change," Ruehle said.

In the first week of the boycott, the officially reported number of cattle sold by formula in Nebraska dropped into single digits, but in the second week the number was back up to 14.6 percent of cattle sold.

Those are reported figures, however, and critics of captive feeding have long maintained that part of the problem with the practice is that it allows packers to manipulate trade reports. Captive trading promoters were admittedly surprised at the impact of the boycott, and there is some industry suspicion that more captives are now being reported in an effort to downplay the boycott’s effect.

The recent price improvement, though heartening to cattle feeders, is a long way from erasing months of red ink. Rick McDonald, part of a cattle feeding operation at Rockville, 35 miles northwest of here, says whether cattle are sold on a live, a dressed or a deferred basis, "the whole deal is so far under the cost of production, it's not even funny."

Nonetheless, McDonald has always been firmly committed to cash sales and firmly opposed to a formula system. When packers can buy large numbers of cattle on a deferred basis, "they're working with captive supplies," he said. "That allows them to own the cattle and there's no competitive price discovery."