President's Notes

To View the October 2015 Digital Issue — Click Here

Certain, Yet Uncertain

Burton Pfliger, ASI President

As stockmen, farmers and ranchers, we deal with as much uncertainty as any business in America. Rain, or lack thereof, storms or other adverse weather events, market volatility, lease negotiations and the ever-expanding government regulation book are all prime examples of challenges we experience day in and day out each year.

This year is no different, but a larger share of your and ASI’s time, attention and energy has centered on the political policy front. Mother Nature and our economy usually share equal parts of our daily efforts, but no one is complaining about this well-deserved reprieve. Our first test this year is the availability of price reports for lamb via the U.S. Department of Agriculture. The Mandatory Price Reporting language needed to be re-authorized by Congress prior to September 30. ASI has worked tirelessly on this issue for nearly three years, virtually drafting language for the House committee to put in place. Your association was far out in front of all other livestock sectors prepping legislative leaders on your behalf.

In fact, I testified before the U.S. House Agriculture Committee in April. All livestock sectors – beef, pork and the National Meat Institute, in unison with ASI – agreed that the MPR was an essential part and needed by all industries. Those present on the agriculture committee expressed confidence in a quick passage and agreed that it was not a political issue either party opposed. We left Washington, D.C., with the expectation Congress would follow through. All this work was completed in advance so an orderly renewal process would commence to mandate price reports producers and lamb companies depend on week to week.

As this magazine was headed to the printer, the Senate had finally taken up the issue (which had already been addressed by the House). The Senate committee reached bipartisan support of a measure that was expected to pass the full Senate in late September. But it differs from the House version in some areas, which means further action would be necessary in the House to finalize mandatory price reporting. We’re hopeful the issue has already been resolved as you read this.

The second question is the final rule of the U.S. Department of Labor on the H-2A sheepherder program. What we do know is the department will issue a rule by Nov. 1 to be implemented in December of this year. We do not know, obviously, if the department will utilize the input submitted by hundreds of sheep producers, state associations and ASI to increase herder wages, maintain eligibility of ranches to hire herders and most importantly sustain an economically viable farm, ranch and sheep industry.

I will say that legislative and litigation courses of action will follow if the rule fails to include sustainable options on the key issues of wage and eligibility. It is likely that either course will not coincide exactly with the timing of the labor rule. Congressional reaction to the rule would likely be addressed in the omnibus appropriations package that we believe the U.S. House and Senate will agree to in late December or perhaps January.

If meaningful improvement is not evident in the final rule, we still suggest folks look to the response of Congress to make reparations, even if it is weeks after the department’s new rule is issued.

I look for a hopeful opportunity with more certainty in the lamb market this coming winter and spring with the announcement of USDA’s willingness to take bids on a wide array of lamb cuts for delivery throughout the winter and into next June. The Agricultural Marketing Service – which ASI has partnered with for years on programs supportive of sheep producers – built a unique purchase program with several million dollars to be available over a number of months into 2016 for legs, shoulders and, for the first time, shanks. It looks as though AMS wants to get ahead of a backup in product that occurred last winter and previous marketing cycles. We at ASI can certainly applaud their efforts in this area and look for a meaningful volume of lamb to be purchased into the coming year.

On another market tool front, ASI is proud to announce the return of LRP-lamb insurance. Each of us needs to evaluate how this tool can assist us in our individual operations. Remember this is a risk protection program and should not be viewed as another revenue stream for our operations. I have heard from some producers who only want to purchase if they are guaranteed a payment. That is entirely the wrong way to view this risk protection policy. It is much like the risk based policy we purchase on our home, auto, ranch and life. We hope we do not have to collect on the policy (especially life), but the policy gives us assurance that in the event of need we can survive and live to fight another day.

Another point to remember, FFRM is an industry-owned insurance agency. All revenue generated is utilized to enhance the sheep industry. Stay tuned for another insurance product offering from FFRM to be announced at the 2016 Convention.

As always thank you for your continued membership. My wife and I look forward to seeing many of you at winter meetings and at 2016 Convention in Scottsdale, Ariz.

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