Beef Buzz News
NCBA’s Ethan Lane On "The Big Issue" of Supply Chain Concerns
Tue, 13 Jul 2021 10:02:17 CDT
According to Ethan Lane, vice president of government affairs for the National Cattlemen’s Beef Association, there is one central issue that he works daily on, and that is beef supply chain concerns.
“Consumer excitement for our product is off the charts,” Lane said, “and yet we’re really hobbled by this constricted processing capacity that’s preventing this tremendous supply of ready cattle from moving their way through processing capacity and into store shelves.”
Lane said this issue is job number one within the beef industry, so as to solve some challenges and get the leverage pendulum swung back in the producer direction.
We have seen this persistent challenge of figuring out how to get producers what they are owed for the high-quality cattle they are producing, Lane said.
Lane added he believes the short-term issue is all about the lack of labor to process cattle.
There is a current labor shortage, Lane said, which has been shown time and time again in retail markets as business begin opening back up from the world pandemic.
The same situation is occurring within processing plants, he said.
Lane said there is potentially up to 5,000 head a day of capacity that is currently on the table not being utilized due to the lack of labor.
“This is a significant bomb in and of itself,” Lane said.
The longer-term problem seems to be the shortage of hooks, Lane said. The last estimates seen are around 5,600 to 5,700 hooks short daily in capacity, he added.
Several recent announcements over the past six months have been made regarding new plants coming online and expanding capacity, Lane said, but these steps forward ultimately take time and resources.
“That is 18 to 24 months in the future, and what we need is that capacity right now,” Lane said.
Lane said they have been working on quite a few new pieces of legislation with the attempt to provide resources to the existing systems.
For example, the RAMP UP Act was previously pushed which would provide $60 million in funds for state-inspected facilities to get up to FSIS standards and expand their reach across markets, he said.
An upcoming piece of legislation that is set to be introduced in the next few weeks will deal with loan guarantees and financing for small plant capacity to new plant capacity to be tilted up, Lane said.
Right now, in the U.S. it is approximately $100,000 per hook to build new capacity, Lane said. So, small facilities could be looking at large investments to make minimal improvements in size.
This leaves very few players who can afford to finance these upgrades independently, Lane said.
“We want this new capacity to be focused on some of those smaller entities,” Lane said. “We want to diversify that packing capacity, and we want to add new buyers to the mix in the markets.”
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