South Dakota Governor Dennis Daugaard says a budget shortfall in the state is partially a result of low commodity prices. Both ranchers and farmers have taken a hit over the last year.
Two livestock industry groups in South Dakota have differing opinions on the root causes of low cattle prices.
Over the last year live cattle futures have consistently dropped until around October when they began rebounding.
That drop in cattle prices is one of the reason’s Governor Dennis Daugaard is calling for a leaner than normal budget for Fiscal Year 2018.
Silvia Christen is with the South Dakota Stock Growers Association. She says multiple factors have lead to the market decrease
“Vertical integration is definitely a huge part of that," Christen says. "We’re looking at a situation where less than 20 percent of all cattle are traded in the cash market, which means that 80 percent of what is being sold is not being done so publicly, which makes it hard to establish a true supply and demand. At the same time we’re seeing the imports from Brazil and a much more globalized market. We’re also seeing the loss of country of origin labelling and lack—customers not being able to choose anymore.”
However, the South Dakota Cattleman’s Association attributes the ebb and flow of cattle prices as the result of a fluctuating market. Larry Stomprud is president of the group.
“We had a real good run here two and three years ago," Stomprud says. "The supplies were down, the demand was there. But, since that time, the producers responded to high prices and now we have a glut of meat in the market place. We can’t move the per capita consumption very much at a time, so that’s where we are right now. We have more supply and the demand is about the same.”
Stomprud says the government should refrain from interfering with the industry and let the market adjust itself accordingly. But others say steps to reduce monopolization of the cattle industry and to bring back some form of country of origin labeling can help independent ranchers meet the bottom line.