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Minnesota Holstein Feeders Delivered Blow By Markets
February 28, 2017

At a recent livestock auction at Central Livestock in Zumbrota, fed Holstein steers sold for about $30 less than fed beef steers.

This sudden drop is unpleasant and costly for Holstein producers.

Frank Sullivan, of Haas Livestock Auction in Cannon Falls, called the immediate cause a “decision that has had monumental and domino ramifications.” Tyson Foods, a company which had been processing Holstein carcasses, has stopped doing so.

“Basically there were three buyers for the cattle: American Foods, JBS Packer Land and Tyson Foods,” said Greg Matzke, owner of Haas Livestock. Tyson decided to pull out of the market around the beginning of the year.

The two plants that continue to purchase Holstein steers found it difficult to absorb the extra cattle so Tyson’s departure has depressed the market to the point where they’re bringing $30 back of the colored cattle live price, Matzke said.

Tyson Food declined to comment, citing it considers its buying practices proprietary. Overall, the change seems to be simply a fluctuation in the market, albeit an unfortunate one.

“We can’t specifically call out one processing plant when something like this happens,” said Ashley Kohls, executive director of the Minnesota State Cattlemen’s Association. “With Holsteins, there are a number of challenges that come with processing them. They’re larger, so they have to slow down processing plants.”

Kohls said Holsteins had been doing better in the market because the cattle industry was down. Now that the colored cattle herd population has increased again, Holsteins are less likely to be purchased.

“We’re encouraging producers to stay current on their marketings,” said Jeff Reed, of Central Livestock. “We’re doing whatever we can to generate interest in some other packers to see if they have need for Holstein carcasses. We think there’s a good chance that someone else will come into the market and see that they are an underpriced product and start buying them. Right now that has not happened.”

In addition to the extra work that goes into processing Holsteins, the beef market has shown more desire for beef made from colored cattle, according to Matzke.

“(Tyson’s) meat customers told them that they want a higher grade of beef, Certified Angus and that type of meat,” he said. “The reason they were killing Holsteins was that the cattle numbers were down so much. Now they have an adequate amount of colored cattle, and their customers are saying they want the beef meat rather than the Holstein.”

Unfortunately, there isn’t a lot that can be done now. As Reed said, there may be a while yet before another buyer is able to come in and increase competition for Holsteins. He has sympathy for producers.

“We’re responsible for generating the best price we can on any given day,” he said. “We’ve got these customers we’ve worked with for many years. We think our customers do a good job feeding these Holstein cattle, and it’s an excellent product. They’re not being paid full value right now, and we’re doing whatever we can to fix that.”

Kohls added this could be an opportunity for regional cattle processing plants to fill the void, if they have the ability to process dairy-influenced cattle.

“Minnesota and the northwest corner of Iowa feed a pretty high volume of dairy-influenced beef,” she said. “The markets have been good for them. The things that cattle producers need to be doing is calling some of these regional plants and asking if they can process Holstein cattle and keeping their relationship open with them and hope that the situation we’re in now is pretty short-lived.”

By: Brita Moore
Source: Post-Bulletin (Rochester, MN)



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