Jack Field - Is Washington Regulating Ranchers Out of Business?

Jack Field, Executive Director of the Washington Cattle Feeders Association, joins Lars to discuss the possible sale of the Pacific Northwest’s largest beef processing facility. Are high costs, taxes and regulations threatening the future of Washington agriculture?

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SPEAKER_01 0:21

Welcome back to the Lars Larson Show. It's a pleasure to be with you on a Monday. We're live on the Radio Northwest Network, and I want to bring this subject up in front of you because I will admit I have a dog in the fight. I like a beef. In fact, uh, I like to have it uh for dinner at least uh maybe a couple of three times a week, if not more often than that. But Washington State's biggest beef plant just went up for sale. Did state red tape just kill a big chunk of the region's food supply? I thought we'd check in with Jack Field. Jack joins us now, and Jack is the executive director of the Washington Cattle Feeders Association. Jack, welcome to the program.

SPEAKER_00 1:00

Good afternoon. Thank you, Lars. Thank you for having me.

SPEAKER_01 1:03

Tell me about this news that uh, you know, we've got beef processing facilities and beef feeding facilities that are simply going up for sale. Now, that doesn't necessarily mean they're going to go away, but where do we stand as a region right now? And are we letting state red tape and taxes drive some of the biggest, most important producers of food in the Northwest out of the region?

SPEAKER_00 1:26

Well, that's you you've asked a uh very timely and complex question. Uh the announcement that came out a little over a week ago regarding the Tyson Fresh Meats plant in Wallula, Washington in Walla Walla County, uh, that announcement that the plant is being placed up for sale was coupled with an even broader statement that Tyson had put out uh closing a plant in Joslin, Illinois, as well as a case-ready facility in Utah. So when you look at that, the other the other shoe that fell was the announcement that the Tyson Fresh Meats plant that processes approximately 2,300 head of fed cattle every day was being placed up for sale. At the moment, uh everything is continuing. Feeder cattle are fed cattle are going into the plant, they're processing it, everything remains the same, but the markets have certainly responded uh in a negative fashion from this announcement, coupled with some other news in the market. Uh, and we've seen a pretty sharp drawback, pullback on the futures with quite a bit of uncertainty knowing what what the next step is.

SPEAKER_01 2:37

Well, I mean, Jack, it's not it's not that unusual that they would still be operating because if you want to sell a business, you don't shut the business down because a non-operating business, I would guess, is not worth nearly as much as an operating business. So they'll keep it running, but it but it doesn't mean that that necessarily it'll stay running if somebody else decides to buy it. Am I right? I I can't argue with the word you said. You're correct. So what does it mean for all of us? And why is this happening? And who do we pin the blame on?

SPEAKER_00 3:10

Well, I I don't know if if there's a single person or entity to pin the blame on. We've got we're we're kind of at the middle of a perfect storm. We've got a U.S. cattle supply that's at a near 75-year record low, and that's been driven by an exceedingly higher age of cons of producers. We've got uh we've had nationwide droughts that have forced reductions across the country. Um, we're in an area now where we are traditionally short uh fed cattle supply to maintain the two plants. So normally this uh PASCO plant would receive Fed cattle from around the Pacific Northwest and throughout Canada to uh offset shortfalls in supply. The benefit that we have is that we're one day closer to the Pacific Rim going out of the port of Seattle. We've got a little bit of a jump on some of our trading partners here domestically, but the challenge that we look at is the packing uh industry has faced some pretty significant losses across the board. And Tyson, in their announcement, was looking to try to consolidate in their kind of cattle dense areas in Texas, and this plant in Washington was kind of out there on its own. Um, my hope obviously is that we see a buyer come forward and they come forward soon because the last thing we need is the fear of uncertainty and or not knowing what's going to happen. Because our next closest plant, should something happen here, is Hiram, Utah, and that's eight to nine hours on a truck, added freight, and things like that.

SPEAKER_01 4:43

So you got to take fed cattle and load them on a truck and drive them 10 hours down to Utah to get them to the next closest plant?

SPEAKER_00 4:52

Well, the the other plant would be the Washington Agri Beef uh Washington Beef facility, but they wouldn't be able to accommodate their kill plus the 2300 head that were going through the Tyson Fresh Meats plant. So there would definitely be cattle that would have to move out of the region to be harvested. Okay, so and and at a significant cost to uh cattle feeders and eventually all the way down the line.

SPEAKER_01 5:19

So, Jack, tell my audience why is the plant up for sale? Is it up for sale because under the current conditions in the state of Washington, they they cannot make the the plant operate at a profit? And are those conditions likely to change?

SPEAKER_00 5:34

Well, uh, I wish I would have been a fly on the wall to uh be you know to be able to answer more of those detailed questions. But I think as we look at this, there's clearly some regulatory expenses that food processors face in Washington state that our neighbors don't have. Uh whether it be and one of the most important things you look at at B and O tax, that was the last thing that had been done about 20 years ago. There had been a sunset on BO taxes for beef processors back in the early 2000s. Um, but that had gone away. Uh we've we've got a variety of other regulatory challenges and costs that drive our cost of operation up here. The benefit that we have and why things look, I think, promising for the facility in the future is we've got everything we need to maintain a viable facility in terms of strong cattle feeding throughout the basin. We've got food processing that helps in providing some additional feed sources. There's a variety of inputs that we can source very locally uh with very minimal freight. Umce we start to look outside of the region and you have to put wheels under things, it becomes much less uh profitable and more challenging for people to see certainty.

SPEAKER_01 6:56

Jack, I want you to uh there there's a a statement put out by Save Family Farming, which is a group I think well of. But they say the Washington state leaders have had a big hand in making this one of the most expensive places in America to grow food. Is that accurate?

SPEAKER_00 7:14

Yes, sir. I mean, look look at it from from the ground up. I mean, we've got a 40-hour minimum wage. We have a 40-hour ag overtime, we've got one of the highest minimum wages in the country. One of the challenges when you look at that, the way the at with our ag overtime and even with our our wages, a an ag operation in Washington State doesn't even have the opportunity to be credited for providing things such as housing, transportation, electricity, and in many cases, beef or food or allowances to their employees. So there's there's a pretty significant amount of benefits that don't get calculated into the overall compensation package of an employee. And as a result, that threshold for the salary with air quotes salary exemption from overtime is rapidly approaching $80,000 to $95,000. And if you look at an ag operation, that's getting to be a pretty significant chunk when you we've only got so many opportunities to create revenue, it it gets very difficult.

SPEAKER_01 8:19

And it sounds like it. That's Jack Field. Jack is executive director of the Washington Cattle Feeders Association. Back in a moment, you got the Lars Larson show.