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Dennis Sun: And Now For Some Much-Needed Wyoming Good News

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By Dennis Sun, Wyoming Livestock Roundup

I always figured the first of May was a good time to plan for summer months and keep in mind the positives out there. As I write this column, it’s raining out, so I guess our rain dances – weather permitting – are paying off. Most of us are still dealing with the drought, but we know each day passed is one day closer to a good rain.  

Most of the state is trying to get their livestock turned out and hoping the grass will grow. We all get a little anxious this time of the year, and then we realize we don’t usually have grass until a certain time in May anyway, but we’re always hoping.

On the state level, it looks like the books are showing more dollars from tax revenue coming in than they expected, which we’ll gladly take. In a press release, the Consensus Revenue Estimating Group had the state General Fund around $45.5 million over what they predicted around the first of the year. 

The group also showed the state Budget Reserve Account had grown by $25.7 million over what they had predicted. I believe the state is projected to receive around $1.2 billion from federal stimulus dollars in October. 

We’re gaining, but we’re going to need some energy dollars to get into the black in the future. But, the state is going in the right direction.

With the number of fat cattle in the system, the packers are not having a problem filling their needs. The cattle feeders are having a tough time keeping current, while the consumer and retail groups are currently paying top prices for beef, as the demand is strong. 

We just need to get the glut out of the feedlots. Last week’s slaughter was estimated at 649,000 head, compared to 438,614 head last year, making the total year-to-date slaughter 3.5 percent higher than this time last year. 

Here at home, the cull bull market has hit $1.25 a pound and cull cows hit around 90 cents last week. We certainly hope these positives will last through the video calf and yearling sales this summer. 

I saw an article in BEEF Daily which talked about new research at the Sioux Falls’ SAB Biotherapeutics labs where a herd of genetically modified cattle are producing human antibodies that can neutralize COVID-19. 

This trial research is being tested as a potential treatment sponsored by the Natural Health Institute. Who knows, these treatments may some day work with other diseases.

This past winter’s meat shortage was an opportunity for some livestock producers to sell their beef and lamb directly to the local consumers. Those consumers had good experiences, not only with the meat product, but with those who raised the animals. 

They ended up with good feelings for the producers and in turn, listened to them as they shared about raising the animals. Those good feelings opened the door when producers explained how they care for the livestock and how important animal welfare is to them. 

Consumers also learned of the producers’ care of the land and what sustainability really was.

This is good, positive marketing.

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Dennis Sun: High Taxes Being Proposed Will Hurt Wyoming Agriculture

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By Dennis Sun, Wyoming Livestock Roundup

We are hearing more and more news from Washington D.C. about higher taxes coming our way. For those in agriculture, this is bad news as taxes are always bad for agriculture.

The taxes we are talking about are capital gains taxes, estate taxes and corporate taxes, to name a few. The dollars we pay go straight to Washington D.C. and most do nothing to help our lives.

If one is in manufacturing, and the corporate tax rate goes up, they just pass the costs on to the consumer. In other words, they raise the cost of the product to compensate for the tax.

However, in agriculture, where our products are commodities, the price is dictated by supply and demand. This means when I sell cattle I can’t say, “I want 20 cents per pound more to pay the higher taxes.”

When one sells grain or other crops, adding on extra costs will leave producers with a product no one wants – if products are overpriced, they will not sell.

Higher taxes will just make the farmer or rancher manage for tax write-offs to lower taxes instead of other management decisions to help the farm or ranch grow or, as some say to their accountant, “I want to pay the lowest taxes you can get me and still keep me out of jail.”

To some politicians, taxes are a game. This was explained to me by an article in the Washington Examiner titled, “The real reason Biden and the swamp want higher corporate tax rates.”

The article starts by saying, “Economists will say hiking corporate tax rates doesn’t help the working class or middle class. Budget wonks will say hiking the corporate rate won’t raise very much revenue.”

It continues, “People who understand business and taxation will explain higher corporate tax rates mostly increase economic distortions by pushing corporations to structure their spending more around tax avoidance, effectively letting the tax code and politicians dictate business decisions. Politicians will say this is the point.”

They say, always remember why half of Washington wants higher tax rates and why nearly all of Washington wants a complex tax code full of loopholes, exemptions and exceptions to exemptions – they want to force businesses and earners to seek Washington’s favor. They want people to play the game, and we have to.

High taxes cause everyone to hire someone to look for loopholes and exemptions and this will give special interest lobbyists more work, which will make the politics in Washington, D.C. larger.

Big government needs big politics to survive. Higher taxes cause businesses to focus their management on finding loopholes to pay fewer taxes instead of growing the companies and hiring more people. So we play the games.

Today, we are in a global market and this is especially true for agriculture. As higher taxes cause higher prices for the inputs ranchers and farmers need, American products will not sell well on global markets. Overseas markets will look away.

Big companies in America will look to move their headquarters and manufacturing plants to countries with lower corporate taxes. We have seen them do it before.

The American economy is trying to recover from the pandemic, and higher taxes will only put this recovery at risk.

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Dennis Sun: What A Burger

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By Dennis Sun, Wyoming Livestock Roundup

Earlier this week, I found an interesting article on ground beef in BEEF Magazine written by Lee Schulz. Schulz had written about the costs, source and current supplies of ground beef.

Many of those in the beef business and ground beef consumers probably take ground beef for granted.

For the consumer, until last June or so when the meat shortage appeared in the grocery stores, ground beef was the go-to meat product.

Ground beef is quick to prepare, cheaper than other cuts and everyone has the confidence to cook it correctly. It is not like a steak or a roast where one has to somewhat prepare it to cook. It is comfort food to most consumers.

The article Schulz wrote in 2020 stated the ingredients for a home prepared, quarterpound cheeseburger totaled $1.84 per cheeseburger.

He said this figure is based on the U.S. Department of Agriculture (USDA) Economic Research Service calculations using data from the U.S. Bureau of Labor Statistics.

The article says ground beef was the largest cost at $1.03, the cheddar cheese was 34 cents, the bun was 18 cents, lettuce was six cents and the tomato was 23 cents. Beef prices rose in 2020 because of the pandemic, to eight percent higher than in 2019, which was an eight cent per burger hike.

In 2020, U.S. ground beef consumption was estimated at just over 27 pounds per person, which is more than 46 percent of the total U.S. retail beef consumption.

We all know ground beef comes from the trimmings of the beef carcass. Generally one gets 50 percent lean trimmings from a fat steer or heifer and 90 percent lean trimmings from cull cows and bulls.

The trimmings from cull cows and bulls are important to beef producers, as they dictate the price the producer gets for these animals, and it is an important part of the producer’s yearly income.

As this income is important for cow/calf producers, it is equally important to those in the dairy business. Trimmings drive the market for those cull cattle.

The huge demand for ground beef is also what drives beef imports. Lean beef from other countries is mixed with U.S. tallow for ground beef.

While U.S. beef producers dislike beef imports, it does drive up the market for the U.S. beef to allow, but it is a better deal for meatpackers.

Some are predicting a rally for beef this spring. Meatpackers are making profits on the boxed beef sector and they are finding beef products are moving at a good rate.

This tells us the meatpackers will need cattle and will likely pay more if these boxed beef prices keep trending higher – and it looks like they will. As it looks now, the owners of finished cattle will be pushing the packers for even more dollars.

Cattle producers will then wonder how long this rally will last. They hope it will last long enough to reach summer video sale season, when the calves and yearlings sell. We can only hope as restaurant and foodservice opens up more that people will want a good ol’ steak or cheeseburger to eat.

But remember, ground beef is like beer – people love it during the good times and also during the bad times. 

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Dennis Sun: A Service Needed

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By Dennis Sun, Wyoming Livestock Roundup

Living in a life of agriculture or in a rural setting has aspects many cherish. The isolation or small-town atmosphere is just what some people want.

We know this by the number of people moving into the region and the number of families moving back to the region, as well as the money they spend to do so.

While one might enjoy the opportunities small town or rural settings provide, they also recognize the challenges that go with it.  It is easier to accept these challenges by growing up with them, rather than facing them when moving into a new setting.

One of the challenges recognized in rural settings is medical care, or more importantly, ambulance or medical transportation services. In past years, a person could pay for a membership to one of the Life Flight services of large hospitals in the region. The cost was affordable and provided great peace of mind.

I thought it was great. We signed up as a ranch and gave the service the coordinates for all the ranches. We did need to use it a couple of times, which made us appreciate the service all the more.

If one had to use the Life Flight service, but wasn’t a member, the cost of the service could reach $50,000 or more. In 2019, the Wyoming Legislature passed a bill which included language seeking to allow Medicaid to cover the Life Flight services, but was later rejected by Medicaid.    

There was another bill this session, which is at this time still alive, but is being amended to work. As I understand it, the issues lie in determining if it is a membership or a medical transportation insurance.

The Senate is trying to make the bill work, but there are some legalities to deal with and the state of Wyoming has limitations on their ability to regulate air ambulance services, as they are federally licensed air carriers under the federal Airline Deregulation Act.

The legislature is in a hard spot to find a way to make this work for the people without being taken to court.

Currently, some insurance companies do include Life Flight insurance.

But, in some instances, after someone has used the service and if the insurance company deems the medical condition to not require air transport, insurance may not pay some, or all, of the bill.

One could be stuck with a $50,000 bill.

There is private ambulatory insurance available, providing complete coverage worldwide for either fixed wing, helicopter and ground ambulance transportation for both family and single coverage. Those over 50 years of age can get lifetime coverage. On top of complete coverage, it provides vehicle return or return transportation and escort transportation.

At some point, this issue is going to get worked out for the betterment of rural residents. We need to stay in touch with state legislators, thank them for their past work and hopefully, for their work towards a solution in the future.

In past years, those who worked or lived in rural areas have been taken advantage of by some services. It is time to get it worked out – lives depend on it.  

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Dennis Sun: Non-Resident Hunters Are Good For Wyoming

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By Dennis Sun, Wyoming Livestock Roundup

One of the bills discussed for a short time during this legislative session in Cheyenne was Senate File (SF) 103, which would have raised the number of resident limited quota hunting tags and also raised the price of all hunting tags in the state. 

It wouldn’t have raised the total number of those limited quota tags, but would have taken half of the non-resident tags and allocated them to resident hunters.

These limited quota tags are for Bighorn sheep, bison, moose, mountain goat, elk, deer and antelope. Currently there is an 80-20 percent split between resident and non-resident hunting tags for antelope, deer, moose and mountain goat. Elk is at an 84-16 percent split.

If the bill were to pass, it would have raised resident hunters to 90 percent and lowered non-residents to 10 percent of the limited draw. Elk, deer and antelope tags are currently regulated by the Wyoming Game and Fish Commission and the rest of the tags are in state statute.

The good news is SF 103 failed in the Senate Travel, Recreational and Wildlife Committee, just as it had in four previous tries in recent years, thanks to five senators with good common-sense this year.

As a landowner, I was against the bill. I felt it hurt myself and other landowners who cater to and welcome non-resident hunters. Non-resident hunters are added income for landowners, and in the past number of years, many have realized this.

Non-resident hunters may employ a licensed guide, which could be the landowner, so they are assured their property will be taken care of and those hunting without permission are dealt with correctly. 

A non-resident hunter comes to the state knowing they will be spending money – both hunting and in the local community – and are glad to do so.

In my case, I really respect the non-resident hunter. They are always grateful for a place to hunt on private lands and they respect the quality hunt they paid for.

While I do lease my private lands to a licensed outfitter, I also save some private lands for resident hunters and limit the number to provide a quality hunt. But most every year, I find the resident hunter has crossed the boundary and is where they shouldn’t be.

I find the non-resident hunter always recognizes my private lands as a privilege to hunt on and always respects my private land rights.

Don’t get me wrong, there are good resident hunters. But, I always remember the disrespectful one percent who think it is their right to hunt anywhere they want. 

Some think owning a side by side or ATV gives them the right to hunt anywhere they can go and they really create a problem on the resource. Again, it is the one percent we remember over the winter.

Another reason I was happy to see this bill fail is there are a few issues in the bill need more discussion with more landowners, hunters, outfitters and Wyoming Game and Fish personnel. 

Gov. Gordon established the Wyoming Game and Fish Commissioners Task Force to discuss issues such as this bill contained. A task force has been formed with private landowners involved – let them do their job.

This task force has a lot of issues to review and change, such a landowner’s coupon issues, cost of hunting licenses and various other issues related to hunting. 

We thank the governor and commissioners for their work in establishing this task force, as we hope there will be good opportunities for everyone. Landowners do take care of a lot of wildlife. 

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Dennis Sun: Dire Thoughts About That Recent ‘Billion Dollar’ Storm

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By Dennis Sun, Wyoming Livestock Roundup

As I write this column, the March snowstorm is hopefully on its last leg. Some are calling it a “million dollar storm,” and it could be with the year-long drought some of us are experiencing. Maybe to keep in tune with all the spending in Washington, D.C., it was a billion dollar storm.

Whatever we call it, the moisture was well needed. We realize it was hard on livestock and those taking care of them, but it may have saved us for the coming year. We hear there are other storms following. We really don’t need another storm of this magnitude – whatever happened to a three-day rain?

Storms this time of the year, besides helping the soil moisture, spur activity in the cattle and sheep markets – especially in the Great Plains area. Stockers are headed for the weekly sale barns looking for summer cattle.

The last few days have produced a wide range of weather conditions across cattle country, and in some parts of the cattle and sheep country it is still terribly dry. It will be interesting to see what happens weather-wise between now and the middle of June.

According to Darrell Peel of Oklahoma State University in this week’s Drovers news, data from the middle two weeks of February as the result of the big storm in Texas and surrounding states, showed steer and heifer slaughter dropped over seven percent year-over-year before coming back. Steer carcass weights dropped sharply in February, declining by 20 pounds – from 919 pounds to 899 pounds – in the last two weeks of the month.

Twenty pounds per carcass may not sound like a lot, but in the U.S., we are killing around 650,000 head of cattle weekly.

Peel said, “The last week in February marks the first time in 71 weeks – since October 2019 – weekly steer carcass weights were lower than the previous year. Heifer carcass weights dropped 6.1 percent from 850 to 834 pounds in the same period.”

Beef production has since come back to average numbers before the storm in February.

Before the March storm last week, cattle volume in wheat country was high as cattle were moved off wheat fields in the Southern Plains. In the Northern Plains and southwestern part of the country, volume was traditionally low with ranchers and stockers watching the drought. It could pick up now for those looking to buy yearlings.

There are a few reasons yearling prices may be rising, demand is strong in the Southern Plains, supported by a good premium of fall feeder cattle futures to nearby contract levels.

The value of the U.S. dollar has weakened substantially in the past year. As we know, a weaker dollar generally makes U.S. agriculture products more competitive in the world export market.

After a challenging currency position in 2020, analysis says the outlook for a stronger Australian currency and Euro should make U.S. beef and pork exports the largest beneficiaries this year.

Couple this with the lower number of cattle in the U.S. and the growing demand of the global foodservice; it all paints a positive picture.

But, as always, we’ll have to watch the weather, exports and the Washington, D.C. happenings.

Two out of three isn’t bad.

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Dennis Sun: Slower Mail, Higher Prices

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By Dennis Sun, columnist

Those who live in rural areas, as well as those living in urban areas, cherish electricity, telephone, broadband and a prompt U.S. Postal Service. It is something we’ve become accustomed to.

So far this year, everything seems to be reliable, except for the mail service.

We hear it has big troubles. Last year, the USPS had a booming business. The agency netted a positive cash flow of almost $2 billion in the first half of the year.

How can the USPS be in such financial trouble? From what I can find, there are two looming issues – a 2006 law passed by Congress and unions.

In 2006, Congress passed the Postal Accountability and Enhancement Act during a lame-duck session which required the USPS to pre-fund 75 years worth of retiree healthcare benefits in a span of roughly 10 years.

So far, the USPS has paid $20.9 billion into benefits, but the agency deferred around $47.2 billion as of September 2019. Those delayed payments still count as an expense, meaning regardless of the agency’s financial success over the last few years, its balance sheet will continue to report enormous losses.

I’ve heard there are six unions involved in the USPS, and those unions got to Congress during the lame-duck session of 2006. Lord only knows how it got passed.

At the moment, the USPS is implementing policies to slow down mail delivery, especially in rural areas, due to a loss of revenue.

Last year, President Trump appointed a donor to become the USPS Postmaster General, along with his appointees on the board. They cut overtime and other parts of USPS spending.

All at once, the mail slowed down and their customers started complaining – rightfully so. The complaints were enough to prompt Postmaster General Louis DeJoy to suspend operational changes in August 2020 after heavy criticism over postal delays. He now plans to release a new 10-year strategic break-even plan, which includes slower mail and higher prices, potentially as soon as late March.

House Oversight and Government Reform Committee Chairwomen Carolyn Maloney (D-NY) made the case for action as the USPS faces shrinking volumes of first-class mail, increased costs of employee compensation and benefits, and higher unfunded liabilities and debt.

Maloney drafted legislation on USPS financial issues, such as eliminating a requirement to pre-fund retiree health benefits and require postal employees to enroll in government-retiree health plan Medicare for a savings of $40 to $50 billion over 10 years.

DeJoy said the reform bill, the USPS Fairness Act, “Alone doesn’t solve the problem.”

One union is asking Congress to award the USPS an additional $15 billion and called for a separate modernization grant of $25 billion. The USPS will also ask the Biden administration to recalculate pension obligations, which would save the USPS around $12 billion.

In December, Congress converted a $10 billion U.S. Treasury loan to the USPS into a grant and now the USPS wants more stimulus dollars.

The USPS just announced a Wisconsin-based maker of military trucks, Oshkosh Corp., won a long-delayed $6 billion, 10-year contract to build as many as 165,000 mail trucks.

This is mind boggling!

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Dennis Sun: Coal is Still King

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By Dennis Sun, Wyoming Livestock Roundup

Hopefully we won’t have any more storms this year like the storm we endured this past week, which was one for the books. It made us further appreciate coal and natural gas, and we wish Washington D.C. would as well.

If we look back in the records or listen to Weatherman Don Day, the years of a strong La Niña always produce a polar vortex weather event such as the one we saw the week of Feb. 8. The last strong La Niña was in the winter of 2011-12, and records show we had the same type of storm across the nation around this time. Weather patterns tend to repeat themselves.

This past storm was ranked as the second worst storm to ever happen in the country. The main reason for this is the storm covered 70 percent of the nation. It was the fourth time Houston had snow, and we saw pictures of icicles on South Padre Island, Texas. In Louisiana, the cold shut down Mardi Gras celebrations – that is cold.

One time, my family and I were in San Antonio, Texas during an early Easter. When we left Wyoming, the temperature was 30 degrees below zero. Two days later, it hit southern Texas and froze everything up.

The fountains at the Alamo looked like ice sculptures, and most of the houses had frozen water pipes as the main water pipes came out of the ground and up the outside of the houses. What a novel idea. Let’s face it, the south can’t deal with cold. Some parts of southern Texas have had no electricity for over 30 to 40 hours.

Many of us have heard about wind turbines freezing up, and it’s true. But, according to news reports, the polar vortex weather has not only shut down electrical generation from wind and solar energy sources, but also other conventional energy sources – especially in the energy-rich state of Texas.

During the ongoing cold, coal and natural gas saved the day, providing over one-half of the electricity on the power grid which serves Texas and its neighboring states. Those southern states also learned even with adequate power sources, the current power grid in most states is not able to keep up with demand of a polar vortex.

The big issues are the severe cold, lack of adequate infrastructure, the large area of the storm and not planning for all of the above.

The best way to plan for these issues, besides building more and better infrastructure, is to have diverse outlets of energy production. The current administration and others in Washington, D.C. want to eliminate oil, natural gas and coal production.

We learned this past week solar and wind energy alone are not going to cut it.  During a normal summer, wind can provide around 60 percent of the power for the state of Texas, but during a harsh winter, it’s a different matter.

Utilities are going north and using coal powered electricity to power up the Southern Plains states. It’s a mess. I’ve been visiting with people from the South. They’re going to remember this storm for a long time, and it’s not even over yet. A coal train from Wyoming looks really good right now.

And, as one person put it yesterday, “There’s not many Texans supporting the Green New Deal this week.”

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Dennis Sun: Rural Broadband, Like Rural Electricity Was, Is Overdue In Rural Areas

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Dennis Sun
Publisher, Wyoming Livestock Roundup

Living in rural areas does have its advantages and adds to quality of life, but one has to realize that there are some shortfalls. Some have no choices, as their businesses are located on a farm or ranch.

Lately, as we see more and more people moving to our part of the country from back east or California, a year later we hear how the romance of living out in God’s country seems diminished. Not receiving the mail daily or a newspaper on Sunday is hard to deal with and what to do with the garbage is a pain – no more of “out of sight, out of mind.”

As you visit with people who have moved out here for a year or so, they tell of their experiences dealing of “living in the wild.” From not having a snow plow or plowing out the road a couple times a day to erratic cell service, these are huge issues to them.

The people who have been here over a year all have a common complaint, everybody in the family wants to come out and visit in the summer, even family relatives they don’t know. Unless they put their foot down, their summers were spent cooking, washing bedding and entertaining relatives.

One issue binding most rural people is internet service – high speed internet service. In the last couple of years, there has been some movement to help with rural internet service.

The U.S. Department of Agriculture (USDA) during the Trump administration had huge grants to get internet service into rural areas. The Wyoming Business Council also has a broadband manager and established a program get broadband to rural areas.

Let’s face it, in the Intermountain West and Great Plains areas, we really have huge rural areas. If internet companies could make a profit supplying these areas with coverage, they would already be there. FedEx and United Parcel Service, I’m told, lose money servicing our area. That means we have to get creative to find the funds.

A couple years ago, during the Economically Needed Diversity Options for Wyoming (ENDOW) planning, rural connectivity was the number one issue for the agricultural committee, and we also now realize the importance of connectivity through the pandemic. In fact, some others on the ENDOW Committee didn’t want anyone on the ag committee to bring the issue to light, as they thought it would hinder businesses wanting to move to Wyoming.

Some 75 years ago, ranchers and farmers had the same issues over electricity as we do currently with internet service, and we fixed that problem with Rural Electric Cooperatives, didn’t we?  It was developed by using low interest government loans.

We realize establishing good, affordable rural connectivity will attract others to move into rural areas, which may cost counties more to service rural areas and may bring on more subdivision in rural areas.

 I think it is possible to control the added costs and to protect farms and ranches so they are able to provide food and fiber for all of us while also having affordable broadband, we just have to make it a priority and that today is the biggest stumbling block.

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