Senate-- Don't Chickenize US Cattle Industry!!!

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October 18, 2007



Urgent Message to Senate: Don’t Send U.S. Cattle Industry Down Same Path as Poultry, Hog Industries



Note: This op-ed was written by R-CALF USA Region II Director Randy Stevenson, who also serves as co-chair of the group’s marketing committee. Please contact Shae Dodson for a head shot and/or bio.



The cash cattle market is rapidly disappearing. The question to ask is “Will there be open, accessible and competitive markets without government oversight?” History is replete with examples that answer with a resounding “No!” What would happen to Wall Street if there were no government oversight? It would be economic anarchy.



The U.S. Senate will soon craft its version of the 2007 Farm Bill, and now more than ever, it is critical that those Senators ensure that independent U.S. cattle producers have the opportunity to remain profitable. With open access to the marketplace, producers will continue to provide economic support to their respective rural communities and states. By including a Livestock Title in the 2007 Farm Bill, the Senate can assure the economic viability of Rural America.

The Livestock Title contains many provisions not yet relevant to the cattle industry. It addresses many severe problems that developed because Congress allowed large meatpackers to exert undue control over the production and marketing of poultry and hogs. This control eliminated the competitive cash market for poultry and nearly eliminated the competitive cash market for hogs.

The once independent poultry and hog producers are now contract growers, and only now is Congress stepping in to regulate the relationship between the contract grower and the meatpacker in an effort to fix what has become an untenable problem. The packers for these two industries possess a disparate share of market power, and the U.S. cattle industry does not want to go there.

We don’t want our cash cattle market usurped by large meatpackers, and we don’t want to be forced to enter grower contracts, but that’s where we’re headed unless Congress does for us what it did not do for those other industries. Congress must take proactive steps to ensure U.S. cattle markets remain open and competitive, and free from meatpacker control.

Control is gained by restricting market access. Meatpackers tie-up large numbers of slaughter-ready cattle without negotiating a price. Independent producers must then accept a discounted price just for the opportunity to access the ever-shrinking cash market. Then, the value of all of the captive, un-priced cattle controlled by the meatpackers is based on the depressed cash market.

This vicious circle is why so few young people enter the cattle industry – competition is eroding, fast. Congress can reverse this negative trend by voting to reform the rules that define the cattle market so competition – not controlled access – dictates the value of cattle sold by independent cattle producers.

If you give an intelligent young man or woman with some common sense a pocket full of cash and send them to Wall Street, they can compete side by side, openly, fairly and transparently, with Warren Buffet. But if you take the same situation and send that young person to compete in agriculture, when it comes time for them to sell their product in today’s world, they simply cannot compete because they do not have access to the market in an open, fair, competitive and transparent manner. Instead, without government oversight, they find a market ruled by market power.

In addition to the reforms already contained in the Livestock Title, R-CALF USA also urges the Senate to include the following in the Senate Farm Bill: 1) Limitation on packer ownership of cattle (S. 305); 2) Captive Supply Reform Act (S. 1017); 3) Disallow meatpackers from alleging a “business justification” to avoid PSA requirements.

Agriculture Committee Chairman Tom Harkin’s Livestock Title contains provisions important to the cattle industry including: 1) Establishment of a Special Counsel for Agricultural Competition to enforce the Packers and Stockyards Act (PSA); 2) Requirement for regulations to define “unreasonable preferences or advantage” under the PSA; 3) Clarification that producers need not also prove a competitive injury if they were subject to an unfair practice; 5) Establishment of attorney fees as a remedy for violations; 6) Implementation of mandatory county-of-origin labeling (COOL).
 

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