Group Praises Vilsack, Holder and Varney
for Approaching Cattlemen's Competition Issues with Open Minds
Fort Collins, Colo. – R-CALF USA wishes to express its gratitude to Agriculture Secretary Tom Vilsack, U.S. Attorney General Eric Holder and Assistant Attorney General for Antitrust Christine Varney for hosting the first-ever historic joint workshop on competition issues in the livestock industry on Aug. 27, 2010, in Fort Collins, Colo. An estimated 2,000 producers were in attendance, many of whom were R-CALF USA members.
Much of the officials' opening remarks made clear that they recognize Rural America is in crisis and that young people who want to farm or ranch should be able to do so and make a fair profit, and that to correct the situation, there must be an open, public dialogue on these very complex, but important issues.
"As I travel across the country, I hear a consistent theme: producers are worried, worried whether there is a future for them and for their children in agriculture," said Secretary Vilsack. "There are many ingredients needed for someone to get into farming and ranching. He or she needs to have access to capital to get the land, equipment and livestock. They need to be willing to take significant risks and work very hard, and they need to know that there's an open and competitive market for their livestock and for their commodities. Livestock producers are extraordinarily innovative, despite enduring some very difficult times. USDA is designed to support producers' ability to join together to market their products, to find value-added opportunities and enter into contract arrangements. Additionally, we look to support producers in their efforts to work hard and to receive a premium for th eir efforts."
Vilsack cited some worrisome statistics: 1) The Top 4 cattle packers control roughly 80 percent of steer and heifer procurement, and the Top 4 hog packers control roughly 65 percent of the market; 2) In 1994, the spot market for hogs was 62 percent. Today, it is only roughly 5 percent, nationally, and new figures, just recently developed show it dipping below 4 percent for the first time ever; 3) In cattle, depending upon what part of the country you live in, the spot market is also rapidly declining. In 1999, the spot market for cattle was 68 percent. Today, it's closer to 52 percent, nationally, and in some parts of the country it is less than 30 percent.
"This thinning spot market is a concern because it sets the base prices in marketing contracts," he emphasized.
Vilsack also indicated that in the past 40 years, the U.S. has lost 800,000 farmers and ranchers, and those that remain are aging. From 2002 to 2007, the average age of a farmer increased from 55 to 57. The number of farmers aged 75 and older has increased by 20 percent over the same period. Meanwhile, the number of operators under 25 years of age has decreased by 30 percent.
"Some have argued that the status quo is better for livestock agriculture and that the current system has resolved it in efficiency and innovation (but) I think we need to take a look at where we are," Vilsack explained. "Under the status quo, there has been a significant exodus from agriculture and a depopulating of Rural America. The sad fact is that young people find it very difficult to get into this important occupational calling we call farming. Only 50 million people now live in Rural America. Urban areas are growing at a much faster pace, and more than half of rural counties have lost population.
"Today, if you consider all family farm operations, only roughly 10 percent of family farm income comes from farming, he continued. "More and more of our farmers are looking elsewhere for their primary source of income. Rural communities have higher poverty rates than the rest of the country. The average per capita income of rural residents is approximately $11,000 below their urban and suburban counterparts.
"While the causes of decline in farm numbers is complex, it's no secret that livestock and poultry marketplaces have become more consolidated and vertically integrated, and although there can be efficiencies found in these trends, there is also the potential for unfair practices and limited transparency, which increases risk for producers," Vilsack added. "We continue to seek answers and solutions, and under our watch at USDA, we've taken a number of steps in an effort to improve competition in agriculture. We've increased GIPSA's budget to improve enforcement over unfair and deceptive practices in the marketplace, and the department is hiring more attorneys and field investigators to handle complex investigations and other violations."
Attorney General Holder told the crowd that this new partnership between the U.S. Department of Justice (Justice), the U.S. Department of Agriculture (USDA) and leaders in the agriculture industry is, "a partnership forged, not only so we can better understand the conditions that you face every day, though that's a first and crucial part of this effort, but also – and most important – so we can act.
"None of us believes that antitrust enforcement is the solution to every problem, but it is a solution, and it is a part of our larger commitment to championing the pro-consumer principles that will promote competition in the agricultural sector…," he continued. "We are here to listen. Not only do we welcome your insights and recommendations – we're relying on them.
"As much as (our) discussion is about cattle, hog and other livestock industry issues, it is also about our nation's founding ideals about fairness and about equal opportunity…our conversation is about much more than simply last year's trends or this year's challenges," he added. "It's about your livelihoods. It is about your families. It is about this region's economy, and our centuries-old American way of life.
"America's farmers put food on the table for all of us, and there's something wrong in the system when the farmers can't make a living – when they cannot pass that farm down to their children," emphasized Asst. Attorney General Varney. "We all need to approach this with an open mind. We all have a part in the solution. And, we don't have an agenda. I don't have an outcome. I don't know what the answer is. But I sure know there's a problem, and I'm here to try to understand what it is we can do…to help fix the problem, to keep American agriculture as vibrant as it's been for the last two centuries."
"R-CALF USA members are fortunate to finally have the opportunity to make our voices heard in an effort to make sure we preserve a competitive market capable of generating a fair, competitive profit from our efforts," said R-CALF USA Region VI Director/President Max Thornsberry, DVM. "This is a once-in-a-lifetime opportunity, and we must seize it to correct these producer issues now. If we don't, there likely won't be a U.S. cattle industry comprised of independent cattle producers in another decade or so. Our members look forward to working with USDA and the Justice Department in the coming months, and again, we thank Agriculture Secretary Vilsack, U.S. Attorney General Eric Holder, and Assistant Attorney General for Antitrust Christine Varney for recognizing that Rural America is in crisis and we appreciate their desire to take action to reverse that trend."
