Agman and/or SH

[agman]

Agman, "Thanks for admitting I am correct. The "buts" are just diversion from the real issue"

Don't be doning the laurel wreath quite yet, you're correct in the sense as that is the strategy behind a strawman - making a statement that can't be refuted but at the same time tangenting off the topic.....

The real issue can be found in Section 202. Have you read it? Would you care to explain how those 7 subdivisions deal with competition between packers and not the packer/producer relationship? Here, let my throw out subdivision (e); It shall be unlawful for any packer.....Engage in any course of business or do any act for the purpose or with the effect of manipulating or controlling prices, or of creating a monopoly in the acquisition of, buying, selling, or dealing in, any article, or of restraining commerce.

Now, are you still going to tell us the PSA is not about the packer/producer relationship?

Yes and thanks. You have made my point. Where is the word producer?

Where is the word "competiton"? Who do you think would be the target of manipulated or controlled prices or a monopoly?

Packers - thus the name Packers and Stockyards Act.

 

[Econ101]

You are right, Agman, it does not say producer, it says any particular person. That is a much broader meaning than producer but also includes producers, feeders, or anyone else who is a person. It does not include cattle, but PETA is working on that one as you say.

Sec. 202 (3) It shall be unlawful for any packer with respect to livestock, meats, meat food products, or livestock products in unmanufactured form, or for any live poultry dealer with respect to live poultry, to:

(a) Engage in or use any unfair, unjustly discriminatory, or deceptive practice or device; or

(b) Make or give any undue or unreasonable preference or advantage to any particular person or locality in any respect whatsoever, or subject any particular person or locality to any undue or unreasonable prejudice or disadvantage in any respect whatsoever; or

(c) Sell or otherwise transfer to or for any other packer or any live poultry dealer, or buy or otherwise receive from or for any other packer or any live poultry dealer, any article for the purpose or with the effect of apportioning the supply between any such persons, if such apportionment has the tendency or effect of restraining commerce or of creating a monopoly; or

(d) Sell or otherwise transfer to or for any other person, or buy or otherwise receive from or for any other person, any article for the purpose or with the effect of manipulating or controlling prices, or of creating a monopoly in the acquisition of, buying, selling, or dealing in, any article, or of restraining commerce; or

(e) Engage in any course of business or do any act for the purpose or with the effect of manipulating or controlling prices, or of creating a monopoly in the acquisition of, buying, selling, or dealing in, any article, or of restraining commerce; or

(f) Conspire, combine, agree, or arrange, with any other person (1) to apportion territory for carrying on business, or (2) to apportion purchases or sales of any article, or (3) to manipulate or control prices; or

(g) Conspire, combine, agree or arrange with any other person to do, or aid or abet the doing of, any act made unlawful by subdivision (a), (b), (c), (d), or (e). (7 U.S.C. 192)

 

[agman]

You are right, Agman, it does not say producer, it says any particular person. That is a much broader meaning than producer but also includes producers, feeders, or anyone else who is a person. It does not include cattle, but PETA is working on that one as you say.

Sec. 202 (3) It shall be unlawful for any packer with respect to livestock, meats, meat food products, or livestock products in unmanufactured form, or for any live poultry dealer with respect to live poultry, to:

(a) Engage in or use any unfair, unjustly discriminatory, or deceptive practice or device; or

(b) Make or give any undue or unreasonable preference or advantage to any particular person or locality in any respect whatsoever, or subject any particular person or locality to any undue or unreasonable prejudice or disadvantage in any respect whatsoever; or

(c) Sell or otherwise transfer to or for any other packer or any live poultry dealer, or buy or otherwise receive from or for any other packer or any live poultry dealer, any article for the purpose or with the effect of apportioning the supply between any such persons, if such apportionment has the tendency or effect of restraining commerce or of creating a monopoly; or

(d) Sell or otherwise transfer to or for any other person, or buy or otherwise receive from or for any other person, any article for the purpose or with the effect of manipulating or controlling prices, or of creating a monopoly in the acquisition of, buying, selling, or dealing in, any article, or of restraining commerce; or

(e) Engage in any course of business or do any act for the purpose or with the effect of manipulating or controlling prices, or of creating a monopoly in the acquisition of, buying, selling, or dealing in, any article, or of restraining commerce; or

(f) Conspire, combine, agree, or arrange, with any other person (1) to apportion territory for carrying on business, or (2) to apportion purchases or sales of any article, or (3) to manipulate or control prices; or

(g) Conspire, combine, agree or arrange with any other person to do, or aid or abet the doing of, any act made unlawful by subdivision (a), (b), (c), (d), or (e). (7 U.S.C. 192)

Any particular person = packers cannot collude. Entering marketing agreements is not illegal, in fact that right is protected by law. Review the Glickman vs IBP case which IBP won.

 

[Jason]

Sounds pretty simple to me. Tyson can't call up Cargill and say you bid that set of cattle we'll bid this set.

Tyson can't say we'll bid all the cattle and sell you half of them at the same price so we can get them bought cheaper.

Doesn't say Tyson can't bid low. Just says they can't call the competition and agree to all bid low. Don't like one bid get another.

 

[rkaiser]

That a boy Jason. Stick up for those ethical, moral buyers of cattle and goers to church on the Sunday. Give me a break. Do you truely beleive that there is never ever any communication between buyers in this industry?

 

[Econ101]

Sounds pretty simple to me. Tyson can't call up Cargill and say you bid that set of cattle we'll bid this set.

Tyson can't say we'll bid all the cattle and sell you half of them at the same price so we can get them bought cheaper.

Doesn't say Tyson can't bid low. Just says they can't call the competition and agree to all bid low. Don't like one bid get another.

Jason, I don't need your interpretation. They are so shallow as to not warrent comment. You might get a job clerking at the 11th circuit, however. All it takes is to kiss a little -------. Seems you might be qualified if you can claim dual citizenship with SH based on his previous posts.

 

[Econ101]

Agman, I have never argued against marketing agreements. I argue against their abuse. The courts can not see the difference and that is why marketing agreements are under fire. The packers could lose a lot more if they are not careful.

The only ones you will win over on this thread are the ones who want to suck up to the packers. I say have them. They are not worth being in the cattle business.

 

[ocm]

Sounds pretty simple to me. Tyson can't call up Cargill and say you bid that set of cattle we'll bid this set.

Tyson can't say we'll bid all the cattle and sell you half of them at the same price so we can get them bought cheaper.

Doesn't say Tyson can't bid low. Just says they can't call the competition and agree to all bid low. Don't like one bid get another.

Jason, I don't need your interpretation. They are so shallow as to not warrent comment. You might get a job clerking at the 11th circuit, however. All it takes is to kiss a little -------. Seems you might be qualified if you can claim dual citizenship with SH based on his previous posts.

There doesn't need to be any direct communication. Tyson, Cargill and Swift each buys a different kind of cattle. There is a little overlap, but not much. Tyson goes for yield, Cargill goes for grade and Swift is kind of in between. On any given pen of cattle I have heard buyers say something like this. Swift: "They're not done yet, call Tyson." You might get a bid from Tyson, but nobody else yet. Two weeks later Tyson says they're overdone, to call Swift or Cargill. Swift will give you a bid, but Cargill says they're not done yet.

Different cattle types will also make a difference in who is willing to bid, too. These three packers have tacitly(without speaking) divided the market. There is some, but very little head to head competition on any given bunch of cattle.

 

[Sandhusker]

Yes and thanks. You have made my point. Where is the word producer?

Where is the word "competiton"? Who do you think would be the target of manipulated or controlled prices or a monopoly?

Packers - thus the name Packers and Stockyards Act.

You're doing a masterful job of dummying up, Agman. Packers the victim of a packer's monopoly? :lol: Kind of like SH trapping himself! :lol: I believe you are in a tree.

What did you say just yesterday about perpetuating a lie?

 

[Beefman]

Sounds pretty simple to me. Tyson can't call up Cargill and say you bid that set of cattle we'll bid this set.

Tyson can't say we'll bid all the cattle and sell you half of them at the same price so we can get them bought cheaper.

Doesn't say Tyson can't bid low. Just says they can't call the competition and agree to all bid low. Don't like one bid get another.

Jason, I don't need your interpretation. They are so shallow as to not warrent comment. You might get a job clerking at the 11th circuit, however. All it takes is to kiss a little -------. Seems you might be qualified if you can claim dual citizenship with SH based on his previous posts.

There doesn't need to be any direct communication. Tyson, Cargill and Swift each buys a different kind of cattle. There is a little overlap, but not much. Tyson goes for yield, Cargill goes for grade and Swift is kind of in between. On any given pen of cattle I have heard buyers say something like this. Swift: "They're not done yet, call Tyson." You might get a bid from Tyson, but nobody else yet. Two weeks later Tyson says they're overdone, to call Swift or Cargill. Swift will give you a bid, but Cargill says they're not done yet.

Different cattle types will also make a difference in who is willing to bid, too. These three packers have tacitly(without speaking) divided the market. There is some, but very little head to head competition on any given bunch of cattle.

Econ: Jason makes valid points. If theyr'e shallow, why so? Please shoot the message, not the messager.

OCM: You must be referencing a very regional or personal situation. All three actively and aggressively procure and recruit quality AND yield in TX, OK, KS, CO. All three also have grid programs which reward for quality AND yield. The competition is very significant.

Beefman

 

[Econ101]

Beefman, Jason needs to bring to this discussion a little more intelligence. He has shown that he has it. Me goading it out of him is sometimes appropriate. I wouldn't mind comments like his from someone who was a little less informed or obviously on a different level of understanding. SH, for example.

Market rigging and manipulation is much more sophisticated than the simple case that Jason described. Evidence of market manipulation is rarely found in phone calls. It is found, and proven, in the actions of market participants, and rarely in their admitting to it.

Jason's scenario denegrates the intelligence required to see the complex actions that form the basis of a case. If he doesn't understand it, he should just ask questions instead of trying to interpret something he knows little about. From the Canadian experience with the packers he has learned little else than to pick a more self serving side. Although I do not have an ethical problem with this from the cattleman's side, since cattlemen do not have market power and do not control the choices, he does not have to defend them so adamantly. It plays into the hand of market manipulation.

Think about it. Cattle buyers gave sellers basically two choices: 1) sell cattle in an artificially low formula pricing or 2) take your chances on the cash market that the buyers did not get enough supply for that week's needs.

Choice 1 was artificially low because the formula price was based on a cash price that was shown to be discriminated against. The formula base price should have been the average market price for cattle. It was not. It was only the discriminated cash market and not a weighted average for the whole market. Taylor's calculations was a difference between these two.

Choice 2 was the cash market. If choice 2 was chosen, and the cattle buyers convinced enough cattle sellers that they had the supply and or inventory to turn away and not buy, then it could be discriminated against again. Jason acts as if there were a lot of buyers representing many different companies.

Jason learned nothing about what just happened in Canada when they lost only one buyer, the U.S. He still wants to play the "market power doesn't matter" theory. If he can not learn any quicker than that, he needs an admonishment or a failing grade or whatever. When you are handed things, as he has been, you don't respect them as much as if you earned them. Jason is intelligent enough to figure all this out without sucking up to the packers on this forum. If you have to suck up and be someone's "favorite" to be successful, then maybe you are not successful. Maybe you are just a suck up. Jason has the potential to be better than that.

 

[rkaiser]

Econo wrote

Jason learned nothing about what just happened in Canada when they lost only one buyer, the U.S. He still wants to play the "market power doesn't matter" theory.

This is what I cannot understand about any Canadian who continues to argue any type of change.

Most all of our industry groups simply want to see things the way that they were prior to BSE. Forget about the fact that Cargill and Tyson now control 85% of the slaughter capacity in Canada, and that the large majority of our exports are to the USA through these two packers. Canada will be a net beef exporter for a long time to come, and this dependence makes us even more vulnerable to disaster than we were before BSE.

BSE turned into a windfall for Cargill and Tyson due to present industry policy. And it will happen again, when the time is right. Painting the mutinationals as ethical civil business partners to the producer will only serve to allow more the next time. The first time is always the hardest Jason - "said the little white boy in the jail cell shower".

 

[Jason]

What you guys don't understand is that Canada lost it's major BEEF customer.

We could have had 2500 packers with the same total capacity we had and still been in the same mess. Quite likely worse, because the smaller plants might have needed higher margins to survive.

In Canada Cargill and Tyson are both licenced to kill and certify CAB cattle. Direct competition for the same cattle.

If a buyer bids a pen of cattle and another buyer looks at the same pen, whose fault is it if the seller tells buyer 2 he wants 1 cent more than buyer 1 offered him? The second buyer knows what buyer 1 is offering but there was no collusion.

The principles behind the PSA are very simple. Intelligent people can understand things that are simple, others looking for conspiracy can't believe anything is simple.

 

[Econ101]

What you guys don't understand is that Canada lost it's major BEEF customer.

We could have had 2500 packers with the same total capacity we had and still been in the same mess. Quite likely worse, because the smaller plants might have needed higher margins to survive.

In Canada Cargill and Tyson are both licenced to kill and certify CAB cattle. Direct competition for the same cattle.

If a buyer bids a pen of cattle and another buyer looks at the same pen, whose fault is it if the seller tells buyer 2 he wants 1 cent more than buyer 1 offered him? The second buyer knows what buyer 1 is offering but there was no collusion.

The principles behind the PSA are very simple. Intelligent people can understand things that are simple, others looking for conspiracy can't believe anything is simple.

Jason, you don't know the elements of the beef manipulation scheme in the U.S. that 12 intelligent people who understood things that were simple, and you dismiss the case with your "conspiracy" tag. You lost your major buyer of beef, the U.S., and all you can do is whine and cry about it and how unfair it is to you and your interests. Yet at the same time you call the people who were involved in the Pickett case "conspiracy" nuts for the abuse of market mechanisms by the few market players who have manipulated prices. If you can't see the abuse of the free market system in the Pickett case, why do you claim you have any right to proclaim that the U.S. should abide by free market principles? Sometimes you have to look beyond yourself and stop sucking up to others to survive. Stand for something, be a man.

If you had more than 4 buyers, your arguments would be compelling. With the market concentration in the industry today, it is not. The decrease in the "packer margins" is just a red herring for more market concentration and power.

If Canada had 2500 packers and the market wasn't so concentrated do you really think that the BSE thing would have played out the way it did and hurt Canadian producers? Would R-CALF be so against the Canadian imports? I doubt it. Look beyond your own nose for a change.

 

[ocm]

Jason, I don't need your interpretation. They are so shallow as to not warrent comment. You might get a job clerking at the 11th circuit, however. All it takes is to kiss a little -------. Seems you might be qualified if you can claim dual citizenship with SH based on his previous posts.

There doesn't need to be any direct communication. Tyson, Cargill and Swift each buys a different kind of cattle. There is a little overlap, but not much. Tyson goes for yield, Cargill goes for grade and Swift is kind of in between. On any given pen of cattle I have heard buyers say something like this. Swift: "They're not done yet, call Tyson." You might get a bid from Tyson, but nobody else yet. Two weeks later Tyson says they're overdone, to call Swift or Cargill. Swift will give you a bid, but Cargill says they're not done yet.

Different cattle types will also make a difference in who is willing to bid, too. These three packers have tacitly(without speaking) divided the market. There is some, but very little head to head competition on any given bunch of cattle.

Econ: Jason makes valid points. If theyr'e shallow, why so? Please shoot the message, not the messager.

OCM: You must be referencing a very regional or personal situation. All three actively and aggressively procure and recruit quality AND yield in TX, OK, KS, CO. All three also have grid programs which reward for quality AND yield. The competition is very significant.

Beefman

In testimony at the Pickett trial provided by Tyson it was that indicated that Tyson bought for yield while Cargill bought for grade. That was not regional.

Each packer's grid is set up differently to reward (that should be penalize) different aspects. They have effectively divided the market. It has been done , not through active collusion but rather passive collusion. What you describe differs from both Pickett trial testimony and my own experience.

 

[Beefman]

There doesn't need to be any direct communication. Tyson, Cargill and Swift each buys a different kind of cattle. There is a little overlap, but not much. Tyson goes for yield, Cargill goes for grade and Swift is kind of in between. On any given pen of cattle I have heard buyers say something like this. Swift: "They're not done yet, call Tyson." You might get a bid from Tyson, but nobody else yet. Two weeks later Tyson says they're overdone, to call Swift or Cargill. Swift will give you a bid, but Cargill says they're not done yet.

Different cattle types will also make a difference in who is willing to bid, too. These three packers have tacitly(without speaking) divided the market. There is some, but very little head to head competition on any given bunch of cattle.

Econ: Jason makes valid points. If theyr'e shallow, why so? Please shoot the message, not the messager.

OCM: You must be referencing a very regional or personal situation. All three actively and aggressively procure and recruit quality AND yield in TX, OK, KS, CO. All three also have grid programs which reward for quality AND yield. The competition is very significant.

Beefman

In testimony at the Pickett trial provided by Tyson it was that indicated that Tyson bought for yield while Cargill bought for grade. That was not regional.

I don't know what was / wasn't testified about regarding grade and yield and who bought what. Plus, that was nearly two years ago. I'm talking about today.

Each packer's grid is set up differently to reward (that should be penalize) different aspects. They have effectively divided the market. It has been done , not through active collusion but rather passive collusion. What you describe differs from both Pickett trial testimony and my own experience.

Yes, there are premiums and discounts. How is getting paid for hitting a specific target dividing the market? In your example, what do you mean by active and passive collusion?

Beefman

 

[Econ101]

Active collusion is when there was an agreement between packers for their buying actions.

Passive collusion is when there is no agreement set up, but the packers refrain from actively bidding against each other for the the cattle. Bidding on different types also shows a segmentation of the wholesale to retail level which is non competitive under the court's take on the PSA of "proof of harm to competition" additional requirement.

Both types of collusion are non competitive outcomes for the cattleman.

OCM may have something else to add, subtract, or disagree with, as this is my take.

 

[pointrider]

Hello Econ!

I have a question for you. Before I ask the question let's do this. Let's assume that starting tomorrow everything in marketing (since that is your preferred area of expertise and interest per your words) - the marketing of beef calves, cows, bulls and case ready meat - is now being done exactly the way you would like for it to be done in a free market, free enterprise situation. No PSA problems. All cash market sales through local sale barns with lots of buyers bidding on the cattle every day.

Also, the exact same situation as today in terms of supply and demand. In other words, starting with the actual volume of stocker and feeder calves that is being marketed today and the same number of exposed breeding cows in the nation's herd. And all of the other factors that play a part in the total picture as they are now such as the price of corn and milo the feeders are paying.

Ok. That said here is the question. What do you think would happen to the cow-calf industry in the U.S.? I promise to tell you what I think after we hear from you. Thanks!

 

[Econ101]

Hello Econ!

I have a question for you. Before I ask the question let's do this. Let's assume that starting tomorrow everything in marketing (since that is your preferred area of expertise and interest per your words) - the marketing of beef calves, cows, bulls and case ready meat - is now being done exactly the way you would like for it to be done in a free market, free enterprise situation. No PSA problems. All cash market sales through local sale barns with lots of buyers bidding on the cattle every day.

Also, the exact same situation as today in terms of supply and demand. In other words, starting with the actual volume of stocker and feeder calves that is being marketed today and the same number of exposed breeding cows in the nation's herd. And all of the other factors that play a part in the total picture as they are now such as the price of corn and milo the feeders are paying.

Ok. That said here is the question. What do you think would happen to the cow-calf industry in the U.S.? I promise to tell you what I think after we hear from you. Thanks!

A couple of quick things, Pointrider as I am walking out the door.

I am not opposed to marketing agreements or any type of market situation like grid pricing or formula pricing that is based on quality or whatever the market wants --- as long as we have a viable market that is not a wholesale controlled market. The PSA is not meant to frustrate efficiency. It is meant to prevent market power from distorting the markets.

I am going out the door, so I will have to finish later.

 

[ocm]

Active collusion is when there was an agreement between packers for their buying actions.

Passive collusion is when there is no agreement set up, but the packers refrain from actively bidding against each other for the the cattle. Bidding on different types also shows a segmentation of the wholesale to retail level which is non competitive under the court's take on the PSA of "proof of harm to competition" additional requirement.

Both types of collusion are non competitive outcomes for the cattleman.

OCM may have something else to add, subtract, or disagree with, as this is my take.

Yes, that is one form of passive collusion. Another example (with other than packers) : Some neighbors attend an auction. When one sees another bidding on an item, he refrains. The action is reciprocal. Nobody has ever discussed it, they just do it.

A real life example with packers. A former packer buyer was discussing the "old days". "It used to be that when another buyer was "on" some cattle we wouldn't jump in." That meant that if one buyer had given a bid, nobody else would give a bid until the seller said yes or no on the first one.

Another kind of passive collusion might be knowing all your competitors numbers and knowing exactly how he will react because of it.

These are some of the reasons "blind" bidding would be beneficial to the market.

To some degree passive collusion can take place at an open auction. What mitigates it there is the fact that the auction is paid by the seller on a commission basis. An auctioneer will sometimes resort to shill bids in such a situation or will sometimes bid on behalf of the auction house.

With packers there is no broker working on behalf of the seller to mitigate passive collusion.