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Feds conduct investigation into major meatpackers

Texan

Well-known member
Feds conduct investigation into major meatpackers

By NATE JENKINS (AP) – May 3, 2010

LINCOLN, Neb. — The federal government is conducting an investigation into whether the handful of large meatpackers that slaughter most of the nation's cattle are illegally or unfairly driving down cattle prices, according to an official representing independent beef producers nationwide.

The investigation is under way as the Justice and Agriculture Departments hold a series of antitrust hearings on competition in agriculture, and the USDA is expected to release sweeping antitrust rules covering the meat industry this spring.

Many ranchers and critics of the meatpacking industry are cautiously hopeful the investigation and more aggressive action by a little-known federal agency will force meatpackers to competitively bid for more cattle. That, they say, could help slow a 15-year trend in which several thousand ranchers are forced out of business every year, resulting in the smallest U.S. cow herd in several decades and threatening a way of life that has kept the nation supplied with beef for more than a century.

Bill Bullard, chief executive officer of R-CALF USA, said the federal Grain Inspection, Packers and Stockyards Administration has been speaking with his group's members for months and is "clearly asking questions in the context of an investigation."

"They appear to be doing a very comprehensive investigation of the overall behavior of meatpackers in the cattle market," Bullard said, adding he believes a main reason for the investigation is to gather information to help craft new rules.

The administrator of GIPSA wouldn't say whether the agency was investigating the so-called "Big Four" meatpackers — Tyson Foods, JBS, Cargill and National Beef — who together slaughter about 80 percent of U.S. beef.

But administrator J. Dudley Butler said GIPSA is being more aggressive in enforcing the Packers and Stockyards Act and investigations are part of that.

"I will acknowledge that what we're doing at GIPSA now is trying to ... enforce the Packers and Stockyards Act, and it's done in many ways, it's done through investigations, it's done through oversight, it's done through interagency working relationships," such as with the U.S. Department of Justice, Butler said.

The nation's largest meatpackers bought about half of their cattle on the cash market in 2008, according to GIPSA. In that market, feedlots notify meatpackers cattle are for sale and receive bids for the animals.

But, the largest companies have increasingly avoided that market in recent years, buying more cattle through prearranged deals with individual feedlots or ranchers, Butler said.

Critics say that with the biggest companies buying fewer cattle on the cash market, prices have dropped, hurting smaller feedlots and ranchers who don't have deals with the large meatpackers.

Cash market prices have decreased by about 5 percent over the past two decades, said Robert Taylor, a professor of agricultural economics at Auburn University.

The 89-year-old Packers and Stockyards Act is meant to ensure fair competition and protect farmers and ranchers from discriminatory, monopolistic practices by meatpackers. But ranchers say it has long been ignored, and a 2006 federal audit concluded GIPSA had avoided complex investigations.

That may be changing under the Obama administration, which named Butler to head the agency a year ago. The agency requested and received court documents from a landmark 2004 case in which a jury awarded 30,000 cattlemen a total of $1.28 billion after concluding that Tyson Foods, the country's largest meatpacker, used unfair marketing agreements to suppress cattle prices. A judge overseeing the trial overturned the decision.

Nebraska-based attorney David Domina, the lead attorney in the case, said he disclosed all the information he was free to under existing court orders after GIPSA asked him for the information.

Tyson Foods spokesman Gary Mickelson wouldn't comment when asked whether the company was being investigated. In an e-mail, he said Tyson buys most of its cattle through competitive bidding. Spokesmen for JBS and Cargill said the companies often communicate with GIPSA but weren't aware of an investigation. National Beef officials didn't respond to a message seeking comment.

Mark Dopp of the American Meat Institute, an association that includes meatpackers, said both ranchers and meatpackers benefit from agreements between producers and packers.

"The producer...is entering into these agreements because they find them beneficial," he said. "It takes two to tango."

A 2007 study GIPSA commissioned before Butler's tenure concluded that while the deals decreased cash-market prices, they also limited costs and risks and resulted in better quality beef.

Nebraska rancher Tom Hansen, a state senator from North Platte, said the agreements allow for marketing schemes that have helped the beef industry — enabling it to sell and market certain grades and types of beef, for example.

But longtime rancher Jim Hanna, who lives near Mullen, Neb., said ranchers make much less on each cow now compared to 30 years ago and the deals with large meatpackers are partly to blame. He was skeptical things would change, but said if GIPSA increases enforcement, it could help ranchers and smaller feedlots.

"Only under certain circumstances do the packers go into the open market and actually bid for cattle they have no hold on," he said. "Enforcing the (Packers and Stockyards Act) would certainly shape that up."



http://www.google.com/hostednews/ap/article/ALeqM5ijaVau6NJXpBin-jmQ81QshDj8XQD9FFFDAO0
 
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Anonymous

Guest
LINCOLN, Neb. — The federal government is conducting an investigation into whether the handful of large meatpackers that slaughter most of the nation's cattle are illegally or unfairly driving down cattle prices, accordingto an official representing independent beef producers nationwide. --------------- But longtime rancher Jim Hanna, who lives near Mullen, Neb., said ranchers make much less on each cow now comparedto 30 years ago and the deals with large meatpackers are partlyto blame. He was skeptical things would change, but said if GIPSA increases enforcement, it could help ranchers and smaller feedlots.
I've heard rumors of this for weeks- and only hope its true...But for 30+ years- from Butz thru Block, Espy, Vennaman, Johanns- USDA has been in the pockets of Big Bucks and the multinational Corporates- probably comingto a head with Espy/Vennaman (Hillarys overnight $100,000 profiting off her first futures trade- and the OIG's finding that Vennamans crew wastoldto do nothing but shuffle paper and look busy :( ) ... Its very deep rooted and goingto betoughto get things backto working for the average rancher/small businessman....The cheap food policy- which has been laid on the backs of the producer- is a political pawn that will be hard to change....
 

Big Muddy rancher

Well-known member
Oldtimer said:
LINCOLN, Neb. — The federal government is conducting an investigation into whether the handful of large meatpackers that slaughter most of the nation's cattle are illegally or unfairly driving down cattle prices, accordingto an official representing independent beef producers nationwide. --------------- But longtime rancher Jim Hanna, who lives near Mullen, Neb., said ranchers make much less on each cow now comparedto 30 years ago and the deals with large meatpackers are partlyto blame. He was skeptical things would change, but said if GIPSA increases enforcement, it could help ranchers and smaller feedlots.
I've heard rumors of this for weeks- and only hope its true...But for 30+ years- from Butz thru Block, Espy, Vennaman, Johanns- USDA has been in the pockets of Big Bucks and the multinational Corporates- probably comingto a head with Espy/Vennaman (Hillarys overnight $100,000 profiting off her first futures trade- and the OIG's finding that Vennamans crew wastoldto do nothing but shuffle paper and look busy :( ) ... Its very deep rooted and goingto betoughto get things backto working for the average rancher/small businessman....The cheap food policy- which has been laid on the backs of the producer- is a political pawn that will be hard to change....

But you voted for change. :shock:
 
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Anonymous

Guest
Big Muddy rancher said:
Oldtimer said:
LINCOLN, Neb. — The federal government is conducting an investigation into whether the handful of large meatpackers that slaughter most of the nation's cattle are illegally or unfairly driving down cattle prices, accordingto an official representing independent beef producers nationwide. --------------- But longtime rancher Jim Hanna, who lives near Mullen, Neb., said ranchers make much less on each cow now comparedto 30 years ago and the deals with large meatpackers are partlyto blame. He was skeptical things would change, but said if GIPSA increases enforcement, it could help ranchers and smaller feedlots.
I've heard rumors of this for weeks- and only hope its true...But for 30+ years- from Butz thru Block, Espy, Vennaman, Johanns- USDA has been in the pockets of Big Bucks and the multinational Corporates- probably comingto a head with Espy/Vennaman (Hillarys overnight $100,000 profiting off her first futures trade- and the OIG's finding that Vennamans crew wastoldto do nothing but shuffle paper and look busy :( ) ... Its very deep rooted and goingto betoughto get things backto working for the average rancher/small businessman....The cheap food policy- which has been laid on the backs of the producer- is a political pawn that will be hardto change....
But you voted for change. :shock:
The federal government is conducting an investigation into whether the handful of large meatpackers that slaughter most of the nation's cattle are illegally or unfairly driving down cattle prices, accordingto an official representing independent beef producers nationwide. ----------------------


Many ranchers and critics of the meatpacking industry are cautiously hopeful the investigation and more aggressive action by a little-known federal agency will force meatpackersto competitively bid for more cattle. That, they say, could help slow a 15-year trend in which several thousand ranchers are forced out of business every year, resulting in the smallest U.S. cow herd in several decades and threatening a way of life that has kept the nation supplied with beef for more than a century.


If it comesto be- it would definitely be a great change....
 

Texan

Well-known member
Oldtimer said:
The cheap food policy- which has been laid on the backs of the producer- is a political pawn that will be hard to change....
I would agree with that except to say that I think instead of it being hard to change, it will be impossible to change.
 

mrj

Well-known member
And there is no OTHER cause of 'loss' of cattle producers than low prices???

It seems logical that producing even more BEEF with the current cow herd that was produced with the much larger cow herd has some effect, doesn't it?

What of government regs and programs making it more difficult to raise cattle, and which give competing meats/grains a competitive edge when it is a more secure financially (via subsidies, ins., etc.) to use all tillable land to produce crops.

And that is only a FEW points coming quickly to mind that show it isn't necessarily or only the 'evil packer collusion' behind "low" cattle prices!

mrj
 

cedardell

Well-known member
I said that wrong. I guess nobody complains about packers using imports to control prices anymore. With free trade beef flowing into US the market price established by our beef doesn't include the whole picture. And consequently the cattle numbers are realatively insignificant anymore. Don't forget we have a world economy now. Doesn't that mean we have world markets?
 

cedardell

Well-known member
What effect does GIPSA have on the world market? This is the main reason all of our industry has moved over seas. We are really hurting in our county now because Caterpiller is moving all of its excavitor production to Japan. They have provided huge tax benefits to our county in the past. I guess it's cheaper to ship a 100 ton machine over from Japan than to build it here. Is this how Obama intends to create jobs? The one thing I can't figure is how people can afford to buy new cars and eat beef anymore. They must be making a ton of money on the stock market.
 

mrj

Well-known member
Or is it the HUGE jump in salaries for government employees since Obama took office????? Talk about an enticement for growth of government........just arbitrarily raise the pay and benefits of government jobs whether warranted or not, necessary job or not!

mrj
 
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Anonymous

Guest
USDA to issue rule on fair play in livestock sales



* USDA expected to propose marketing rules in June

* Rules deal with "undue preference" in purchases

* Also clarify producer rights in contract disputes

* Packers say they follow the law



By Charles Abbott | Reuters | Tue May 25, 2010 6:31pm EDT



WASHINGTON, May 25 (Reuters) - The U.S. government will soon propose rules to bar meatpackers from unfairly favoring big cattle feedlots and to give poultry producers more leverage, two small-farm groups said on Tuesday.



The proposal would modify Agriculture Department guidelines on fair play in livestock and poultry sales. Activists say farmers are out-muscled by big packers who dominate meat processing. The 2008 farm law required action on the issue.



Agriculture Secretary Tom Vilsack told agribusiness lobbyists on Tuesday that changes to marketing rules would be proposed in June but did not specify them. He said the changes would allow USDA to "do a better job of responding to some of the complaints we've heard" from farmers.



Two farmer advocacy groups identified the proposals as dealing with "undue preference" in livestock purchases by meatpackers and clarifying the contractual rights of producers who feed poultry for large processors.



Most U.S. poultry, pork and beef is produced under contract to companies such as Tyson Foods Inc (TSN.N), Cargill, JBS USA (JBSS3.SA), National Beef Packing Co and Smithfield Foods Inc (SFD.N).



Producers say they have limited recourse if packers treat them unfairly. Meat processors say existing antitrust and competition laws are effective.



Vilsack cited ongoing Obama administration hearings into competition in the agricultural sector before mentioning the imminent release of proposed revisions.



"It's encouraging the secretary is mentioning them," said Kathy Ozer of the National Family Farm Coalition, referring to the proposed rules.



A spokesman for the National Sustainable Agriculture Coalition said, "we've been waiting and waiting" for the update to USDA's application of the 1921 Packers and Stockyards Act.



Under the 2008 farm law, USDA is required to issue regulations to:



--prevent packers from price discrimination in buying livestock. Farm activists say small and medium-size producers do not get as good a price as big producers.



--give poultry producers the right to refuse arbitration in a contract dispute and take the issue to court.



--require poultry processors to warn producers if they will delay delivery of a new flock of birds.



--mandate poultry processors tell producers in advance of improvements that will be required in feeding houses.



--give swine and poultry producers a reasonable amount of time to correct problems that could lead to termination of a production contract. (Reporting by Charles Abbott; Editing by David Gregorio)



reuters.com
 
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