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Foglesong is wrong

Tex

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NCBA president: GIPSA rule could set cattle industry back 50 years
Retail meat prices could increase by 3.3 percent if proposed regulations take effect.
Dan Grant
Published: Oct 27, 2010
Cattle produces aren't the only ones who could take an economic hit if new regulations, proposed by USDA's Grain Inspection, Packers, and Stockyard Administration (GIPSA), are added to the Packers and Stockyards Act of 1921.

Consumers could end up paying higher prices for fewer beef selections if the new GIPSA rules take effect, according to Steve Foglesong, president of the National Cattlemen's Beef Association and a producer from Fulton County.

The new rules seem to take aim at packer ownership of livestock in an effort to address concerns about a lack of competition among packers.

The GIPSA rule infers all cattle will be valued on an average or standard price, regardless of quality. Any deviation from the standard price must be justified to the government, which could lead to litigation that livestock buyers seek to avoid, according to the NCBA president.

"This will lead to a generic market and generic product," Foglesong said. "Where would the incentive be for producers to make investments in higher quality products?"

Foglesong said packers have indicated to NCBA the new GIPSA rule will make it tougher to offer premiums to producers.

Cattle producers under the regulations would have to focus their business models squarely on feed efficiency and rate-of-gain in their herds, which are sound strategies to make money.

"But we'll be giving up quality grades to get to that point," Foglesong said. "That's where it really comes back to the consumer."

A recent study commissioned by the American Meat Institute concluded the new regulations would increase retail meat prices nationwide by about 3.3 percent. Higher meat prices could lead to about a 2 percent reduction in consumption, which then could lead to the elimination of about 104,000 jobs in the meat production, processing, and food industry, the study suggested.

Meanwhile, the regulations, which are aimed at competition issues, actually could make the situation worse by pushing some small producers and packers out of business due to higher costs and reduced returns, according to Foglesong.

"It will drive further consolidation in the packing industry," he said.

Foglesong again called on USDA to conduct a more thorough economic review of the new regulations before implementing them. USDA last month ignored a similar request by 115 members of Congress.

"Ultimately, (the new GIPSA rules) would turn the clock back 50 years," Foglesong said. "We deserve a full-blown cost-benefit analysis."

"retail meat prices could increase by 3.3 percent"-----If it is passed on to cattle producers, what is wrong with that? If there is real competition, it will be passed on to producers. We do live in a capitalist society where making a profit is a business necessity for existence.

Foglesong:

The GIPSA rule infers all cattle will be valued on an average or standard price, regardless of quality. Any deviation from the standard price must be justified to the government, which could lead to litigation that livestock buyers seek to avoid, according to the NCBA president.

This is a big lie and has been refuted by GIPSA directly. This is proof Foglesong is incompetent or under the sway of meat packers. If there is a deviation from some price standard there must be a justification. Why would you not do this unless you were using the price difference as a market manipulation scheme? If you are getting a premium price for some kind of program as a beef slaughterer, why not pass on those higher premiums to producers who are going the extra effort to fulfill them?

"This will lead to a generic market and generic product," Foglesong said. "Where would the incentive be for producers to make investments in higher quality products?"

It may lead to generic market and generic products but it will be because meat packers want it that way and they can do what they want since they control the buying and selling of cattle and beef. Nothing now could stop them from doing that. There is already differentiation in the market for different products and sold to consumers. If packers want to drop those programs, maybe they didn't have value in the first place, or more likely, the value was captured by the meat packers and they won't do anything that decreases their margins---like paying cattle producers premiums.

Foglesong said packers have indicated to NCBA the new GIPSA rule will make it tougher to offer premiums to producers.

Let us face it, Foglesong is repeating what PACKERS are saying. The NCBA has too much influence by the meat packers to see what is good for the cattleman.

Cattle producers under the regulations would have to focus their business models squarely on feed efficiency and rate-of-gain in their herds, which are sound strategies to make money.

Cattlemen already have to focus on these things. What is new? They can still get premiums for differentiated products.


"But we'll be giving up quality grades to get to that point," Foglesong said. "That's where it really comes back to the consumer."

They already do. What is different? Tyson sells select beef that has been poked and injected to get select to act like choice. Does Foglesong know anything about the cattle business?

You have to go to Sams in my area to get choice graded meat on a consistent basis. That is because Tyson would rather pay cheaper prices for their cattle due to the grade and then manipulate the meat to make it eatable. They could just pay more for putting more fat on cattle so more cattle would grade out choice. It is in their control already and we see what route they take. When I was younger, Choice used to be more widely available. Now all you can find locally on a consistent basis is manipulated lower grade meat because that is what meat packers pay for.

A recent study commissioned by the American Meat Institute concluded the new regulations would increase retail meat prices nationwide by about 3.3 percent. Higher meat prices could lead to about a 2 percent reduction in consumption, which then could lead to the elimination of about 104,000 jobs in the meat production, processing, and food industry, the study suggested.

Again, quoting meat packer studies? Does Foglesong represent cattle producers or meat packers? There should be a recall for this guy.

This study is about as good as the last one on MCOOL. Oh, it was done by the same people!!!!

3.3 percent higher prices for cattle producers would be great!!! Maybe more money would go into rural communities instead of the financial system. More money on main street, less on Wall Street.

Meanwhile, the regulations, which are aimed at competition issues, actually could make the situation worse by pushing some small producers and packers out of business due to higher costs and reduced returns, according to Foglesong.

Fear tactics. There won't be higher costs for these guys. A ton of the little guys that were thrown out of the business might actually get back into it. Is Foglesong representing meat packers at the expense of cattlemen again?

"It will drive further consolidation in the packing industry," he said.

Foglesong again called on USDA to conduct a more thorough economic review of the new regulations before implementing them. USDA last month ignored a similar request by 115 members of Congress.

"Ultimately, (the new GIPSA rules) would turn the clock back 50 years," Foglesong said. "We deserve a full-blown cost-benefit analysis."

What, the meat packing industry isn't consolidated now? The lack of these rules help consolidate the industry. They should have been enforced long ago and if politicians weren't paid off and doing their job, it would have saved the processing plant in my area.

The new GIPSA rules will roll back the frauds of the past 50 years because of non enforcement of the rules.

I agree we need a cost benefit analysis. In that analysis, it should include all the meat packing plants that have been consolidated so there is less competition and all of the billions and billions of value that the meat packers have sucked out of these rural communities in order to compete with each other and weed out the companies who didn't base their business models on cheating producers.

My farm is one of them, but one of many in my area.

Foglesong represents meat packers plain and simple. You have to be a hayseed to not see it.

Tex
 
Comment by Dan-o at the end of the article:

50 years would be much preferred to what we have now. The meat packers have decreased farm prices by 3.3% (AMI's study) which has had an effect of killing many rural economies. In addition, meat packers have used illegal alien labor for years which has also undermined wage growth. Can rural areas take much more hammering? While the meat industry has employed these tactics, depressing farm gate prices and rural jobs, the extra money in the economy has rushed into creating bubbles like the housing bubble, the high tech bubble, and others. Why does the NCBA support these policies? It is because they are preaching meat packer interests instead of producer interests. Foglesong should be embarrassed at his cooperation of the ruining of the rural economy so more money can go into these type of bubbles. The NCBA is a meat packer controlled organization that has had its own problems in administering the Checkoff funds. Recent accounting audits show they were breaking the law in the administration of the check off funds that producers pay, not packers. Why not ask packers to pay $1.00 a head instead of producers? Maybe then they would be better at shifting demand for beef products instead of shifting incomes from rural producers. Talk about a foxes in the henhouse! That is what the NCBA intended to do all along and trusting rural producers unfortunately went along with it.
Posted by Dan-O on October 29 at 11:42 AM
 

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