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KCA on packer ownership ban

Sandhusker

Well-known member
KCA: Banning Packer Ownership Provides Producer Opportunities Not Limitations


Kansas Cattlemen's Association, along with other producer organizations, is urging senators and representatives to keep the ban on packer ownership and other competition reforms in the Farm Bill.

In recent days, the NCBA President, Andy Groseta, stated, "Some are already calling for Congress to further inject itself into this situation by banning packer ownership of cattle. But that would not be productive, nor would it make any sense. Banning packer ownership more than 14 days before slaughter actually limits the marketing options of cattle producers, and reduces the field of potential buyers. It does nothing to enhance competition."

So how does banning packer ownership enhance competition? Or, better yet, how does packer owner deplete competition? Brazil owned JBS just purchased National Beef and Smithfield Beef, the fourth and fifth largest meat packers in the United States. In 2007, JBS purchased the then third largest packer, Swift & Co. So, to date, one company consolidated three packers and is purchasing Five Rivers Ranch Feeding Company LLC, a business that as more than an 800,000 head capacity. When the cattle market is high and one company owns its own cattle, that packer has the capability of not competing in the market by staying out to the market all together and utilizing its own cattle for processing. This drives down the price of cattle and is negative to producers. If packer ownership is banned, packers would then need to compete for its weekly processing, benefiting producers.

The industry has heard rhetoric the banning packer owner more than 14 days before slaughter actually limits the marketing options of cattle producers. Yet, the provision of banning packer ownership as it appears in the Senate version of the Farm Bill does not address formula or program cattle. Producers will still be able to utilize those marketing opportunities. The ban on packer ownership, however, would affect when a base price is established.prior to delivery of cattle to the packer. Premiums based on formula incentives and quality cattle would still be available to those producers. Therefore, banning packer ownership does not limit marketing opportunities; it enhances producer opportunities.
 

mrj

Well-known member
So, packer haters, how many packer buyers do you suppose are sitting in most sale barns buying calves these days?

Does having more buyers or fewer buyers have anything to do with selling prices?

I hear some sale barn owners bragging about how many buyers are in sitting in their barns on sale day, so apparently they think it helps sell cattle to have more buyers.

Have you ever heard the sale barn owners ask anyone buying cattle for packers to leave before the sale starts????

mrj
 

Sandhusker

Well-known member
mrj said:
So, packer haters, how many packer buyers do you suppose are sitting in most sale barns buying calves these days?

Does having more buyers or fewer buyers have anything to do with selling prices?

I hear some sale barn owners bragging about how many buyers are in sitting in their barns on sale day, so apparently they think it helps sell cattle to have more buyers.

Have you ever heard the sale barn owners ask anyone buying cattle for packers to leave before the sale starts????

mrj

Are you finally starting to understand what packer consolidation does to prices, MRJ? :shock:

This is another thing you can ask NCBA about when you call them, MRJ. Since you understand what fewer buyers means, ask them about their position on the concentration of packers.
 

Sandhusker

Well-known member
No reply from MRJ......

She reminds me of that boat cruise commercial where the one girl wouldn't ever smile. The camera finally caught her smiling and as soon as she realized she was outed, the frown came back and she took off.

Here, MRJ actually had a rational thought, but when it was brought to her attention that she was actually in danger of going against the NCBA, she took off. Can't have any of that thinking..... :lol: :lol: :lol:
 

RobertMac

Well-known member
Sandhusker, not so quick...I don't think she gets it. She'll have to go ask Scott to clarify what he told her. mrj, tell ole Scotty hi from us!!!! :lol: :lol: :lol:
 

mrj

Well-known member
Are you boys really certain I have nothing better to do than check out EVERY thread to read your version of "wisdom"?

SAndhusker, what do you mean "understand what packer consolidation does to prices"?

My point was that if those buying cattle for packers at our sale barns were not there, there would be fewer buyse, with less immediate need for cattle, therefore it would mean LOWER feeder/stocker prices.

Apparently, judging by your comments, you would consider that a good thing?????

Re. Scott, which one, my son, or my friend? Both give me advice on occasion, and I don't see or contact either of them often as they are even busier than I am. Let me think.......last time I talked to SH, the subject was mostly highschool basketball.......and a some of our favorite players made it to the central SD All Stars games, too.

mrj
 

Sandhusker

Well-known member
MRJ, " My point was that if those buying cattle for packers at our sale barns were not there, there would be fewer buyse, with less immediate need for cattle, therefore it would mean LOWER feeder/stocker prices. "

You're drawing a direct correlation between number of buyers and prices. I applaud you. The phenomena you're describing is called "competition". Less competition because of fewer buyers means lower prices. Moving right along....

MRJ, "SAndhusker, what do you mean "understand what packer consolidation does to prices"?"

Since you understand that fewer buyers means lower stocker/feeder prices, surely it is not a leap to understand that fewer buyers has the same effect on fats prices (Which in turn affects feeder prices as the guys who sell fats are the guys who buy feeders.) Packer consolidation means that instead of 30 packers there to bid on the cattle, there are only 3 because of that consolidation - and we come full circle because you have already demonstrated that you know what happens to prices when there are fewer buyers.

Capeche?
 

mrj

Well-known member
Do you really believe that hundreds or thousands of small packers are going to be able to build and staff the state of the art packing plants needed to achieve what you claim to want........diversication and going back in time to when there were more than a handful of packers?



BTW, what would be the optimum number of packers and what would their distribution across the nation and/or world need to be to serve the worldwide consumers as well as is being achieved today?

Do you want fat cattle to be sold on the "open, competitive market"?

What makes you think that even with only three major packers, they would not be competing with one another? I believe there is very strong competition among them for cattle, especially given the red ink packers have been experiencing in recent years.

mrj
 

Sandhusker

Well-known member
MRJ, "What makes you think that even with only three major packers, they would not be competing with one another? "

The exact same reason that you think fewer buyers in the sale barn means lower stocker/feeder prices.

It sure didn't take long to regress......
 

RobertMac

Well-known member
mrj, you make Sandhusker's point, but still fail to realize it.

mrj said:
My point was that if those buying cattle for packers at our sale barns were not there, there would be fewer buyse,

When the beef industry consolidates, there are fewer packers...argo there are fewer buyers. When independent small and medium packers are forced out of business or bought out and shut down(by the large packers), then there are fewer buyers to BUY YOUR CATTLE!!!


mrj said:
with less immediate need for cattle,

When these same few large packers also own their own feedlots AND own the cattle in them, there is less immediate need to BUY YOUR CATTLE!!! Why will these packers pay top dollar for cattle at the salebarn when they have cattle at their feedlots to keep their plants running at full capacity?????


mrj said:
therefore it would mean LOWER feeder/stocker prices.
EXACTLY...in case you miss the meaning of your own comment, that means you will get paid less for your cattle!!!!

We don't hate packers...we love them...we just want a lot more of them!!!!!! Our capitalistic system works because of choices...the more choices, the more self-regulating it is!!!
 

mrj

Well-known member
Can you honestly see no difference between business needing a constant supply of cattle DAILY to serve national and international markets, or face problems of serious cost overruns, and a local sales barn having weekly, or even several weekly sales, a FEW of which mayPOSSIBLY serve a multiple state area? As well, many such facilities (including the largest ones) operate on a seasonal basis, rather than having the same rate of sales every week of the year.

There is no such thing as a matter of scale in your world?

Your bill will eliminate sorely needed buyers at many sale barns, but you can't show that it will "improve" competition, WHICH ALREADY EXISTS, between the major packers.

I believe there is a world of difference between sale barns moving maybe a few thousand cattle in a month, and packing plants processing many thousands per month.

BTW, which big packers own a majority or ALL the fed cattle they need for their packing plant operations?

You have no embarrassment at, in effect, comparing apples to oranges here, do you?

mrj
 
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