Marketing Agreements - Good or Bad?

[agman]

THE market system for buying and selling livestock in the U.S. is alive and well. A ban on packer ownership of livestock and other alternative marketing arrangements (AMAs) in the beef industry would cost producers, packers and consumers billions of dollars. These are the key conclusions of a massive new study of the effects of AMAs in livestock and meat marketing. The 1200-page, $4.5M study is the most expensive and comprehensive study ever of how livestock and meat are bought and sold. The study, largely by independent (of industry) economists and business researchers, involved 248M cattle, hogs and lambs bought by meat packers from October 2002 through March 2005 (30 months).

The study included 590,000 transactions on more than 58M cattle from the 29 largest beef processing plants. It showed that 62% of cattle were procured on the cash or spot market, with 29% through marketing agreements, 4.5% through forward contracts and 5% or less packer-owned cattle. It concluded that marketing arrangements benefit producers without hurting the spot market's competitiveness. This should strongly counter claims that so-called "captive supplies" damage the overall live cattle market, say observers.

The study, conducted by RTI International of North Carolina, was prepared for USDA's Grain Inspection, Packers and Stockyards Administration (GIPSA). It and economists from several other federal agencies put together the criteria for the study. It involved nearly 30 economists and researchers, including several from the Wharton School of Business at the University of Pennsylvania. The "business" element gives the study even more credibility, say observers. Previous studies of livestock markets have been primarily by agricultural economists.

THE cost savings and quality improvements associated with the use of alternative marketings arrangements (AMAs) in the beef industry outweigh the effect of potential market power that AMAs might provide packers. So concludes a massive study of the market that involved 58M cattle sold over a 30-month period to 10 companies and processed at 29 plants. Reducing the use of AMAs would result in economic losses for beef consumers and the beef industry, says the study, conducted by RTI International for USDA's Grain Inspection, Packers and Stockyards Administration.

These losses would be massive. A 25% reduction in AMAs would result in $2.24 billion in losses or added costs for producers, packers, retailers and consumers in just the first year and a $14.7 billion loss or added cost over ten years. A 100% reduction in AMAs would mean losses of $12.5 billion in Year 1 and an $82.4 billion loss or cost over ten years, says the study.

Under a 25% reduction in Year 1, retailers would lose $98M, packers $143M, cattle feeders $558M and ranchers $69M. In addition, consumers would have to pay $371M more for beef. Under a 100% reduction in Year 1, retailers would lose $547M, packers $838M, cattle feeders $3.116 billion and ranchers $6.00 billion. Consumers would have to pay $2 billion more for beef. A 100% reduction would reduce beef demand by 0.16%, increase processing costs by 4.7% and reduce potential market power by 0.7%, says the study. Conversely, the study says that cattle producers believe that, as a result of delivering higher quality cattle to packers through an AMA, they obtain a $15-17 per head premium over cash market prices. Nearly 52% of cattle producers that the study surveyed said they use AMAs because they allow for the sale of higher quality calves and cattle, says the study.

Feedlots Identified Cost Savings

The 1200 page report contains 20 primary conclusions just for the fed cattle and beef industries. Beef producers and packers believe that some types of AMAs help them manage their operations more efficiently, reduce risk and improve beef quality, says the study. Feedlots identified costs savings of $1 to $17 per head from improved capacity utilization, more standardized feeding programs and reduced financial commitments required to keep feedlots at capacity. Packers identified cost savings of $0.40 per head in reduced procurement cost. Both agreed that if packers could not own cattle, higher returns would be needed to attract other investors and that beef quality would suffer in an all-commodity market place.

The study says that 85% of small producers use only the cash market when selling to packers, compared with 24% of large producers. Only 10% of large packers reported using only the cash market to purchase cattle, compared to 78% of small packers. While nearly all packers bought some cattle on a live weight basis, 88% of large packers purchased cattle based on carcass weight with grids, while almost no small packers used this type of valuation.

Producers that use AMAs identified the ability to buy and sell higher quality cattle, improve supply management and obtain better prices as the leading reasons for using AMAs, says the study. Packers that used AMAs said their top three reasons were to improve week-to-week supply management, secure higher quality cattle and to allow for product branding in retail stores. Both producers and packers surveyed believe that AMAs are important for beef quality, says the study. Both believe that signals for attributes of quality beyond simple quality grade would be difficult in a cash-only marketing system. Quantitative analyses suggest that AMAs are often associated with higher quality.

The study was also unique in that it obtained actual Profit and Loss (P&L) data from 21 plants owned by the four largest firms (Tyson, Cargill, Swift and National Beef). This data showed significant economies of scale in beef packing. It also showed that packers lost $2.40 per head during the study period (October 2002 through March 2005). Their average total processing cost was $138.61 per head while their average gross margin was $140.73 per head. Based on an analysis of P&L statements, procurement of cattle through AMAs results in production cost savings to the plants that use them, says the study. The weighted average industry cost saving was about $6.50 per head. For an industry with an average loss of $2.40 per head during the 30-month sample period, this is a substantial benefit, says the study.

This is reprinted from the latest Cattle Buyers Weekly - Agman

 

[Mike]

Just one PEER REVIEWER response:

"9. Section 6.1. Most of the beef producer respondents were cow-calf producers, with
relatively few feedlot operators amongst the respondents. Feedlot operations would
be more likely to use AMAs because they routinely purchase and sell cattle
throughout the year. By having a small portion of feedlots in the beef producer
group, the results may show less use of AMAs than actually exists. Further, this
results in having a greater proportion of smaller-sized operations in the respondent
group that are less likely to use AMAs and focuses the attention on the feeder cattle
market rather than the fed cattle market (where more AMAs are likely to exist).
This also seems inconsistent with the researchers' goals in terms of wanting to select
businesses that are likely to use a variety of AMAs (as they did for the transaction
data collection, see Section 10). It would be helpful to have the cow-calf and feedlot
operator responses separated. Alternatively, the results could be weighted by the
number of head, rather than weighting all producers equally. Doing so would
alleviate the challenge that the results indicate that few producers use AMAs, but a
large number of livestock may be traded by those that do use AMAs."
***********************************************
There are several questionable practices used in this study. Read ALL the Peer Reviewers responses agman. It might interest you.....

 

[Econ101]

GIPSA has been known to solicit "independent" economic studies that are slanted. Why trust an agency like GIPSA who have such a poor record of performance when it comes to enforcing the Packers and Stockyards Act---their primary responsibility. McBride, one of the economic henchmen of the packers has had his hand in helping shield the packers from potential liabilities.

These type of studies pump govt. money in universities and land grant programs. Their data is usually cherry picked and outcomes largely the answer that is wanted by industry. Land grant colleges play the game because it usually comes with strings attached that are hard to resist.

It might help if the USDA didn't have such a revolving door or if the industry were not able to bribe politicians with their special interest groups.

Agman, a real study was done in the Pickett case. Too bad an MIT "expert" had to lose his clothes, play the lawyer game, and cheat producers.


Agman, I could cherry pick time periods and collected data (GIPSA has had a very bad record of even being able to gather information that would hold up and prove a case) and get the answer I wanted. Garbage in, garbage out.

GIPSA hasn't even been able to track current or former investigations they have spent considerable resources on. The investigations and their outcomes are not even made available to the producers who have reported the abuses. Even through the Freedom of Information Act. The investigations that could have consequence across a broad range of practices in the industry are not used in that manner. They are individualized to the particular producers who make the complaints and not expanded in similar situations. Every infraction has to have its own investigation and the results of the investigation are applied only to those in the initial complaint.

Was there ANY information on the substitutes that are owned by the packers and what happened to the profit margins in those commodities? Most grocers are familiar with loss leaders. Was beef during this period being used as a loss leader so that they could rack up in the substitutes the control?

Remember, the profits of market power abuse are not always in the commodities being manipulated. It doesn't mean the manipulation didn't happen, it may mean that the culprits made their extra profits from the substitute.

I will cite two examples of this cherry picked data. One was the data given to NC Tomaslav Vukina in his study of the hog industry and vertical integration. Another was in some of his papers of the tournament system and evidence of "hold up". Vukina was given the hog study after the poultry paper that was slanted towards integrators. While GIPSA paid good taxpayer money for some of these studies, they have been unable to enforce the operative economic prohibitions in Section 202 when the evidence of abuse has been handed to them on a silver platter and irrefutable. It seems GIPSA would rather hide behind a "huge" economic study, and ignore the facts that are happening when producers report them to them.

I will remind you of the post I made of the Illinois Farm Bureau about GIPSA and remind you that in spite of having the power to propose rule changes similar to what we have seen the USDA do, GIPSA has not even asked for these rule changes. Without real enforcement (when producers report to GIPSA, GIPSA reports those producers to the poultry dealers or the livestock dealers for special attention or retribution) GIPSA has become nothing more than a reporting agency to the packers. The agency hides behind the fact that they don't have the rules to do any enforcement against abuses in the industry when it comes to the big players. The economists that actually do good studies (according to GAO studies) either have those studies hidden where they will not see the light of day and/or they are immediately pulled out of the agency and placed in another part of the USDA. This has been a recurring problem when anything critical has come out investigations by GIPSA that did not fit the purposes of the big boys. MRJ, don't take my word for it, READ THE GAO (General Accounting Office) REPORTS and the OIG (Office of Investigator General) REPORTS of the USDA who have actually investigated GIPSA.

Since there are no penalties that GIPSA can bear on the industry in certain areas, the harms that the packers do to producers is not corrected with compensation (again, see the Illinois Farm Bureau Report I posted in "5 years ago"--this flaw was expressed in that report and testimony). That means that essentially, the packers get a parking ticket that has no fine, can not be used civilly for the benefit of producers, and they get to continue to park in unlawful areas WITH NO PENALTY!!!!

I haven't read the study yet, but these are some of my opening concerns. I would hold my opinion of the study until I have read it and studied it, but if these questions I pose are not addressed, it will be another trash study by GIPSA to deflect criticism of their job of enforcing the PSA.

I hope they have no validity, but I must be proven wrong to believe that is the case.

Agman, are the issues of substitutes addressed or are they sidestepped as you have tried to do in our former arguments?

 

[agman]

The issue of various marketing agreements and various marketing arrangements is discussed. If you are asking about substitutes I assume you mean competing meat impact. The answer for this study would be NO and it would be irrelevant. This is not a Demand study.

If you knew as much as you think you know you should understand that by default the impact of competing meats is built into the price of each meat. What interrelationships exist is an entirely different issue.

 

[Econ101]

The issue of various marketing agreements and various marketing arrangements is discussed. If you are asking about substitutes I assume you mean competing meat impact. The answer for this study would be NO and it would be irrelevant. This is not a Demand study.

If you knew as much as you think you know you should understand that by default the impact of competing meats is built into the price of each meat. What interrelationships exist is an entirely different issue.

Agman, as I said, I have not read the report.

Marketing agreements their use, and their miss use is a function of time period. Just because there are marketing agreements, does not mean market power is being exerted through these agreements. It doesn't rule the possibility out either. In the Pickett case, the fact that marketing agreements were used to thin out and depress the cash market, which was the basis for some of the pricing structures, was important.

It is a fact that marketing agreements do have the ability to be used to depress the cash price as it relates to captive supply. Like I said, just because they can be misused does not mean that they are. Picking out a period of time where they were not part of an over all market manipulation and then extrapolating to all time periods is dangerous.

I have used marketing agreements myself. They can be beneficial to producers and packers----as long as they are not used to manipulate the market.

The study was also unique in that it obtained actual Profit and Loss (P&L) data from 21 plants owned by the four largest firms (Tyson, Cargill, Swift and National Beef). This data showed significant economies of scale in beef packing. It also showed that packers lost $2.40 per head during the study period (October 2002 through March 2005). Their average total processing cost was $138.61 per head while their average gross margin was $140.73 per head. Based on an analysis of P&L statements, procurement of cattle through AMAs results in production cost savings to the plants that use them, says the study. The weighted average industry cost saving was about $6.50 per head. For an industry with an average loss of $2.40 per head during the 30-month sample period, this is a substantial benefit, says the study.

My point on the marketing agreements and substitutes did not have to do with demand as you note, but as an indication of total corporate profits which includes the margins and profits on the substitutes the corporation owns or controls. In other words, to have a per head profit margin of $2.4 per head of beef and use that as an indication of over all profitability for a company like Tyson, it would be ridiculous. During the time period you have put up, Tyson may have had low margins per head (profit per lb) in beef but may have racked up in poultry with a much larger per lb. profit percent. This is one of the primary reasons past courts have stopped packers from owning the substitutes through court orders. It presents some arguments that may be true, but do not show the whole story. Previous courts have not been so easily fooled as current courts (I don't think they were fooled, they were just packed by Clinton in the 11th circuit).

Marketing agreements themselves are not the problem and never have been. It is the miss use of marketing agreements to manipulate the market that has been the problem. That is the reason that there are bills in congress limiting the abuse of these marketing agreements by packers.

The report may have indicated the benefits of marketing agreements but they did not address the concerns of their abuse.

Relying on GIPSA to be an authority on this topic is like giving credibility to a student who has cheated, failed, and then gives a recommendation of his best friend for a coveted position in honors classes.





:shock: :shock: :shock:

 

[Mike]

USDA Grain Inspection and Packers and Stockyards Administration (GIPSA) released a report earlier this month addressing price competition in the nation's beef and pork sectors. The report, mandated by the 2002 farm bill, came out just a day after Senate Ag Committee Chairman Tom Harkin of Iowa said he planned to introduce a competition title in the next farm bill.

Michael Stumo, general counsel with the Organization for Competitive Markets (OCM), called the report's release politically timed. Stumo said the report, completed by the Research Triangle Institute on behalf of USDA, wasn't done by economists with the right expertise and didn't even address the question of deliberate price manipulation by packers.

But Stumo told Brownfield the report, despite all its flaws, still came to one important conclusion. "It does conclude that captive supplies or meatpacker controlled supplies lower price in livestock - swine and beef," Stumo said.
University of Nebraska at Lincoln livestock economist Dr. Darryl Mark told Brownfield Stumo's assertion is true. But he also said alternative marketing arrangements by beef and pork producers also reduce producer risk. And that reduced risk, Mark said, has a cost.

"One of the payments, essentially, for reducing risk in marketing is to take a slightly lower price," Mark explained. "We do that all the time when we hedge, for example."

Mark also said consumers benefit from alternative livestock marketing arrangements. He said that's because those arrangements facilitate the communication of consumer desires back to ag producers more quickly than do cash livestock markets.

"Agreements or relationships or even integration across different sectors upstream and downstream in the industry - it passes a lot of important information along to producers from packers and ultimately information received from consumers," Mark said. He added packers can than provide "an incentive for producers to grow the types of meat products or produce the type of meat products that consumers most heavily demand."

But Stumo said evidence provided in the now-dismissed case of Pickett vs. IBP showed the exact opposite is true. He also said ag economists like Mark who claim alternative marketing arrangements benefit consumers simply don't have their facts straight.

"The ag economists who say that are wrong - they are absolutely wrong," Stumo asserted. "They have no support for that other than interviews with packers who actually engage in these arrangements."

Both men agree the issue of competitive livestock markets will play a prominent role as the farm bill is crafted this year. And Stumo predicts the farm bill will address the issue one way or another.

"I don't know that it will be organized into its own title," Stumo mused. "There's a miscellaneous title at the end of every farm bill that these bills will probably go into."

But Mark cautioned that legislating the current U.S. livestock marketing system could well have unintended consequences. Among those, Mark said, could be higher meat prices for consumers and even lower prices for producers.

"Any time you start introducing legislation to make businesses do things that they aren't otherwise doing in a competitive free market type of situation such as we would be in right now in terms of how they procure cattle, it's going to introduce costs," said Mark. "And those costs will eventually be passed somewhere - it'll be passed to the consumer level or it would be passed back to the producer level."


Related Links:
Complete GIPSA study
OCM news release on GIPSA study

 

[Econ101]

That reduced risk can be obtained through a working futures market and "invisible holders" where the price is determined in a time period independent of the current price based on those risks. When it allows packers to discriminate against the cash market and that cash market is part of the pricing of determination of the producer's prices through grid pricing, the lower prices CAN BE as a result of market manipulation, not reduced risk.

There are times when market manipulation can be a factor leading to lower prices and is not. Cherry picking time periods to make statements about the market in general is disingenuous to the notion that market manipulation never occurs.

Darrel Marks does bring up a good point, that marketing arrangements can reduce risk and therefore reduced risk will allow lower prices. It also allows for market manipulation.

The whole idea behind vertical integration (taking marketing agreements to the theoretical limit) is that it does reduce costs. It also reduces the price determination mechanisms of the free market and allows those mechanisms to be controlled by the vertical integrator, as it is in poultry. This ultimately leads to lower producer profits. Then companies like Tyson gain their comparative advantage based on how much they screw the producers compared to their competition. With non existent enforcement of the Packers and Stockyards section 202 provisions, this cheats producers and gives them a price below what would be the real free market equilibrium. The excuse is less market risk but the result is loss of profitability through abuse of market power.

This is the way Tyson and other large integrators have grown and developed into a more concentrated and less competitive market for producers. The margins are then increased for the remaining market participants. There then becomes a Nash Equilibrium where collusive activity or collusive conduct is in the best interest of all participants. This increases prices to consumers. The middle guys (processors, integrators) make a barrier to entry by taking it from producers. This protects them from competition of new entrants.

 

[Sandhusker]

"A ban on packer ownership of livestock and other alternative marketing arrangements (AMAs) in the beef industry would cost producers, packers and consumers billions of dollars."

Since wealth is not created nor destroyed, merely transferred, there has to be somebody gaining those billions of dollars. Not everybody can lose money. If the packer's costs go up, that is probably because they paid more for the cattle or because the retailer paid them less for the beef. In that case the packer's loss is offset by the producer's and retailer's gain. If something cost the producer more, the packer or feeder would be in line for the gain. Claiming everybody loses money makes no sense.

 

[agman]

Just one PEER REVIEWER response:

"9. Section 6.1. Most of the beef producer respondents were cow-calf producers, with
relatively few feedlot operators amongst the respondents. Feedlot operations would
be more likely to use AMAs because they routinely purchase and sell cattle
throughout the year. By having a small portion of feedlots in the beef producer
group, the results may show less use of AMAs than actually exists. Further, this
results in having a greater proportion of smaller-sized operations in the respondent
group that are less likely to use AMAs and focuses the attention on the feeder cattle
market rather than the fed cattle market (where more AMAs are likely to exist).
This also seems inconsistent with the researchers' goals in terms of wanting to select
businesses that are likely to use a variety of AMAs (as they did for the transaction
data collection, see Section 10). It would be helpful to have the cow-calf and feedlot
operator responses separated. Alternatively, the results could be weighted by the
number of head, rather than weighting all producers equally. Doing so would
alleviate the challenge that the results indicate that few producers use AMAs, but a
large number of livestock may be traded by those that do use AMAs."
***********************************************
There are several questionable practices used in this study. Read ALL the Peer Reviewers responses agman. It might interest you.....

The review you cite is not available on the data that I have access to from the USDA. If you have a URL post it please. I will follow-up. Thanks

I see nothing in the review you cite that disagrees with the conclusion of the study. All the reviews I have read are similar. Some would modify the methodology slightly for various reasons but none disageee with the results.

 

[Econ101]

"A ban on packer ownership of livestock and other alternative marketing arrangements (AMAs) in the beef industry would cost producers, packers and consumers billions of dollars."

Since wealth is not created nor destroyed, merely transferred, there has to be somebody gaining those billions of dollars. Not everybody can lose money. If the packer's costs go up, that is probably because they paid more for the cattle or because the retailer paid them less for the beef. In that case the packer's loss is offset by the producer's and retailer's gain. If something cost the producer more, the packer or feeder would be in line for the gain. Claiming everybody loses money makes no sense.

Agman's view is one of a cheap food policy. This allows more money to be spent on big houses and less goes to the producers. Agriculture based towns die out.

MRJ, this is the pie shrinking, not growing.

Wealth is created through the management of natural resources (grass and cattle). The profits of that management is increasingly getting concentrated to and by the bottleneck in the form of earnings and barriers to entry, which reduces competition and undermines free market price determination for producers.

 

[agman]

"A ban on packer ownership of livestock and other alternative marketing arrangements (AMAs) in the beef industry would cost producers, packers and consumers billions of dollars."

Since wealth is not created nor destroyed, merely transferred, there has to be somebody gaining those billions of dollars. Not everybody can lose money. If the packer's costs go up, that is probably because they paid more for the cattle or because the retailer paid them less for the beef. In that case the packer's loss is offset by the producer's and retailer's gain. If something cost the producer more, the packer or feeder would be in line for the gain. Claiming everybody loses money makes no sense.

Your response is short-sighted. If total revenues are enhanced everyone can and does share. If revenues decline that poses a different result that will ultimatley lead to more consolidation at every level. Thus, the conoldistion during the period of delcining beef demand.

Your comment from above " If the packer's costs go up, that is probably because they paid more for the cattle or because the retailer paid them less for the beef."

My response... There are many costs to running a packing business other than the input cost of cattle. Fixed costs rise over time while variable costs can change dramatically given capacity utilization from week-to- week. Those associatied costs can and do increase over time independent the of the cost of cattle.

Second point: If retailers pay the packers less that does not impact his cost, it impacts his revenue.

 

[agman]

"A ban on packer ownership of livestock and other alternative marketing arrangements (AMAs) in the beef industry would cost producers, packers and consumers billions of dollars."

Since wealth is not created nor destroyed, merely transferred, there has to be somebody gaining those billions of dollars. Not everybody can lose money. If the packer's costs go up, that is probably because they paid more for the cattle or because the retailer paid them less for the beef. In that case the packer's loss is offset by the producer's and retailer's gain. If something cost the producer more, the packer or feeder would be in line for the gain. Claiming everybody loses money makes no sense.

Agman's view is one of a cheap food policy. This allows more money to be spent on big houses and less goes to the producers. Agriculture based towns die out.

MRJ, this is the pie shrinking, not growing.

Wealth is created through the management of natural resources (grass and cattle). The profits of that management is increasingly getting concentrated to and by the bottleneck in the form of earnings and barriers to entry, which reduces competition and undermines free market price determination for producers.

It is astonishing how limited your knowledge is. The cheap food policy you and others hide behind is a result of exceptional gains in income. Consumers do not spend less on food, they spend more total dollars on food each year. Your simple conclusion overlooks the exceptional income growth as a result of being in the greatest economy in the world which provides a higher standard of living for more people than any nation in the world.

Where do you think consumption and spending would be if our income growth was cut in half? Our food expenditures relative to income would double but no more dollars would be spent. Would you call that a high cost food policy?!!! Would we be better off than third world counties that spend 50% or more of their income on food but earn less than $10.00 per day, many less than $2.00 per day. What do you call that type of food policy?

You should do something you may be actually qualified to do like, sell hot-dogs on a street corner or be a clown in a circus. Even when your comments are not riddled with lies your positions defy reason, logic and display your very limited knowledge of subject matter.

 

[Sandhusker]

Agman, "Your response is short-sighted. If total revenues are enhanced everyone can and does share. If revenues decline that poses a different result that will ultimatley lead to more consolidation at every level. Thus, the conoldistion during the period of delcining beef demand."

Revenues are not always shared. Part of the profitability struggle is keeping any revenue gain and not sharing it. I've asked you and SH to prove any direct relationship between packer profits and cattle prices, and I haven't seen anything yet. That suggests to me the packers aren't sharing their revenue gains.

Agman, "My response... There are many costs to running a packing business other than the input cost of cattle. Fixed costs rise over time while variable costs can change dramatically given capacity utilization from week-to- week. Those associatied costs can and do increase over time independent the of the cost of cattle."

Yeah, yeah, you're confusing the issue. The article was singling out marketing agreements as were my comments. Both were under the assumption of "all other things being equal".

Agman, "Second point: If retailers pay the packers less that does not impact his cost, it impacts his revenue."

Whatever, you're confusing the issue again. If a marketing agreement is going to cost Agman Packing Company $1 billion whether it is a loss of revenue or an added input cost, where is that $1 billion being offset? It has to be some place.

 

[Econ101]

"A ban on packer ownership of livestock and other alternative marketing arrangements (AMAs) in the beef industry would cost producers, packers and consumers billions of dollars."

Since wealth is not created nor destroyed, merely transferred, there has to be somebody gaining those billions of dollars. Not everybody can lose money. If the packer's costs go up, that is probably because they paid more for the cattle or because the retailer paid them less for the beef. In that case the packer's loss is offset by the producer's and retailer's gain. If something cost the producer more, the packer or feeder would be in line for the gain. Claiming everybody loses money makes no sense.

Agman's view is one of a cheap food policy. This allows more money to be spent on big houses and less goes to the producers. Agriculture based towns die out.

MRJ, this is the pie shrinking, not growing.

Wealth is created through the management of natural resources (grass and cattle). The profits of that management is increasingly getting concentrated to and by the bottleneck in the form of earnings and barriers to entry, which reduces competition and undermines free market price determination for producers.

It is astonishing how limited your knowledge is. The cheap food policy you and others hide behind is a result of exceptional gains in income. Consumers do not spend less on food, they spend more total dollars on food each year. Your simple conclusion overlooks the exceptional income growth as a result of being in the greatest economy in the world which provides a higher standard of living for more people than any nation in the world.

Where do you think consumption and spending would be if our income growth was cut in half? Our food expenditures relative to income would double but no more dollars would be spent. Would you call that a high cost food policy?!!! Would we be better off than third world counties that spend 50% or more of their income on food but earn less than $10.00 per day, many less than $2.00 per day. What do you call that type of food policy?

You should do something you may be actually qualified to do like, sell hot-dogs on a street corner or be a clown in a circus. Even when your comments are not riddled with lies your positions defy reason, logic and display your very limited knowledge of subject matter.

Agman, part of the increase in income is just keeping up with inflation. For your information, there is also inflation in real costs in agriculture also.

Even if total dollars per person were higher over time, the real dollars spent on food (those adjusted for inflation---and yes, agriculture has to deal with inflation too) has been decreasing. Some of this is because of efficiencies, true. The costs of risk are still in the system. They are not all decreased due to marketing agreements---they are just transferred.

Your equating my comments about consumers needing to spend more money on food or even a higher percentage and then twisting it (in your own simple mind) to mean I said the consumer should spend the same percentage of income on food is your problem, not mine. You have a thought and a reading problem not me. "Even when your comments are not riddled with lies your positions defy reason, logic and display your very limited knowledge of subject matter." to quote you.

If you had an inkling of a clue you might come up with some good points instead of your last paragraph stating your opinion of someone who is calling you on your obviously incorrect conclusions.

Some facts are indisputable:

*Farm income in real terms has had a long term downward trend. Inflation adjusted income has decreased in agriculture. Profits for Agribusiness has increased during this time.

*Profit per unit has decreased. You can call this productivity if you want.l What it really means is that farmers/ranchers have to produce more to stay even in income. Inflation adjusted income is worse yet.

*Consumers have spent less of their income on food. They have spent less as a percentage, and for the farmer's part, they have spent less in real terms for beef and chicken.

*Farmers/ranchers still have to contend with inflation. Inflation over productivity gains and profit margins deflates the value of the money farmers/ranchers have to spend.

*This lower income has ripple effects in rural communities. Less income in the nation going rural means these communities suffer economically.

All these factors lead to consolidation and control of our food supply to fewer and fewer people.

Agman, for backup of total farm originated income go here:

http://www.ers.usda.gov/Briefing/FarmStructure/Data/historic.htm

You will have to note that total farm income includes non farm income. Please look at only farm income as that is what we are talking about here. You can see that in real terms it is decreasing by looking at the data and if you want it in real terms (inflation adjusted) you can put it in the inflation calculator here:

http://www.westegg.com/inflation/

For beef in particular, look up your demand paper and put in dollar amounts on the graph into the inflation calculator.

Agman, sorry to keep adding to the same post but I did the calculation.

In 1960, farm income was $4,054. Adjusted for inflation, that income would be worth (in the high year, 2005) $26,194.24 compared to the actual of $14,637.24.

This means that farm income in real terms has decreased almost 50% over those years!!!!

Keep telling me there hasn't been a farm crisis or that we haven't had a decrease in real revenue per farmer/rancher. Europe has a much different number than this. They value farmers and food in their government policy. We obviously do not if you look at the results.

I will let you continue to be the "expert" on cattle and the meats in general. Put the prices in the inflation calculator yourself. If you are not just a dimwit, you will see the truth.

 

[RobertMac]

Agman, I haven't taken the time to read all this thread, yet, but I have a question...

If our food production system is to continue a cheap food policy, where is the money, that consumers are to save, going to come out of the system?

 

[Anonymous]

Not what you wanted to hear huh Conman?

Quick, run, discredit what you don't want to believe. Wrap that packer blaming turbin around your head...

Lying King: "GIPSA has been known to solicit "independent" economic studies that are slanted. Why trust an agency like GIPSA who have such a poor record of performance when it comes to enforcing the Packers and Stockyards Act---their primary responsibility."

This was an independent study. Just because it didn't say what you wanted to hear doesn't mean the results aren't valid.

Lying King: "These type of studies pump govt. money in universities and land grant programs. Their data is usually cherry picked and outcomes largely the answer that is wanted by industry. Land grant colleges play the game because it usually comes with strings attached that are hard to resist."

Of course........ZZZZZZZZzzzzzzzzzzzzzzzz..........Everything is a conspiracy that doesn't support your conspiracies.

Same-O, Same-O!

Lying King: "Agman, a real study was done in the Pickett case. Too bad an MIT "expert" had to lose his clothes, play the lawyer game, and cheat producers."

Pickett Lost!
Pickett Lost on appeal!
Pickett was refused by the Supreme Court!

Lying King: "Was there ANY information on the substitutes that are owned by the packers and what happened to the profit margins in those commodities?"

Totally irrelevant!

Packers do not sacrifice one commodity at the expense of another. If they didn't want each commodity to be profitable, they would specialize in the most profitable commodity.

Lying King: "Remember, the profits of market power abuse are not always in the commodities being manipulated. It doesn't mean the manipulation didn't happen, it may mean that the culprits made their extra profits from the substitute."

PROVE IT!!

Nothing but a baseless conspiracy theory unsupported by fact, AS ALWAYS!

Lying King: "GIPSA has become nothing more than a reporting agency to the packers. The agency hides behind the fact that they don't have the rules to do any enforcement against abuses in the industry when it comes to the big players."

Talk is cheap!

Is that why Pickett lost?

Lying King: "Since there are no penalties that GIPSA can bear on the industry in certain areas, the harms that the packers do to producers is not corrected with compensation (again, see the Illinois Farm Bureau Report I posted in "5 years ago"--this flaw was expressed in that report and testimony). That means that essentially, the packers get a parking ticket that has no fine, can not be used civilly for the benefit of producers, and they get to continue to park in unlawful areas WITH NO PENALTY!!!!"

I thought that's why you packer blamers took your conspiracies to the court room. What happened there? You lost again!

Lying King: "I haven't read the study yet, but these are some of my opening concerns."

Bwahahaha!

Your opening concern was that the study didn't say what packer blamers like you wanted to hear.

Lying King: "I would hold my opinion of the study until I have read it and studied it, but if these questions I pose are not addressed, it will be another trash study by GIPSA to deflect criticism of their job of enforcing the PSA."

GIPSA didn't conduct the study.

You presented your meaningless opinion before you read the study.



~SH~

 

[Anonymous]

Lying King: "In the Pickett case, the fact that marketing agreements were used to thin out and depress the cash market, which was the basis for some of the pricing structures, was important."

Marketing agreements were not used to thin out and depress "THE CASH MARKET". Marketing agreements in this case only affected TYSON'S CASH MARKET". Tyson is not "THE MARKET". Tyson is "A MARKET" within "THE MARKET".

Lying King: "My point on the marketing agreements and substitutes did not have to do with demand as you note, but as an indication of total corporate profits which includes the margins and profits on the substitutes the corporation owns or controls. In other words, to have a per head profit margin of $2.4 per head of beef and use that as an indication of over all profitability for a company like Tyson, it would be ridiculous."

Nobody claimed it was an indication of overall profitability. That is the profitability in the beef sector only. None of these companies are going to sacrifice one commodity at the expense of another OR WHY WOULD THEY HAVE INVESTED IN THAT COMMODITY IN THE FIRST PLACE????

Your ignorance is amazing Conman.


~SH~

 

[Anonymous]

Sandcheska: "Since wealth is not created nor destroyed, merely transferred, there has to be somebody gaining those billions of dollars. Not everybody can lose money. If the packer's costs go up, that is probably because they paid more for the cattle or because the retailer paid them less for the beef. In that case the packer's loss is offset by the producer's and retailer's gain. If something cost the producer more, the packer or feeder would be in line for the gain. Claiming everybody loses money makes no sense."

If foreign markets for edible and inedible ofal dry up, tell us oh Cody wizard, who gains in that situation?



~SH~

 

[Anonymous]

Sandcheska: "I've asked you and SH to prove any direct relationship between packer profits and cattle prices, and I haven't seen anything yet."

The direct relation is between retail beef prices and cattle prices not packer profits and cattle prices. Packer profits are tied to many factors. Mainly what they pay for cattle in relation to what they receive for beef.

Sandcheska: "That suggests to me the packers aren't sharing their revenue gains."

Out of $2.40 per head, what did you expect them to share with you?


To believe as you do, you would have to believe there is no competition between the various packers. Are you honestly so stupid as to believe that?


~SH~

 

[Anonymous]

Do you know what is absolutely amazing about this topic?

Who sells fat cattle, the producer or the feeder? THE FEEDER!

Who stands to lose more if marketing agreements are detrimental to the market, the producer or the feeder? THE FEEDER!


WELL WHY THE HECK WOULD THE FEEDERS NEED THE LIKES OF CONMAN AND SANDCHESKA TO SAVE THEM FROM THEIR OWN MARKETING AGREEMENTS????

The absolute epitomy of arrogance!


~SH~