Marketing Agreements - Good or Bad?

[DiamondSCattleCo]

Exactly! So if FEEDERS see a reduction in their revenue because of short sighted packer blamers who eliminate contractual arrangements, they'll have less to spend on PRODUCER cattle.

Did you not read the thread at all? It specifically said that contracts lowered the dollars paid to feeders. :roll:

Here is your exact quote:

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

Even you agree that marketing agreements are detrimental to the market, unfortunately you aren't bright enough to understand that it affects producers too.

Twist and twist some more SH.

Rod

 

[katrina]

Bravo!!!!! Great discussion......I am coping this so I can read this again...
Nice to have limited name calling........

 

[Econ101]

What the Packers and Stockyards Act says:

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)

If you look at the operative economic (the guts) part of the PSA above and think of what has been happening in the meats industry, you can tell that the packers are not following the law.

Can any of you look at the above provisions and pick out what part is being broken by the packers given the scenario I described?

The courts haven't been able to do it, but maybe some of you could.

There is no right or wrong answer here, just opinions. Please let us keep it civil. It is just a discussion.

 

[Anonymous]

Conman,

What's your point?

There is no proof of market manipulation with contracts so no PSA violation. You got nothing!

Rod: "Did you not read the thread at all? It specifically said that contracts lowered the dollars paid to feeders.

Here is your exact quote:

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

Even you agree that marketing agreements are detrimental to the market, unfortunately you aren't bright enough to understand that it affects producers too."

I never admitted that marketing agreements are detriment to the market Rod. I'll stop short of calling that a lie and just assume that you can't comprehend what you are reading and simply don't know any better. That was a QUESTION ("?") not a statement ("." or "!").

My point, that you weren't bright enough to grasp, was that if marketing agreements were deterimental to feeders, FEEDERS WOULDN'T USE THEM. LIKE DUUUUH!!!

You packer blamers think these feeders need you to save them from their own marketing agreements. How damned arrogant. Always saving someone else from themselves.

Did you not read this thread? It specifically said that marketing agreements are good for the industry but that's not what conspiracy theorists like you want to believe.


~SH~

 

[Econ101]

Conman,

What's your point?

There is no proof of market manipulation with contracts so no PSA violation. You got nothing!

Rod: "Did you not read the thread at all? It specifically said that contracts lowered the dollars paid to feeders.

Here is your exact quote:

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

Even you agree that marketing agreements are detrimental to the market, unfortunately you aren't bright enough to understand that it affects producers too."

I never admitted that marketing agreements are detriment to the market Rod. I'll stop short of calling that a lie and just assume that you can't comprehend what you are reading and simply don't know any better. That was a QUESTION ("?") not a statement ("." or "!").

My point, that you weren't bright enough to grasp, was that if marketing agreements were deterimental to feeders, FEEDERS WOULDN'T USE THEM. LIKE DUUUUH!!!

You packer blamers think these feeders need you to save them from their own marketing agreements. How damned arrogant. Always saving someone else from themselves.

Did you not read this thread? It specifically said that marketing agreements are good for the industry but that's not what conspiracy theorists like you want to believe.


~SH~

You didn't raise your hand, SH. No one called on you.

 

[Sandhusker]

SH, "You packer blamers think these feeders need you to save them from their own marketing agreements. How damned arrogant. Always saving someone else from themselves"

Kind of like you thinking we need to save the Japanese from themselves? :shock:

 

[Anonymous]

Sandcheska: "Kind of like you thinking we need to save the Japanese from themselves?"

Japan is importing non tested beef and phasing out their own 100% testing program. They're smarter than you are.

Better luck next time!


~SH~

 

[Econ101]

Sandcheska: "Kind of like you thinking we need to save the Japanese from themselves?"

Japan is importing non tested beef and phasing out their own 100% testing program. They're smarter than you are.

Better luck next time!


~SH~

How many dollars have we already lost in exports due to the USDA's policy?

 

[Anonymous]

Lying King: "How many dollars have we already lost in exports due to the USDA's policy?"

None!

Japan banned our beef because we had bse, not because we didn't absorb the unnecessary expense of 100% testing THAT THE WORLD NOW RECOGNIZES AS A WASTE OF TIME AND MONEY!

Next stupid question!



~SH~

 

[Anonymous]

Lying King: "How many dollars have we already lost in exports due to the USDA's policy?"

None!

Japan banned our beef because we had bse, not because we didn't absorb the unnecessary expense of 100% testing THAT THE WORLD NOW RECOGNIZES AS A WASTE OF TIME AND MONEY!

Next stupid question!



~SH~

Then how come so much of the rest of the world is still testing :???: Japan tests ALL-- the UK tests ALL OTM- many countries of the EU still test OTM's and allow PRIVATE testing....

I guess they just got money to burn in those areas eh SH?

 

[Sandhusker]

Sandcheska: "Kind of like you thinking we need to save the Japanese from themselves?"

Japan is importing non tested beef and phasing out their own 100% testing program. They're smarter than you are.

Better luck next time!


~SH~

Over THREE YEARS later, they're taking a trickle of what they once bought, and their citizens don't want the testing to stop.

Did you get those rose colored glasses from the NCBA or are they issued to government employees?

 

[Sandhusker]

Captive Supply:
Correlation v. Causation
OCM Economics Fellow
Dr. Robert Taylor


GIPSA recently released their $4.5 million interim captive supply report, "Spot and Alternative Marketing Arrangements in the Livestock and Meat Industries." The interim report largely regurgitates previous studies of captive supply. While devoid of real analysis of hard data – they claim that data analysis will come in the final report due in 2006 – the authors nevertheless conclude that benefits of vertical integration are "clear" but that impacts on the cash market are "elusive." The report states,
"While the empirical research, on balance, suggests an inverse relationship between captive supplies and cash market prices, establishing a causal link has been elusive. (p. 3-17)"

The causal link has been elusive? Elusive? Causal mechanisms were not elusive to Bob Peterson, long-time cattle buyer and former CEO of IBP. He identified several causal mechanisms in talks to cattlemen in 1988 and 1994. In particular, he emphasized the leverage the packer obtained in the cash market with captive supplies. He stated,

"Do you think this (packer-owned or contracted cattle) has any impact on the price of the cash market? … You bet!"

"In my opinion the feeder can't win against the packer in the real fair play if
we go into the feeding and the hedging program."

"I don't know if we should be proud or ashamed but I'm telling you we started formula pricing. Why did we do it? So we have the same leverage our competition had (with packer fed cattle). And we feed cattle through the process of formula pricing."

In three lengthy speeches Peterson clearly and effectively identified how captive supplies could be used to manipulate the cash market. Yet, his warnings and threats about manipulative use of captive supply have been unheeded by economists in several USDA studies costing taxpayers
millions. It is disturbing that so many economists would continue to ignore persuasive statements from the person who would know best – the executive responsible for buying 30-40% of fed cattle during the 1980s and 1990s.

Common sense application of basic economic principles reveals numerous causal mechanisms, including:

Buyer power in a highly concentrated industry. This is undergraduate textbook stuff.
Base price in most marketing agreements is typically tied to a cash price. Such arrangements, in the presence of buyer power, depress cash price further that it would be without the agreements.
Asymmetric information favoring the large buyer over the feeder. It is well known in economics that asymmetric information favoring the buyer tends to depress price. Testimony in Pickett revealed that the head buyer had 65-75 field buyers calling in four times daily to report market information. Feeders selling on the cash market do not have much of this information.
Preferential deals for selected captive feeders. Such deals increase total supply thereby causing cash price to be lower than it would otherwise be. Hard data in Pickett revealed that Tyson/IBP paid more, on average, for captive cattle than for cash cattle, yet the cash cattle had about 10% more grading choice and prime, although captive cattle yielded about 1% more.
Packer mandated narrow trading window.
Packer control of within-week timing of acquisition and slaughter of captive and cash cattle.
Exclusive arrangements that preempt other buyers from accessing those cattle, thus making entry more difficult for potential competitors.
How was the evidence weighed in arriving at conclusions in the GIPSA study? We don't know1. Were both sides represented? Obviously the independent cattlemen were not represented. There is no mention in the $4.5 million interim report of extensive Pickett evidence. There is no mention of several common-sense causal mechanisms. There is no mention of Bob Petersons warnings.

Early studies of captive supply presumed causation. Then, in a 1996 GIPSA funded study, Schroeter and Azzam advanced a hypothesis that the negative relationship between captive supply and cash price was due to the correlation2 of captive supplies and captive feeders' expectation of price. Their hypothesis may have been well intentioned3, but there was no apparent weighting of evidence. Implicit in their report is the presumption that any argument for correlation, no matter how far-fetched, trumps any causal explanation. Unfortunately, the
correlation hypothesis has dominated the mind-set of academics, and has been a convenient excuse for USDA/GIPSA inaction.

Arguments for and against both the correlation and causation explanations should be objectively weighed. Since the captive supply issue falls under the Packers and Stockyards Act and perhaps under the Sherman and Clayton Antitrust Acts, the preponderance of evidence standard (more likely than not) is the appropriate legal standard and thus the appropriate standard for GIPSA studies. Academic standards should not apply, particularly standards that are never disclosed.

The GIPSA report claims that "clear" conclusions are reached about benefits of vertical integration. Yet, they do not report any real numbers to support these clear conclusions. It must not matter that hard evidence in Pickett contradicts most of their so-called clear conclusions.

Taxpayers deserve a final report that is based on fairly weighting the evidence – all evidence – by a clearly defined and appropriate evidentiary standard. This should not be a purely academic exercise intended to impress other academics. At this point in the captive supply debate, we need practical, common sense analyses not esoteric academic exercises.

Despite several taxpayer-funded captive supply studies spanning over a decade, only a Jury of your peers has looked at the hard facts and carefully weighed the evidence. GIPSA economists have not. Federal Judges have not. After listening to four weeks of testimony followed by five days of careful deliberation, the Pickett Jury verdict (question #4) was that "… use of captive supply proximately caused the cash market price to be lower than it otherwise would have been."CRT

 

[Anonymous]

OT: "Then how come so much of the rest of the world is still testing Japan tests ALL-- the UK tests ALL OTM- many countries of the EU still test OTM's and allow PRIVATE testing...."

JAPAN IS PHASING OUT THEIR 100% TESTING PROGRAM!!!!

What part of that can't you wrap your brain around OT???

Sandcheska: "Over THREE YEARS later, they're taking a trickle of what they once bought, and their citizens don't want the testing to stop."

WHICH HAS EVERYTHING TO DO WITH THE U.S. HAVING BSE AND NOT A DAMN THING TO DO WITH TESTING.

But blamers like you have to blame something because that's what you do best.

How would you know what their citizens want??? More of what you can't support but WANT TO BELIEVE. Let's look at the facts:

FACT - JAPAN IS IMPORTING UNTESTED BEEF.
FACT - JAPANESE CONSUMERS ARE BUYING UNTESTED BEEF.
FACT - JAPAN IS PHASING OUT THEIR OWN 100% TESTING PROGRAM.

What do you have to defend your position Sandcheska? NOT A DAMN THING JUST LIKE ALWAYS!

Causal mechanisms were not elusive to Bob Peterson, long-time cattle buyer and former CEO of IBP. He identified several causal mechanisms in talks to cattlemen in 1988 and 1994. In particular, he emphasized the leverage the packer obtained in the cash market with captive supplies.

These statements were clearly taken out of context by packer blamers looking to support their market manipulation conspiracy theories.

Observe as these quotes are put back in context .........

BP: "Do you think this (packer-owned or contracted cattle) has any impact on the price of the cash market? … You bet!"

Bob is speaking of IBP's CASH MARKET, not the overall cash market.

One buyers action with less than 1/3 market share cannot affect the overall cash market. When an order buyer has an order to fill for 10,000 head of cattle, as he nears the end of the order, he is also willing to pay less. This is not market manipulation as Pickett clearly showed.

quote: BP: "In my opinion the feeder can't win against the packer in the real fair play if we go into the feeding and the hedging program."

And what percent of the cattle that ibp slaughters do they feed and hedge HUH SANDCHESKA??? Answer the question.

DIVERSION AGAIN!

IBP is not in the feeding game or hedging game big enough to be a factor in the market BUT TAYLOR SAID WHAT SANDCHESKA THE PACKER BLAMER WANTED TO HEAR SO YOU JUST REPEAT IT LIKE THE BLIND FOLLOWER YOU ARE.

BP: "I don't know if we should be proud or ashamed but I'm telling you we started formula pricing. Why did we do it? So we have the same leverage our competition had (with packer fed cattle). And we feed cattle through the process of formula pricing."

Great job defeating your own argument. ibp started formula arrangements to COMPETE but the packer blamers say "THERE'S NO COMPETITION". Talk about shooting your argument square in the foot.

Taylor: "In three lengthy speeches Peterson clearly and effectively identified how captive supplies could be used to manipulate the cash market. Yet, his warnings and threats about manipulative use of captive supply have been unheeded by economists in several USDA studies costing taxpayers
millions. It is disturbing that so many economists would continue to ignore persuasive statements from the person who would know best – the executive responsible for buying 30-40% of fed cattle during the 1980s and 1990s."

I suppose that would explain why you got your head handed to you in Pickett vs. ibp too wouldn't it?

Pickett vs. ibp - LOSS
Pickett vs. ibp appealed to the 11th circuit - LOSS
Pickett reviewed by the SUPREME COURT - LOSS

Taylor: "Testimony in Pickett revealed that the head buyer had 65-75 field buyers calling in four times daily to report market information."

Yeh, so what? What's that supposed to prove? They have a certain amount of cattle they need so they would need to know whether to drop their price to reflect their needs. GEE SUPPLY AND DEMAND!

Taylor: "Feeders selling on the cash market do not have much of this information."

Real time sales of ibp, excel, and Swift are available at the touch of a cell phone. Taylor reveals his complete ignorance on that one.

Taylor: "Preferential deals for selected captive feeders. Such deals increase total supply thereby causing cash price to be lower than it would otherwise be."

Means absolutely nothing! TYSON IS NOT "THE MARKET", TYSON IS "A MARKET" WITHIN "THE MARKET". Their actions does not reflect the needs of Swift or Excel.

Taylor: "Hard data in Pickett revealed that Tyson/IBP paid more, on average, for captive cattle than for cash cattle, yet the cash cattle had about 10% more grading choice and prime, although captive cattle yielded about 1% more."

The choice select spread at the time was narrow. Cash cattle were being fed longer due to falling fat prices which was due to falling boxed beef prices. With more choice cattle available, THEY WERE WORTH LESS THAN THEY NORMALLY WOULD BE. Making the 10% more choice figure basically irrelevant.

What they don't tell you is the amount of backfat carried by the cash cattle and how many Yield Grade 4's they had due to the extra days on feed.

Once again, TYPICAL PACKER BLAMING DECEPTION!

Taylor: "Packer control of within-week timing of acquisition and slaughter of captive and cash cattle.
Exclusive arrangements that preempt other buyers from accessing those cattle, thus making entry more difficult for potential competitors."

GOSH, WHAT WOULD THE FEEDING INDUSTRY DO WITHOUT ARROGANT PACKER BLAMERS LIKE TAYLOR TO SAVE THEM FROM THEIR OWN MARKETING ARRANGEMENTS???

The absolute epitomy of arrogance!

WE KNOW MORE ABOUT MARKETING CATTLE THAN THOSE WHO MARKET CATTLE!

Taylor: "Federal Judges have not. After listening to four weeks of testimony followed by five days of careful deliberation, the Pickett Jury verdict (question #4) was that "… use of captive supply proximately caused the cash market price to be lower than it otherwise would have been."CRT"

THAT IS NOT MARKET MANIPULATION!

TYSON'S ACTIONS ARE NOT SWIFTS ACTIONS ARE NOT EXCEL'S ACTIONS ARE NOT USPB'S ACTIONS ARE NOT ANY OTHER PACKER'S ACTIONS.

Tyson is not "THE MARKET"! Tyson is "A MARKET" within "THE MARKET".

No wonder these packer blamers got their collectives heads handed to them in Pickett. What a bunch of bull!


~SH~

 

[Sandhusker]

And Warren Zevon sings, "An excitable boy they all said, an excitable boy."

Scotty, do you think that Tyson's actions have any effect on Swift?

 

[Anonymous]

Little Sandcheska: "Over THREE YEARS later, they're taking a trickle of what they once bought, and their citizens don't want the testing to stop."

Mike posts.....

TOKYO (AP)--Japan's food safety panel on March 28 recommended the government stop testing cattle younger than 21 months for bovine spongiform encehpalopathy, a step toward making U.S. beef eligible for import after a 15-month ban.

So are we to believe that....

A. last March Japan's food safety panel voted against THEIR CITIZENS?

or

B. Little Sandcheska is full of sh*t again?



~SH~

 

[Mike]

Little Sandcheska: "Over THREE YEARS later, they're taking a trickle of what they once bought, and their citizens don't want the testing to stop."

Mike posts.....

TOKYO (AP)--Japan's food safety panel on March 28 recommended the government stop testing cattle younger than 21 months for bovine spongiform encehpalopathy, a step toward making U.S. beef eligible for import after a 15-month ban.

So are we to believe that....

A. last March Japan's food safety panel voted against THEIR CITIZENS?

or

B. Little Sandcheska is full of sh*t again?



~SH~

They have not stopped testing yet. They changed the law because the US was putting pressure on them to import our beef. They could not allow our beef until this law was changed.


Fact: The Japanese citizens would not allow them to stop testing and they have not.

And if they continue to find positives in their herd it will not stop.

They feel we are hiding BSE because the USDA would not allow private testing. In fact, the USDA would not even allow Creekstone to send a brain stem to the Japs for each animal for them to test.

Testing would have gotten us in the door in 2004. All this crap would have blown over by now and we would have all of the Asian markets back.

My 3 year old grandaughter could have worked a better deal than the USDA.

 

[Sandhusker]

Reality update for you, SH; Governments don't always do what their people want them to do.

 

[PORKER]

FOLLOW THE MONEY ...................

 

[Anonymous]

Mike: "They have not stopped testing yet."

They are phasing out 100% testing because only the USDA blamers and bse test salesmen are advocating it.

Mike: "They changed the law because the US was putting pressure on them to import our beef."

Oh I see so Sandcheska was lying again when he said Japan is going to do what Japan wants to do.

You USDA blamers need to get your stories straight.

Mike: "They could not allow our beef until this law was changed."

HOW CAN THAT BE??

You USDA blamers said that Japan wanted tested beef and now you are saying they changed their law SO THEY COULD IMPORT OUR BEEF???

Which way is it Kluso?

Mike: "Fact: The Japanese citizens would not allow them to stop testing and they have not."

FACT: THEY ARE IMPORTING NON TESTED BEEF
FACT: JAPANESE CONSUMERS ARE BUYING NON TESTED BEEF
FACT: 100% TESTING WAS NOT MENTIONED DURING ANY RECENT NEGOTIATIONS.
FACT: THEY ARE PHASING OUT 100% TESTING.

The Japanese actions trump the CHEAP TALK of USDA blamers.

Mike: "They feel we are hiding BSE because the USDA would not allow private testing."

Oh, I see, now you are the official spokesperson for the Japanese government. Interesting!

You don't know what you are talking about again.

Mike: "Testing would have gotten us in the door in 2004. All this crap would have blown over by now and we would have all of the Asian markets back."

There is absolutely NOTHING to back that position.

NOTHING BUT A BLAMER'S NEED TO BLAME USDA!


~SH~

 

[Anonymous]

Sandcheska: "Reality update for you, SH; Governments don't always do what their people want them to do."

Reality update for you. If Japanese consumers were wanting 100% bse tested beef, they would not be buying non tested beef.

GEE, YA THINK YOU CAN GRASP THAT ONE????



~SH~