Sandhusker
Well-known member
Serious Flaws in GIPSA's Latest
Livestock and Meat Marketing Study
Billings, Mont. – The Grain Inspection Packers Stockyards Administration (GIPSA) recently issued its latest Livestock and Meat Marketing Study, which is seriously flawed. The study continues a tradition of stating as fact the simple declarations of packers or large formula feeders, and it concludes that Alternative Marketing Agreements (AMAs), among other benefits, provide for a reliable and consistent supply of quality cattle.
This same declaration was made in the March 2002 report titled "Potential Impacts of the Proposed Ban on Packer Ownership and Feeding of Livestock," conducted by the Sparks Companies, which also was unsupported by any real data analyses.
Before any data was analyzed, the contractors for the current study, upon releasing an interim report in August 2005, declared that AMAs were used "to assure high and consistent quality."
"In contrast to these statements, publicly available data indicate that the exact opposite situation is true – that the supply of AMA cattle is more variable than the cash market," said Auburn University's Robert Taylor, Alfa Eminent Scholar and Professor, Agricultural Economics.
For example, according to Taylor:
· Variability of U.S. beef production has not changed appreciably in many decades, even though captive supply has increased to near half of total supply;
· Captive supply was 2.2 times more variable than supply from the cash market based on GIPSA monthly data for the 15 largest packers, 1988-98;
· Captive supply was 1.5 times more variable than supply from the cash market based on AMS "additional movement" weekly data, 1994-1998;
· Tyson/IBP's captive supply was 1.5 times more variable than their acquisitions from the cash market based on weekly data made public in Pickett v. Tyson/IBP, 1994-2002;
· Captive supply was 3.5 times more variable than supply from the cash market based on GIPSA monthly data for the four largest packers, 1990-2002;
· Captive supply was 2.4 times more variable than supply from the cash market based on GIPSA "revised" monthly data for the four largest packers, 1999-2002;
· Captive supply was 1.4 times more variable than supply from the cash market based on MPR weekly data, April 2004 through January 2007.
"In spite of these examples that point to AMA supply variability, GIPSA's Livestock and Meat Marketing Study did not offer a single data set, or a single analysis, that supported the industry-wide declaration that AMAs provide a consistent supply of cattle," pointed out R-CALF USA Vice President/Region II Director Randy Stevenson. "Even though the study contractors collected millions of bits of data, they did not use them to prove – or disprove – the variability of captive supply. They relied, instead, on the opinions of market participants. That seems to suggest that the study contractors worked toward a predetermined conclusion concerning a reliable supply of cattle.
"There is also within the study absolutely no consideration given to other possible methods of attaining a reliable supply," he continued. "Either the cash market or other contracting methods might accomplish that better than AMAs, but the study did not offer any other possibilities.
"Congress ordered GIPSA to conduct the study, and Congress needs to hold them accountable for these serious flaws," Stevenson said. "Without supporting data, the conclusion that AMAs are used to provide a reliable and consistent supply of cattle should be soundly rejected.
"We fully recognize GIPSA Administrator James Link was not in charge during GIPSA's lengthy history of turmoil, and we thank him for speaking to our members during the recent R-CALF convention and for his acknowledgement of the errors made in the past and his vow to correct those situations," Stevenson emphasized. "But as he considers appropriate actions for improving the agency, he should reject this study as a basis for those decisions. Instead, he should continue to rely on the recommendations made by the agency's Office of Inspector General (OIG) more than a year ago. R-CALF looks forward to working with Link and with Congress to see to it that honesty and competition is returned to the marketplace."
R-CALF USA membership policies support a ban on packer ownership of cattle, with the exception of plants that slaughter less than 100 head per day. Membership policy also defines captive supplies to include any livestock owned by, committed to, or otherwise under the control of, the packer before seven days of slaughter, including non-negotiated transactions and imported cattle and beef.
Livestock and Meat Marketing Study
Billings, Mont. – The Grain Inspection Packers Stockyards Administration (GIPSA) recently issued its latest Livestock and Meat Marketing Study, which is seriously flawed. The study continues a tradition of stating as fact the simple declarations of packers or large formula feeders, and it concludes that Alternative Marketing Agreements (AMAs), among other benefits, provide for a reliable and consistent supply of quality cattle.
This same declaration was made in the March 2002 report titled "Potential Impacts of the Proposed Ban on Packer Ownership and Feeding of Livestock," conducted by the Sparks Companies, which also was unsupported by any real data analyses.
Before any data was analyzed, the contractors for the current study, upon releasing an interim report in August 2005, declared that AMAs were used "to assure high and consistent quality."
"In contrast to these statements, publicly available data indicate that the exact opposite situation is true – that the supply of AMA cattle is more variable than the cash market," said Auburn University's Robert Taylor, Alfa Eminent Scholar and Professor, Agricultural Economics.
For example, according to Taylor:
· Variability of U.S. beef production has not changed appreciably in many decades, even though captive supply has increased to near half of total supply;
· Captive supply was 2.2 times more variable than supply from the cash market based on GIPSA monthly data for the 15 largest packers, 1988-98;
· Captive supply was 1.5 times more variable than supply from the cash market based on AMS "additional movement" weekly data, 1994-1998;
· Tyson/IBP's captive supply was 1.5 times more variable than their acquisitions from the cash market based on weekly data made public in Pickett v. Tyson/IBP, 1994-2002;
· Captive supply was 3.5 times more variable than supply from the cash market based on GIPSA monthly data for the four largest packers, 1990-2002;
· Captive supply was 2.4 times more variable than supply from the cash market based on GIPSA "revised" monthly data for the four largest packers, 1999-2002;
· Captive supply was 1.4 times more variable than supply from the cash market based on MPR weekly data, April 2004 through January 2007.
"In spite of these examples that point to AMA supply variability, GIPSA's Livestock and Meat Marketing Study did not offer a single data set, or a single analysis, that supported the industry-wide declaration that AMAs provide a consistent supply of cattle," pointed out R-CALF USA Vice President/Region II Director Randy Stevenson. "Even though the study contractors collected millions of bits of data, they did not use them to prove – or disprove – the variability of captive supply. They relied, instead, on the opinions of market participants. That seems to suggest that the study contractors worked toward a predetermined conclusion concerning a reliable supply of cattle.
"There is also within the study absolutely no consideration given to other possible methods of attaining a reliable supply," he continued. "Either the cash market or other contracting methods might accomplish that better than AMAs, but the study did not offer any other possibilities.
"Congress ordered GIPSA to conduct the study, and Congress needs to hold them accountable for these serious flaws," Stevenson said. "Without supporting data, the conclusion that AMAs are used to provide a reliable and consistent supply of cattle should be soundly rejected.
"We fully recognize GIPSA Administrator James Link was not in charge during GIPSA's lengthy history of turmoil, and we thank him for speaking to our members during the recent R-CALF convention and for his acknowledgement of the errors made in the past and his vow to correct those situations," Stevenson emphasized. "But as he considers appropriate actions for improving the agency, he should reject this study as a basis for those decisions. Instead, he should continue to rely on the recommendations made by the agency's Office of Inspector General (OIG) more than a year ago. R-CALF looks forward to working with Link and with Congress to see to it that honesty and competition is returned to the marketplace."
R-CALF USA membership policies support a ban on packer ownership of cattle, with the exception of plants that slaughter less than 100 head per day. Membership policy also defines captive supplies to include any livestock owned by, committed to, or otherwise under the control of, the packer before seven days of slaughter, including non-negotiated transactions and imported cattle and beef.
