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Senator Brownback talks Against FB Packer Ownership Ban

Tex

Well-known member
Senator Sam Brownback just spoke up against the ban on packer ownership of 14 days before slaughter.

He just cited an integrated model of Black Angus, naturally raised (without hormones and antibiotics) that would not work with the 14 day packer ownership ban. He said the 14 day packer ban ownership rule would not allow his cattlemen to get the premium under the program.

Unless he just talked to his "economic" guru, Phil Gramm, and his wife Wendy Gramm, who was on the board of IBP leading up to the Pickett case, he just came up with this (Wendy Gramm was also on the board of Enron).

Comments????
 

Sandhusker

Well-known member
Tex said:
Senator Sam Brownback just spoke up against the ban on packer ownership of 14 days before slaughter.

He just cited an integrated model of Black Angus, naturally raised (without hormones and antibiotics) that would not work with the 14 day packer ownership ban. He said the 14 day packer ban ownership rule would not allow his cattlemen to get the premium under the program.

Unless he just talked to his "economic" guru, Phil Gramm, and his wife Wendy Gramm, who was on the board of IBP leading up to the Pickett case, he just came up with this (Wendy Gramm was also on the board of Enron).

Comments????

Just what the heck does the purchase date have to do with the premiums? You still have the same people buying the same cattle for the same program.

Somebody in the gallery needs to ask these guys "how" and "why" and watch them pull a Hillary trying to answer.
 

Tex

Well-known member
My personal thought is that Brownback says it will be a benefit to producers, but it really will not be.

Suppose a packer came up with a premium plan as he suggested. They could make sure the plan was being adhered to as he suggests, for added value down the production line.

Contracts that tie those cattle to that one packer would end up giving that packer the control over those cattle. That would decrease the options of the cattle producer who was working under the plan.

Suppose for instance, that the conditions for increased value added an extra 10 cents per lb. value to the cattle for the processor and the marketing plan they want. Suppose they say that they will give 5 cents of the added value to the producer and keep 5 cents themselves. In this case, the producer gets 5 cents per lb for having a certified black angus grown with no hormones or antibiotics as a premium.

Now let us suppose the market price for cattle in general is 1.00 per lb.

The cattle producer under the program would get 1.05 for his cattle, giving him extra value for the particular feedout situation.

If Brownback is right, and his cattle producers get this in their contract, and agree to it, that is great.

Now let us see how this would play out with packer owner ban and without.

With packer owner ban, the marketing choices for the cattle are still within the producer's control. If the packer is willing to only give 1.00 per lb. and not give the premium for the certified product, the owner of the cattle can then sell those cattle to someone else who is willing to give that premium or to the market without the certification. That keeps the packer honest.

Without packer owner ban, the cattle might be under contract, cattle prices rise, and the owner (producer) of the cattle would not get the premium because he was already contracted at a lower rate. He could not sell his cattle at a higher rate, the market rate, because of the ownership by the packer. Thus, what seemed to help the producer, actually hurt him.

The other thing that would happen is that the packer could, as they say in the Senate, stack the tree, with his supply, and therefore influence the cash market price which all other prices (futures market) are based. the next week's contract price could thus be affected if it was based on the cash price. This is the reason that there is to be no packer ownership within the last 14 days.

It gives the cattle owners more control over the supply they have available for the packers and makes clear the line of supply and demand between the two.

One of you feeder types may want to clarify this or come up with a better example.

It seems to me that it only limits the options of the producer when supply is contracted and it decreases the feeder's options.
 

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