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When meat packers own their own cattle

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HAY MAKER

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In the world of cattle marketing, the independent custom feeders play a key role in the continued profitability of the industry. Whether feeding customer or company-owned cattle, independent feeders provide efficient cattle feeding and care, professional marketing, and establish the weekly prices through negotiating with packers. But the independent feeders are being driven out of business by captive supplies, because packers freeze them out of markets in favor of packer-aligned cattle sources. Captive supply reform must be included in the 2006 Farm Bill to revitalize the industry.

When meat packers own their own cattle, or contract months ahead for delivery of cattle, the industry calls the arrangements "captive supplies." The packer has "captured" the exclusive right to cattle delivery, there is no bidding when cattle are sold, and the prices are not reported. The Organization for Competitive Markets believes about 80% of cattle sold today are captive cattle.

This means prices are set by the 20% or fewer remaining cattle sold after negotiations with independent feedlots. The USDA reports these few transactions, which set the market price for the week. Packers use their captive supplies to avoid the open market, and to bid low because they have most of their needs met through "captured cattle." Though extremely efficient, independent feedlots face far more uncertainty, worrying every week whether they can sell customer cattle because packer needs are full. Their customers lose money and do not return.

Just as Hurricane Katrina devastated Louisiana, Mississippi and Alabama with the convergence of rain, wind and floods; captive supplies devastate the independent cattle feeding sector with the convergence of market freeze out, low prices, and a financially demoralized customer base. The packers then claim we need to import Canadian, Australian and Brazilian cattle because of short domestic supplies.

These points were proven in the recent Pickett versus Tyson Fresh Meats case in Montgomery, Alabama. The jury saw Tyson data showing packer had 180% of their plant capacity locked in through captive supplies in some weeks. In other words, Tyson had all its cattle committed for one week plus 80% of the next week's cattle. This access grants the ability to stay out of the cash market for weeks at a time and drive down the cash market.

The Packer & Stockyards Act was passed in 1921 to address these problems, but U.S. Courts have gutted the law. Congress needs to overrule the courts with new statutory language they cannot ignore. The USDA could fix many of the problems, but the revolving door and FEMA-like cronyism prevent this.

Imagine if the buyers of your cattle were actively bidding on them all week rather than a thirty minute window once a week. This true market process would not only raise the price of live cattle and increase the standard of living for the American producer, but would also benefit the whole of rural America. We need to get behind captive supply reform and get language into the upcoming Farm Bill that addresses this problem.

We need to tell our Congressman and Senators they are anti-agriculture unless they support competition over packer-controlled markets.
 
[/code][/quote]These points were proven in the recent Pickett versus Tyson Fresh Meats case in Montgomery, Alabama. The jury saw Tyson data showing packer had 180% of their plant capacity locked in through captive supplies in some weeks. In other words, Tyson had all its cattle committed for one week plus 80% of the next week's cattle. This access grants the ability to stay out of the cash market for weeks at a time and drive down the cash market.
Or they had 20% locked in for the next five weeks. This article was written by whom?
 
Funny how the feeding sector is expanding and receives sealed bids from multiple packers when they are ready to sell.

Look like the author of that piece isn't paying attention.
 
When meat packers own their own cattle, or contract months ahead for delivery of cattle, the industry calls the arrangements "captive supplies." The packer has "captured" the exclusive right to cattle delivery, there is no bidding when cattle are sold, and the prices are not reported. The Organization for Competitive Markets believes about 80% of cattle sold today are captive cattle.


They contradict themselves in the same paragraph. They properly define captive supplies then go on to include formula cattle to inflate the numbers to 80%. Typical R-CULT/OCM lies and deception!



~SH~
 
The posts above are from 2 Canadians and 1 name calling packer backer.
 
Conman: "The posts above are from 2 Canadians and 1 name calling packer backer."

If being a defender of the truth makes me a packer backer as opposed to a thumb sucking packer blamer, so be it.

I'd rather be a packer backer than a comulsive liar like you are.


~SH~
 
"defender of the truth" :lol: :lol: :lol: :lol: :lol: :lol: :lol: :clap: :clap: :liar: :liar: :liar: :help:
 
I don't need to fill in the blanks Mr. Illusion. I proved my case. You offered nothing to the contrary and you never will.

When you can prove me wrong, you'll have something. Until that time you can use your parroted "fill in the blanks" to create an illusion. As always, you want everyone else to prove everything when you prove nothing.

Where's your proof that I lied? You said "when someone from Cody, NE calls someone a liar, they better be able to back it". Did you back it? Of course not. That just proves what a hypocrite you really are.

YOU GOT NOTHING ON ME!


~SH~
 
~SH~ said:
I don't need to fill in the blanks Mr. Illusion. I proved my case. You offered nothing to the contrary and you never will.

When you can prove me wrong, you'll have something. Until that time you can use your parroted "fill in the blanks" to create an illusion.

Where's your proof that I lied? It doesn't exist and it never will.

YOU GOT NOTHING!


~SH~

:lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol:

You provided proof, but can't fill in them dang blanks. I know where the illusion is - same place the delusion is. :lol: :lol: :lol: :lol:

You're a dandy, SH.
 
Econ101 said:
The posts above are from 2 Canadians and 1 name calling packer backer.

Econ, so you're once again attempting to shoot the messenger instead of the message. Would you care to point out any inaccuracies in anything these three have stated?

The cut and paste article Haymaker posted was authored by Chase Carter, of the OCM, which was written sometime last month. The article is brim full of inaccuracies. For example:

Carter of OCM: said:
But the independent feeders are being driven out of business by captive supplies, because packers freeze them out of markets in favor of packer-aligned cattle sources.

In the past three years, how many people have succumbed to the fate Carter describes? What have live prices done during this same time frame?


Carter of OCM: said:
When meat packers own their own cattle, or contract months ahead for delivery of cattle, the industry calls the arrangements "captive supplies." The packer has "captured" the exclusive right to cattle delivery, there is no bidding when cattle are sold, and the prices are not reported. The Organization for Competitive Markets believes about 80% of cattle sold today are captive cattle.

Do packers get feeders in a headlock and force them to forward contract, or was it the feeders idea in the first place? Recently, I heard Randy Blach of Cattle Fax detail the percentage of cattle sold in formulas, grids, contracts, etc the past five years. In 2002, it was just over 50%, and in 2004 it was 39%. This year is projected to be in the low 40's. Where in the world does Chase Carter come up with 80%?

Carter of OCM: said:
This means prices are set by the 20% or fewer remaining cattle sold after negotiations with independent feedlots. The USDA reports these few transactions, which set the market price for the week. Packers use their captive supplies to avoid the open market, and to bid low because they have most of their needs met through "captured cattle." Though extremely efficient, independent feedlots face far more uncertainty, worrying every week whether they can sell customer cattle because packer needs are full. Their customers lose money and do not return.

Chase must not read ranchers.net. Otherwise, he'd better understand that it's a consumer driven pricing mechanism that determines pricing. There absolutely are not 20% of the cattle "setting" the price for everyone else.

Carter of OCM: said:
Just as Hurricane Katrina devastated Louisiana, Mississippi and Alabama with the convergence of rain, wind and floods; captive supplies devastate the independent cattle feeding sector with the convergence of market freeze out, low prices, and a financially demoralized customer base. The packers then claim we need to import Canadian, Australian and Brazilian cattle because of short domestic supplies.

Even think the most passionate RCAlf members haven't said this. To compare the tragedies suffered along the gulf coast with unsubstantiated, unsupported data like this is unthinkable. Again, name the frozen out, priced low feedlots who have a financially demoralized customer base. Ain't there.

Carter of OCM: said:
These points were proven in the recent Pickett versus Tyson Fresh Meats case in Montgomery, Alabama. The jury saw Tyson data showing packer had 180% of their plant capacity locked in through captive supplies in some weeks. In other words, Tyson had all its cattle committed for one week plus 80% of the next week's cattle. This access grants the ability to stay out of the cash market for weeks at a time and drive down the cash market.

Stay out of the market for weeks (plural) at a time and drive down the cash market???????? If that was the case, why would the market EVER go up?

Carter of OCM: said:
Imagine if the buyers of your cattle were actively bidding on them all week rather than a thirty minute window once a week. This true market process would not only raise the price of live cattle and increase the standard of living for the American producer, but would also benefit the whole of rural America. We need to get behind captive supply reform and get language into the upcoming Farm Bill that addresses this problem.

Wasn't that long ago that packers did bid / buy cattle all week long. I have yet to meet anyone that take credit for the 30 minute window we trade in. This window isn't the packers doing.

Carter of OCM: said:
We need to tell our Congressman and Senators they are anti-agriculture unless they support competition over packer-controlled markets.

So if you don't subscribe to OCM's line of thinking, you're anti agriculture. I've gotta ask, has a desperation mentality set in with this group?

Beefman
 
Beefman:
Joined: 27 Apr 2005
Posts: 64


PostPosted: Thu Dec 22, 2005 9:35 am Post subject: Reply with quote
Econ101 wrote:
The posts above are from 2 Canadians and 1 name calling packer backer.


Econ, so you're once again attempting to shoot the messenger instead of the message. Would you care to point out any inaccuracies in anything these three have stated?

Beefman, you may have some credibilty on that call if called everyone on it and don't do it yourself. I recently saw you post something on I-4, was it, and missed the whole context of a post. Your "unbiased" rant was noticed. I have noticed that you do not attribute a derrogatory handle to me so I will recipocate with the same courtesy.

The packers are obviously trying integrate the cattle markets with supply capture. Whether they do it all the time or just when they can get away with it is immaterial. Just like marketing agreements and captive supply, these mechanisms are used when it benefits the buyers. I actually don't mind their use as long as the economic tenants of Section 202 are not broken. Pickett proved to a jury that they were broken and Tyson provided no evidence to the contrary. The courts came in and substituted their "and" s into the law for the "or"s. It was judicial activism.

You may cite time periods that any of the allegations that the article suggests do not hold. The problem is that sometimes they do hold. Any time they do hold they have the affects mentioned in the article. You don't have to rob a man every time he goes down the street to make him a believer that it is a bad and unpoliced neighborhood. It only takes once, with no justice being served, for him to move out. That is what is happening.

As far as your points about the article:

1. "Do packers get feeders in a headlock and force them to forward contract, or was it the feeders idea in the first place? Recently, I heard Randy Blach of Cattle Fax detail the percentage of cattle sold in formulas, grids, contracts, etc the past five years. In 2002, it was just over 50%, and in 2004 it was 39%. This year is projected to be in the low 40's. Where in the world does Chase Carter come up with 80%? "

Forward contracts are not a problem unless they are used to depress the cash market. The percentage contracts does not matter, it is the market power that is gained by their used and the use of other methods (formula or grid).

2. "Chase must not read ranchers.net. Otherwise, he'd better understand that it's a consumer driven pricing mechanism that determines pricing. There absolutely are not 20% of the cattle "setting" the price for everyone else."

Consumers (for the most part) do not buy fat cattle. Packers do. Consumers influence the other side of packers and may be a factor in what strategies packers use in their offerings, but they do not buy cattle on the hoof. You are making the case here that packers are not in this business for profit and are only margin operators. Agman's varying "packer margins" are proof that this is not the case.

3. "Even think the most passionate RCAlf members haven't said this. To compare the tragedies suffered along the gulf coast with unsubstantiated, unsupported data like this is unthinkable. Again, name the frozen out, priced low feedlots who have a financially demoralized customer base. Ain't there. "

I don't know all of the people individually, but you can count the people in the Pickett case as part of that class.

4. "Stay out of the market for weeks (plural) at a time and drive down the cash market???????? If that was the case, why would the market EVER go up?"

Again, a misuse of the "everytime" doctrine. Packers can play games in the middle sometimes and not all the time.

5. "Wasn't that long ago that packers did bid / buy cattle all week long. I have yet to meet anyone that take credit for the 30 minute window we trade in. This window isn't the packers doing."

So you didn't invent the gun. The problem is not the gun, it is the misuse of it.

6. "So if you don't subscribe to OCM's line of thinking, you're anti agriculture. I've gotta ask, has a desperation mentality set in with this group?

Beefman"

Not anti-agriculture, anti-free market. Markets require rules to prevent those who live by the "He who has the gold makes the rules" to "Do unto others as you would have them do unto you".

Food (and water) is too important for life for it to be controlled by a few with a few chokepoints. Katrina did prove that.
 
Conman, here is your one chance to show everyone that you are a formidable opponent in the debate of beef industry issues.

Explain to me and everyone on this board what allows packers to manipulate markets at certain times and not in others?

You have admitted that packers will pay less for cattle "IF" they can. What situations allow them to and what situations don't?

How does that, in turn, correlate with the actual changes in cattle prices and boxed beef prices?

How do you explain a 50% advance in price in a single year with no change in the level of captive supplies?

Tell us oh self proclaimed marketing wizard, what situations allow packers to manipulate markets and what situations don't?

What situations allow packers to profit and what situations allow packers to run into red ink?

For once, why don't you try to explain your market manipulation conspiracy theories with some real time examples FROM THE CATTLE/BEEF INDUSTRY rather than some unrelated event to create another illusion.

I am totally convinced that you are a complete phony and a compusive liar as are many other readers here. Here is your chance to prove otherwise.


I'll even help you out with this Conman. The only valid argument that you have is that packers drop their price in the cash market when their needs are filled in the formula and captive supply market. There is no denying that. The head of cattle procurement for Tyson even stated under oath, "when the captive supplies go up, the cash price goes down". Nobody can argue that point. OCM has even sunk his teeth into that statement. It's your job to convince everyone here how packers dropping their price in the cash market due to having their needs filled in the formula market or captive supply market is market manipulation. Before you go down that road you better be prepared to apply that same logic to every segment of this industry. If dropping your price in the cash market due to having your needs filled in the formula market or the captive supply market is market manipulation, so is dropping your price in every aspect of cattle purchasing when you have part of your needs met through other purchasing contracts.



~SH~
 
~SH~ said:
Conman, here is your one chance to show everyone that you are a formidable opponent in the debate of beef industry issues.

Explain to me and everyone on this board what allows packers to manipulate markets at certain times and not in others?

You have admitted that packers will pay less for cattle "IF" they can. What situations allow them to and what situations don't?

How does that, in turn, correlate with the actual changes in cattle prices and boxed beef prices?

How do you explain a 50% advance in price in a single year with no change in the level of captive supplies?

Tell us oh self proclaimed marketing wizard, what situations allow packers to manipulate markets and what situations don't?

What situations allow packers to profit and what situations allow packers to run into red ink?

For once, why don't you try to explain your market manipulation conspiracy theories with some real time examples FROM THE CATTLE/BEEF INDUSTRY rather than some unrelated event to create another illusion.

I am totally convinced that you are a complete phony and a compusive liar as are many other readers here. Here is your chance to prove otherwise.


I'll even help you out with this Conman. The only valid argument that you have is that packers drop their price in the cash market when their needs are filled in the formula and captive supply market. There is no denying that. The head of cattle procurement for Tyson even stated under oath, "when the captive supplies go up, the cash price goes down". Nobody can argue that point. OCM has even sunk his teeth into that statement. It's your job to convince everyone here how packers dropping their price in the cash market due to having their needs filled in the formula market or captive supply market is market manipulation. Before you go down that road you better be prepared to apply that same logic to every segment of this industry. If dropping your price in the cash market due to having your needs filled in the formula market or the captive supply market is market manipulation, so is dropping your price in every aspect of cattle purchasing when you have part of your needs met through other purchasing contracts.



~SH~

Their market power, their willingness to use it, and no one to stop them.
 
Their market power is constant.

Explain how their market power allows them to manipulate markets in some situations and not in others. Anyone can make the claim, if you know what you are talking about you should have no trouble explaining it.

Go ahead, explain it!



~SH~
 
~SH~ said:
Their market power is constant.

Explain how their market power allows them to manipulate markets in some situations and not in others. Anyone can make the claim, if you know what you are talking about you should have no trouble explaining it.

Go ahead, explain it!



~SH~

Whatever is strategically advantageous to their bottom line---which includes their other business interests.
 
QUIT DANCING YOU DAMN PHONY AND EXPLAIN IT!

WHAT CIRCUMSTANCES ALLOW MARKET MANIPULATION AND WHICH DON'T?????

EXPLAIN IT OR ADMIT THAT YOU CAN'T!

MARKET POWER IS CONSTANT!



~SH~
 
~SH~ said:
QUIT DANCING YOU DAMN PHONY AND EXPLAIN IT!

WHAT CIRCUMSTANCES ALLOW MARKET MANIPULATION AND WHICH DON'T?????

EXPLAIN IT OR ADMIT THAT YOU CAN'T!

MARKET POWER IS CONSTANT!



~SH~

SH, I have told you before that I do not relish giving you lessons that you should pay for. I just don't think you get anything out of them.

Have a Merry Christmas.
 

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