U.S. Cattle Producers Praise Effort to Limit Packer Ownership
(Billings, Mont.) – R-CALF USA commends the introduction of legislation by U.S. Sen. Ken Salazar, D-Colo., and U.S. Sen. Chuck Grassley, R-Iowa, that would prohibit packers from owning, feeding or controlling livestock for more than seven business days prior to slaughter, thus ensuring market access for both large and small producers.
Other co-sponsors of the bill include: Sen. Byron Dorgan, D-N.D.; Sen. Mark Dayton, D-Minn., Sen. Mike Enzi, R-Wyo.; Sen. Tom Harkin, D-Iowa; Sen. Tim Johnson, D-S.D.; and, Sen. John Thune, R-S.D.
"Senator Salazar said his goals with this legislation are to keep a check on vertical integration of the U.S. cattle industry, create open and competitive markets, and ensure a place for independent producers in the marketplace," noted Leo McDonnell, president and co-founder of R-CALF USA. "We agree entirely with the efforts of this bipartisan group, which will result in increased competition for cattle, more fair-access to slaughter space for independent producers, and of course, less market distortion."
Currently, four meatpackers control more than 80 percent of the beef market. Packers claim any loss in ownership will result in a loss of equity, loss of quality control, and even loss of the domestic cattle industry, but R-CALF USA holds those claims as false. Rather than experiencing a loss of equity, the cattle industry actually would experience an increased infusion of equity into the production chain. This increase will result from packer purchases of the same number of cattle, but at a higher cost because packers will be buying heavier fed cattle, not lighter feeder cattle.
"The packers are in business to slaughter cattle, and the number of cattle they slaughter depends on retail demand for beef, so the packer ban will only change how packers procure the cattle needed to satisfy retail demand," McDonnell explained. "The ownership ban will require packers to purchase all their fed cattle from feedlots or independent feeders, in turn, creating an increased demand for fed cattle. As a result, feedlots and feeders will have to aggressively buy more feeder cattle from independent producers to place enough cattle on feed to satisfy the packers' demand for enough beef to satisfy retail demand – the very essence of the free enterprise system our country was founded on."
States such as Iowa and Nebraska have enacted restrictions on packer ownership of livestock or livestock facilities, and there has been no evidence of financial injury to either packers or producers.
"The percentage of captive supplies continues to increase, and several government reports indicate there clearly is a negative statistical relationship between the use of captive supply and the spot market price of fed cattle, and packer-owned cattle contribute substantially to that negative impact" continued McDonnell.
"Although a ban on packer ownership was removed from the 2002 Farm Bill, we're happy to see congressional leaders bring the issue to the forefront once again," he concluded. "If ranchers want fairer prices for their cattle, then the U.S. cattle industry should stand firmly in support of this legislation and work aggressively to ensure it becomes law."
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R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) represents thousands of U.S. cattle producers on domestic and international trade and marketing issues. R-CALF USA, a national, non-profit organization, is dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. R-CALF USA's membership consists primarily of cow-calf operators, cattle backgrounders, and feedlot owners. Its members – over 14,500 strong – are located in 46 states, and the organization has over 60 local and state association affiliates, from both cattle and farm organizations. Various main street businesses are associate members of R-CALF USA. For more information, visit www.r-calfusa.com or, call 406-252-2516.
(Billings, Mont.) – R-CALF USA commends the introduction of legislation by U.S. Sen. Ken Salazar, D-Colo., and U.S. Sen. Chuck Grassley, R-Iowa, that would prohibit packers from owning, feeding or controlling livestock for more than seven business days prior to slaughter, thus ensuring market access for both large and small producers.
Other co-sponsors of the bill include: Sen. Byron Dorgan, D-N.D.; Sen. Mark Dayton, D-Minn., Sen. Mike Enzi, R-Wyo.; Sen. Tom Harkin, D-Iowa; Sen. Tim Johnson, D-S.D.; and, Sen. John Thune, R-S.D.
"Senator Salazar said his goals with this legislation are to keep a check on vertical integration of the U.S. cattle industry, create open and competitive markets, and ensure a place for independent producers in the marketplace," noted Leo McDonnell, president and co-founder of R-CALF USA. "We agree entirely with the efforts of this bipartisan group, which will result in increased competition for cattle, more fair-access to slaughter space for independent producers, and of course, less market distortion."
Currently, four meatpackers control more than 80 percent of the beef market. Packers claim any loss in ownership will result in a loss of equity, loss of quality control, and even loss of the domestic cattle industry, but R-CALF USA holds those claims as false. Rather than experiencing a loss of equity, the cattle industry actually would experience an increased infusion of equity into the production chain. This increase will result from packer purchases of the same number of cattle, but at a higher cost because packers will be buying heavier fed cattle, not lighter feeder cattle.
"The packers are in business to slaughter cattle, and the number of cattle they slaughter depends on retail demand for beef, so the packer ban will only change how packers procure the cattle needed to satisfy retail demand," McDonnell explained. "The ownership ban will require packers to purchase all their fed cattle from feedlots or independent feeders, in turn, creating an increased demand for fed cattle. As a result, feedlots and feeders will have to aggressively buy more feeder cattle from independent producers to place enough cattle on feed to satisfy the packers' demand for enough beef to satisfy retail demand – the very essence of the free enterprise system our country was founded on."
States such as Iowa and Nebraska have enacted restrictions on packer ownership of livestock or livestock facilities, and there has been no evidence of financial injury to either packers or producers.
"The percentage of captive supplies continues to increase, and several government reports indicate there clearly is a negative statistical relationship between the use of captive supply and the spot market price of fed cattle, and packer-owned cattle contribute substantially to that negative impact" continued McDonnell.
"Although a ban on packer ownership was removed from the 2002 Farm Bill, we're happy to see congressional leaders bring the issue to the forefront once again," he concluded. "If ranchers want fairer prices for their cattle, then the U.S. cattle industry should stand firmly in support of this legislation and work aggressively to ensure it becomes law."
# # #
R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) represents thousands of U.S. cattle producers on domestic and international trade and marketing issues. R-CALF USA, a national, non-profit organization, is dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. R-CALF USA's membership consists primarily of cow-calf operators, cattle backgrounders, and feedlot owners. Its members – over 14,500 strong – are located in 46 states, and the organization has over 60 local and state association affiliates, from both cattle and farm organizations. Various main street businesses are associate members of R-CALF USA. For more information, visit www.r-calfusa.com or, call 406-252-2516.
