Dear Editor,

In a June third article of the Western Ag Reporter, the author likened the effort to reform the cattle market to that of a basketball game in the last twenty-one seconds of the fourth quarter with the score tied. The Packers versus the Producers; or the Cowboys might be more apt, as there are not enough independent feeders left to put a full team on the floor.

To continue to use this basketball analogy, the Cowboy’s team is unfortunately playing with a half-deflated ball.  The solution that the Cowboys are looking to restore market competition, nick-named the 50/14 bill, introduced by Senators Grassley and Tester would amend the Agricultural Marketing Act by requiring that packers buy half of their cattle on the spot market.

The trouble is that the Agricultural Marketing Act of 1947, only gives the government the authority to require the reporting of prices.  There is no provision within this Act that allows government to mandate how buyers can buy or sellers sell. That is the realm of anti-trust laws such as the Packers and Stockyards Act.

The first two questions a Federal Judge will ask, when the legality of the 50/14 is questioned by the Packers, are: “where is the evidence that mandating spot market purchases is necessary and why Is this not being addressed within the Packers and Stockyards Act?”

Both R-Calf and US Cattlemen’s Association are in favor of this 50/14 approach and make the argument that although it may not be the full solution, we need to solve this problem in an incremental manner.  The trouble with this line of thinking is that the inevitable litigation will require all of the same economic and legal analysis that a more direct and comprehensive solution to the cattle market dysfunction would also require.

Litigation takes time, and should the 50/14 approach prevail, we still would have only half of the market competitively priced while the other half would in essence be legal “captive supply.”

However, should the 50/14 lose in Federal Court, this will be another court precedence against restoring market competition to the livestock industry. Would it not make more sense to fix the market dysfunction once and for all, just like they did in 1921. The solution at that time was to require packers to buy all of their cattle in a public competitive market.

Senators Grassley and Tester proposed just that in their 2007 Captive Supply Reform Act.  At that time, our cattle organizations were engaged in their habitual bickering and would not come together to actually fix the cattle market. As a result, Captive Supply Reform did not get traction and was not incorporated into the Farm Bill.

Speaking of bickering between cattle organizations, I am sure we all are heartened by the recent summit meeting in Phoenix. I for one hope that they shall continue those discussions.  However, beware of the National Cattlemen’s Beef Association (NCBA) bearing gifts. They pulled that trick in 1999 when they first came up with the idea of mandatory livestock price reporting.  At that time, USDA was considering requiring that packers actually bid for all of their cattle purchases, just as the later Grassley and Tester 2007 Captive Supply Reform Act would have required.

To prevent USDA from following through on actual market reform, NCBA proposed mandatory livestock price reporting instead, promising that this would provide sufficient market transparency to level the playing field.  We all know that this did not happen. Even back then, spot market purchases were not large enough to provide actual price discovery. Besides, the discrepancy of economic power between the numerous small feeders and the four dominant packers made true competition a joke.

The old adage is “fool me once – shame on you: fool me twice -shame on me! Apparently, the only issues that NCBA pushed, coming out of the summit meeting, are some enhancements to mandatory livestock price reporting (but not the 50/14 plan) and more studies.  Those that oppose market reform always call for more studies because studies waste time. Are the NCBA and their Packer puppet masters worried that there is enough anger out in cattle country that something might actually happen to rein in the packer monopoly unless they channel this movement into another deadend?

Sincerely yours,

Gilles Stockton

 

Senators urge Department of Justice to investigate potential violations of antitrust laws in the face of skyrocketing corporate profits, plummeting live cattle prices 

(Big Sandy, Mont.) – U.S. Senator Jon Tester and a group of his bipartisan colleagues are calling on the U.S. Department of Justice to investigate whether the control large meatpackers have over the beef processing market violates U.S. antitrust laws and principles of fair competition.

In a letter to U.S. Attorney General Merrick Garland, Tester and his colleagues outlined the ongoing irregularities in cattle prices that have led to major corporate packers making significant profits while independent ranchers experience tightened margins and consumers face higher prices at the grocery store.

“In the last several years, the price of live cattle in the United States market has plummeted, while the price of boxed beef has significantly increased, raising consumer prices at the grocery store,” Tester and his colleagues wrote. “Concurrently, the major packing companies realized significant profits, while both U.S. beef consumers and independent cattle producers paid the price. These large price disparities are leading independent cattle producers to go broke and causing consumers to pay an unnecessary, over-inflated premium on beef.”

The U.S. meatpacking industry is significantly consolidated — just four companies operate 18 of the top 20 beef slaughter facilities in the country. Through formula and forward cattle pricing, large corporate packers are able to reduce the number of slaughters, curtail cash trades, and use depressed demand to manipulate future contracts and reduce the ability of independent ranchers to negotiate fair returns for their products.

Tester is leading the charge in the efforts to combat corporate consolidation and protect the livelihood of family farmers and ranchers. Following the steepest decline in cattle prices in forty years, Tester called on the Department of Agriculture to take immediate action to stabilize beef markets. He released his three-part Rancher Relief Plan aimed to provide more certainty to Montana producers and give consumers more access to Montana’s world-class products. These bipartisan initiatives include:

1. Increasing interstate commerce and diversifying meat production in Montana and neighboring states;
2. Legislation to ensure fair prices at the farm gate from large packers;
3. And the first bipartisan Senate push for mandatory Country of Origin Labeling since Congress repealed it in 2015.

Read Tester’s full letter to Attorney General Garland HERE.

June 2, 2021 (WASHINGTON) – On Wednesday, the United States Cattlemen’s Association (USCA) sent a letter to Secretary of Transportation Pete Buttigieg requesting immediate regulatory relief for transporters of live animals and fresh meat products following the impact of the cyberattack on global meat supplier JBS SA.  In the letter, USCA requests the Federal Motor Carrier Safety Administration (FMCSA) provide emergency regulatory flexibility for motor carriers and drivers hauling both live animals and meat products:  “After reviewing reports from our members regarding the impact of the JBS outage, USCA strongly believes this event warrants immediate regulatory action to ensure grocery store shelves stay stocked of fresh meat products. “Further, agency action following the May 7, 2021 ransomware attack of Colonial Pipeline provides a precedent for the issuance of such an emergency declaration to ensure supply chain continuity of essential consumer goods.”

Read the letter.