19 November 2007

3 minute read

North America

Time and again, we heard top officials in Washington, D.C., talking of the need to loosen government’s grip on American agriculture. As a National Cattlemen’s Beef Association member, this was music to my ears. NCBA embraces the philosophy of less government control and interference in our industry.

But now the heavy hand of government threatens to make this farm bill a disaster for cattlemen. The Senate Agriculture Committee’s version of the bill contains several anti-competitive provisions, including a ban on packer ownership of cattle more than 14 days prior to slaughter.

Now I’m sure this idea has surface appeal to some cattle producers. After all, nobody wants to see packers gaining control over cattle production and squeezing out the small, independent producer.

That’s a noble thought, but it has no basis in reality. Independent cattle producers all across the country are improving their bottom line through innovative, value-added marketing programs. These smart business options are helping cattlemen break out of the traditional price-taker role. When they produce high-quality cattle that meet particular criteria, they are reaping the rewards they so richly deserve.

But some members of Congress want to derail these business strategies that have taken us many years to build. They want to dictate how, when and to whom we can sell our cattle. I don’t know about you, but I think I can make those decisions for myself, rather than have them imposed from Capitol Hill.

This urge to play nanny over the cattle business might be more understandable if the large meatpackers were actually gaining significant control over cattle production. But nothing could be further from the truth. Because of the capital required and the risk involved, we’ve seen very little growth over the years in packer-owned cattle herds. The free market is doing a better job of keeping packers out of the cattle-raising business than any new law ever could.

Congress even ordered an independent study recently to examine packers’ influence over the market. In over 58 million cattle transactions studied between 2002 and 2005, only 5 percent involved any type of direct packer ownership. Does this sound like a trend that justifies a major government “rescue” effort?

This same study found that about 38 percent of cattle transactions involved some sort of alternative marketing arrangement. Some of these agreements may require transfer of ownership more than 14 days before slaughter, meaning this so-called ban on packer ownership places them in legal jeopardy. Even more revealing is the fact that these arrangements had a very minimal impact on the cash market n which still accounted for 62 percent of all transactions.

The bill advanced by the Agriculture Committee is bad enough. But a separate Senate floor amendment is also expected to outlaw the ability for cattlemen to engage in confidential, one-on-one business deals with prospective buyers, and ban the use of other marketing agreements that greatly benefit cattlemen. “The Captive Supply Reform Act” is dressed up like a proposal that will protect the role of the independent cattle producer. But in reality, it will penalize cattlemen who make the investment and commitment necessary to produce high-quality cattle. It will drag us back to the days of the average pricing system, put the government in charge of our businesses, and destroy many of the economic advances we have achieved in recent years.

If you feel you can run your cattle operation better than Congress can, call your U.S. senators today and tell them so. At stake is your ability to conduct business as you see fit, and the economic freedom on which our industry and our country were built.

Source: AG Weekly

- Go to our previous news item on this story by clicking here.