In a prepared statement presented during the 2018 Farm Bill listening session
sponsored by Senator Jon Tester (D-Mont.), R-CALF USA said the need for major
changes is urgent if Congress wants to prevent the U.S. cattle industry from
going the way of the packer-controlled poultry, hog and sheep industries.
"Our industry is fast becoming chickenized, meaning dominant packers are
eliminating competition in the fed cattle market and substituting it with
corporate ownership or control," said R-CALF USA CEO Bill Bullard. This
process is also known as vertical integration, in which dominant packers
acquire complete control over the supply chains within their respective
industries.
Bullard described the U.S. cattle industry as an industry where 4 of every 10
ranchers in business 30 years ago are gone today, where cattle supplies have
shrunk to 70-year lows, where domestic production has shrunk to a 20-year low,
and where the cattle cycle, which historically provides several years of strong
prices, is now dysfunctional. He said cattle prices have been falling farther
and faster than any time in history despite historically low supplies and
strong beef demand.
"These are not indicators of progress. These are indicators of an industry
in decline."
He said incremental changes will not reverse the declining cattle industry
because the dominant packers are simply too powerful and too sophisticated to
let one or two new hurdles stop them from continuing to capture the live cattle
supply chain away from independent producers.
"We must act aggressively to reverse our industry's decline before the
packers dismantle or destroy the competitive processes and marketing channels
within our industry. When those are gone, we will no longer be able to bring
our industry back," he said.
The group's urgent priorities include:
- Reinstate mandatory country of origin labeling (COOL) to provide independent
producers the tool they need to compete in their domestic market and abroad.
- Support the so-called GIPSA rules so the overarching rules of competition
envisioned in the Packers and Stockyards Act (PSA) can be enforced; and then
amend the PSA to disallow packers from circumventing those rules of competition
by claiming to have a business justification for violating the PSA. Bullard
said these changes will empower producers to self-monitor and self-enforce the
rules of competition without having to wait for the government to act.
- Remove from the packers' toolbox the tools they use to manipulate prices.
This includes banning packer ownership of cattle; banning un-priced cattle
procurement contracts (such as formula contracts); and prohibiting packers from
shorting or otherwise speculating in the cattle futures market for the purpose
of lowering prices.
- Remove the Agriculture Secretary's discretion to allow fresh meat from
countries where foot-and-mouth disease (FMD) exists. This includes amending the
Animal Health Protection Act to prohibit the importation of fresh meat from
Brazil or any other country that is not free of FMD without vaccination.
- Provide producers with real-time and more accurate market information. This
includes amending the Livestock Mandatory Reporting Act to address the numerous
new cattle procurement practices the group says that dominant packers use to
circumvent reporting requirements. The group identifies five new practices that
it says causes reporting inaccuracies.
- Restore the integrity of the national beef checkoff program by prohibiting
any lobbying group from contracting for checkoff dollars and making the
checkoff program voluntary.
- Reinstate a Livestock Title in the Farm Bill to include all livestock-related
provisions.
Source: USAgNet