U.S. Farm Report Mailbag
U.S. Farm Report
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A Viewer Speaks on Predatory Pricing
Oct 10, 2011
Many states have laws that make it illegal to use excessive predatory market pricing for necessities once a disaster is declared. Texas is one such state. Due to the exceptional drought that has forced many cattle producers to either sell off their entire herds or rely on supplemental cattle feed, the feed manufacturers have enjoyed a significant increase in market power, allowing them to set prices at whatever price they decide.
While the manufacturers have argued that volatile commodity prices have caused the more than fourfold increase in the last two years, their quarterly profits have shown a different picture. Land O' Lakes Purina, for example, had an increase in profit of $39 million in the first quarter of 2010 to $101 million in first quarter 2011, much of it attributed to their feed operations and commodity trading.
Texas is also a state where animal cruelty laws require a cattle producder to provide "necessary food, water or care" and, as such, has defined the necessity of cattle feed. Shouldn't the prohibitions against predatory pricing be enforced against cattle feed manufacturers both by the states like Texas that have declared a disaster related to the drought and the federal government related to the predatory pricing and the federal antitrust laws?