R-CALF Pushing for Cattle Market Reform

12:00AM Feb 12, 2010
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Source: R-CALF USA

R-CALF USA members who attended the group's recent convention voted unanimously on two policy resolutions that call for total and complete enforcement of the Packers and Stockyards Act (PSA). All R-CALF USA members will have the opportunity this spring to vote on proposed policy via a mail-in ballot.

"I wish I could say something positive, but it's pretty hard to when you look at the shape this industry is in,” said R-CALF USA Marketing Committee Chair Dennis Thornsberry. "Our biggest problem in this industry is captive supplies. Packers are dead-set on vertically integrating the cattle industry. They want to get to the point where they can tell us what kind of cattle we'll be allowed to produce, what kind of bull we must turn out with our cows, what kinds of vaccinations we have to give our cattle, and then they're going to tell you what kind of money you're going to receive for that animal, and if you don't like it, they'll tell you to go sell your cattle somewhere else – but there won't be any place else to sell.

"We're not looking for any government bailout or stimulus money to throw at the problem,” he continued. "Let's fix the problem by making the government enforce the PSA. We've got to change things, and if we don't, I don't think independent U.S. live cattle producers have much of a future left.”

Thornsberry said the first resolution brought forward by the marketing committee is one he hopes will clarify that Congress intended the PSA to protect individual producers from harm. Recently, courts have ruled that damage to an entire industry must be proved, rather than damage to individuals. This first proposed resolution states:

WHEREAS: recent court decisions have nullified protections afforded cattle producers under the Packers and Stockyards Act (PSA) by imposing standards not contained in the PSA – for example, courts have required producers to demonstrate competitive injury and harm to competition and have allowed meatpackers to claim a business justification for their otherwise unlawful actions,

THEREFORE, BE IT RESOLVED: that R-CALF USA urges clarification of the PSA to make the unlawful acts or practices by meatpackers, as enumerated by Congress in Section 192 of the PSA, unlawful on their face: 1) regardless of whether the acts or practices were actuated by intent; 2) regardless if such acts or practices caused a competitive injury or otherwise adversely affected competition; and, 3) regardless of any alleged business justification for such acts or practices.

Thornsberry said the second proposed resolution is plain language that suggests the administrator of the Grain Inspection Packers and Stockyards Administration needs to be aggressive in doing his job.

"We cannot go on as an industry and still sell cattle below the cost of production, and that's what's taking place in this industry,” he emphasized. "We talk about prices for fed cattle. What prices? What does supply and demand have to do with our industry any more? It has nothing to do with our industry. Whenever packers control that many cattle and have committed them forward, we don't have a market. It's not supply and demand driven. The only way to fix this problem is to enforce the PSA, and we have to address the problem of captive supply. If we can't do that, I think we're done.”

The second proposed resolution from the group's marketing committee states:

WHEREAS: The United States cattle industry has been, and continues to be, in a state of contraction,

AND WHEREAS: currently four major packers slaughter approximately 88 percent of all market-ready steers and heifers,

AND WHEREAS: these same four major packers engage in the anticompetitive practice of captive supply and the manipulation of the cash market thereof,

AND WHEREAS: the practice of captive supply eliminates competitive bidding, transparency and true price discovery in the open marketplace,

THEREFORE, BE IT RESOLVED: R-CALF USA strenuously recommends to the Grain Inspection Packers and Stockyards Administration (GIPSA) and the Department of Justice that they immediately and vigorously enforce the Packers and Stockyards Act (PSA) of 1921, thereby eliminating anticompetitive market practices including captive supply, and thereby restoring competitive bidding and transparent price discovery.

"A lot of people are frustrated and mad, or broke,” Thornsberry concluded. "There are a lot of feed yards that went out of business this year. How many more have to close? How many more people does this market situation have to break who just won't be able to come back? That's where we're at today, but we can't give up.”