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Chicago Tribune – Monday – January 29, 2007
2 senators take
aim at meatpackers
Bill aims to boost
smaller ranchers
By
Stephen J. Hedges
Washington
Bureau
WASHINGTON
-- A pair of Iowa senators has revived legislation to challenge the dominance
that the nation's largest meatpacking companies hold over that market, offering
a bill that would ban those companies from buying livestock in an effort to
eliminate what the lawmakers contend are practices that gouge small farmers and
ranchers.
The new "packer ban" bill resembles a similar, hard-fought initiative that was
defeated as part of the 2002 farm bill.
Like the
old bill, the new one asks Congress to prohibit large meat producers from using
their market heft to buy and raise their own livestock.
It also would restrict the sort of contracts that the large companies may strike
with those who raise cattle just before the cattle are shipped to packing plants
for slaughter.
Republican Sen. Charles Grassley and Sen. Tom Harkin, a Democrat and the new
chairman of the agriculture committee, contend that the large meatpacking
companies use their overwhelming buying power to obtain livestock long before
they are sent to packing plants for slaughter.
That practice, they say, enables those companies to keep livestock prices low
and undercut farmers and ranchers who also are trying to sell cattle on the open
market.
When livestock prices start to go up, the senators say, the meatpacking
companies cull their herds to save money. When the prices go down, Grassley
said, the big companies buy livestock for slaughter on the open market or strike
deals with feedlot operators for future deliveries at lower prices.
The larger meatpacking companies and their trade associations have denied that
they control livestock prices. They contend that use of "forward contracting,"
or arranging to buy cattle ahead of time, is similar to practices in other
industries, and that it helps maintain a steady supply of cattle.
Just like Maytag
"Our business practices line up exactly with what the retailers, restaurateurs
and consumers demand," said Mike Brown, senior vice president of legislative
affairs for the American Meat Institute in Washington. "Can you imagine Detroit
or Maytag or Whirlpool if they couldn't secure the necessary component for their
cars or washing machines on demand?"
Brown said the contention that the packing companies use those contracts to
control livestock prices is "just a wives' tale from the countryside and I don't
think that's true at all."
Jay Truitt, vice president of government affairs for the National Cattlemen's
Beef Association, called the legislation "a perennial favorite in some circles."
But he said repeated reviews of the proposal by his group's members showed they
are opposed to it.
"Our consensus for everyone who looks at these legislative options is that the
marketplace needs to determine who the winners and losers are," Truitt said. He
added, "We have always opposed these market-limiting bills in the past, and will
in the future."
Gary Mikelson, a spokesman for Tyson Foods, said in a statement, "We rely on a
successful livestock production industry in order to stay in business. As we
noted the last time this legislation was proposed, we have no interest in
becoming a large player in the livestock feeding business."
But Clayton Casteel, a farmer who raises cattle in Cambridge, Ill., said that
the influence of the big packing companies is obvious in local cattle markets.
"It happens every month," said Casteel, who with his wife, Jodi, farms 850 acres
outside the Quad Cities. "Once a month they have a big pool of captive supply
that they have to pull from. When we try to come in and sell cattle on the open
market, it's hard for us."
With the change in Congress to Democratic control, Republicans who back the bill
think it now has a good chance to pass.
Committee support
"The chance this time is that the House is philosophically different because of
the Democrats," Grassley said. "In the Senate, the agriculture committee
supports it. Anyway I guess my assumption is that this time it will be a little
bit different, because the Democrats tend to be more populist."
Five companies--Tyson Foods, Cargill Meat Solutions, Swift & Co., National Beef
and Smithfield--make up more than 80 percent of the meatpacking industry. The
beef industry totaled nearly $80 billion in sales in 2005.
But some
other farm and cattle groups have long been pushing for something like the
packer ban. They have supported the latest attempt to restrain the large meat
producers.
"Their numbers have a significant impact on the direction of the cattle market
because they are excluded from the competition of the cash market," said Bill
Bullard, chief executive of the Ranchers-Cattlemen Action Legal Fund, or R-Calf.
If the
Harkin-Grassley bill passes, it would mark a big change for the nation's meat
industry and a rare defeat for meatpackers, whose practices have attracted
legislative scrutiny since the beginning of the last century.
The bill would make it illegal for meatpackers to "own, feed, or control
livestock, either through a subsidiary or an arrangement that gives the packer
operational, managerial, or supervisory control prior to seven days before
slaughter."
The American Meat Institute's Brown said that, if passed, the legislation would
render the packing industry's business practices illegal.
If approved, the bill also would be the latest in a century-long effort by
Congress to regulate market practices in the meat industry.
One such
measure, the 1921 Packers and Stockyards Act, was cited recently by cattlemen in
a class action lawsuit they filed against Tyson Foods in Alabama.
In the initial trial, a jury awarded the cattlemen $1.28 billion. The trial
judge, however, reversed the ruling and an appeals court upheld his decision. An
appeal by the cattlemen to the Supreme Court was denied.
Several states have passed laws that prevent packing companies from owning
livestock well before slaughter. Those laws have met with legal challenges.
Iowa's version was ruled unconstitutional in January 2003 by a federal judge
after a legal challenge from pork producer Smithfield. The company and Iowa
later reached a settlement.
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2007, Chicago Tribune
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