Billings, Mont. – In a prepared statement presented this week 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.
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R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) is the largest producer-only cattle trade association in the United States. It is a national, nonprofit organization dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. For more information, visit www.r-calfusa.com or, call 406-252-2516.