Speak Your Piece: Going to K.C.

The Obama administration announced an investigation into antitrust violations in the food business three years ago at a meeting of the Organization for Competitive Markets. OCM meets again, a year after that investigation ended with no action being taken.

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Later this afternoon, we’ll jump a plane to Kansas City for the annual meeting of the Organization for Competitive Markets.  We didn’t know whether we’d attend the meeting of the agricultural advocacy group — and then we saw a brief “market news” report produced by the U.S. Department of Agriculture.

The report was issued July 13 and told, succinctly, that there were so few cattle sold at auction that there was no way to determine a fair price for beef. Most cattle raisers were selling their animals according to a formula devised by packers. And that left prices up to a handful of large companies.

That’s the way we read this paragraph. But, here, see for yourself:

The fed cattle cash market lost 2.00 this past week to 115.00 with negotiated sales now routinely making up less than 20 percent of the weekly slaughter.  Over 60 percent of the weekly movement is formula-priced off the scant cash trade that is more like a dictatorship than a democracy.  Soon, cattle feeders may be forced to ship their cattle with only a ballpark idea of what their check will look like – similar to the sheep industry. 

The report says, to us, that cattle raisers no longer have power in the markets. They take what price they are given. Instead of a competitive market, there is a “dictatorship.”

R-CALF USA first published the USDA market report and the rambunctious group’s CEO, Bill Bullard, had this interpretation:

The meatpackers are now working aggressively to destroy the nation’s fed cattle cash market, which shrank nearly 20 percent just during the past few years – from over 52 percent in 2005 to less than 33 percent in 2011…

The U.S. cattle market is in a Code Red state of emergency, with the few remaining independent cattle feeders losing upwards of $150 per head… 

Meanwhile, we have corrupt officials at the highest levels of this Administration working covertly to cover-up the data and facts needed to address this serious problem. The meatpackers are but a breath away from destroying our industry’s price discovery market and capturing the live cattle supply chain away from independent producers and the only action from this Administration is to stick its head in the sand and kowtow to the multinational meatpackers.

Bullard says there was a “cover-up.” What he means by that is that the USDA sent out a second market report to replace the first, which it removed from its website. That second new summary contained a “correction to narrative.” 

The correction was simple. The new report didn’t contained the paragraph quoted above. All the stuff about this market being “more like a dictatorship than a democracy” had been taken out.

Don’t take our word. Here is the original report.  Here is the “corrected” version. (They didn’t even do a very good job of doctoring the report.) 

At one time, the Obama administration held hearings on exactly this issue. Two years ago, thousands of ranchers came to Fort Collins, Colorado, to testify about the power of a handful of meat packers to control the markets. At that time, it appeared the USDA and the Department of Justice would take some action under the nation’s antitrust laws. Instead, nothing has happened.

“USDA has some good people within its ranks and they are sounding the alarm as well as they are able,” Bullard said. “It can’t be said much stronger than this.  Where are those promised reforms from the Department of Justice (DOJ) and USDA to prevent our cattle industry from being captured by the multinational meatpackers just as the poultry and hog industries already have been captured? USDA is now issuing the same warning R-CALF USA has long been issuing. It is time for decision makers to act.” 

We don’t have many editorial positions at The Daily Yonder, but one is that rural communities are better off when local people are in charge of their businesses, their governments and their lives. If cattle raisers are living under a market “dictatorship,” then that’s something that ought to be dealt with.

The federal government doesn’t appear ready to act. We haven’t seen that the jillions of urban “foodies” have the slightest interest in this question. OCM is the organization where opposition to market monopoly is paramount. So we’re going to Kansas City to see if livestock raisers can find a way to regain some control over their farms and ranches.

We’ll be writing from the OCM meeting Friday. Stay tuned.

Bill Bishop is co-editor of The Daily Yonder.

 

Topics: Ag and Trade
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