Weekend Roundup: Packer Ban Up

Ban on packer ownership of cattle before the Senate • Vermont looks to have broadband everywhere by 2013 • Regional papers cut back on print publication

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The South Dakota Stockgrowers Association sent out an alert this week saying that a provision that would ban packer ownership of livestock will be offered as an amendment to the 2012 Senate Farm Bill next week.

The amendment is authored by a Republican, Sen. Charles Grassley of Iowa, and a Democrat, Sen. Kent Conrad of North Dakota. The amendment would prohibit beef packers from owning livestock. The amendment is backed by the Stockgrowers and by R-CALF USA. It is opposed by the National Cattlemen’s Beef Association.

According to the Stockgrowers, Grassley is offering his amendment to the full Senate because he lacked support in the Senate Agriculture Committee.

Here is why Sen. Grassley says the ban is needed: 

I would love to say opportunities for independent producers have gotten better since the last time we debated this bill during the 2008 Farm Bill.  But that simply isn’t the case.  We are to the point where most farmers have to deliver their livestock to one of a few very large packers.  Farmers’ bargaining power is diminished by the sheer size and economic position of the packers.  But beyond that, farmers have to compete with the livestock owned by the packing plant itself.  The packer ban would make sure the forces of the marketplace work for the benefit of the farmer as much as it does for the slaughterhouse.

R-CALF explains its support:

Today, a handful of packers (4) now control over 80 percent of the fed cattle market. Those dominant packers can use packer-owned cattle to harm competition in at least two ways:  

First, dominant packers can overbid the price of lighter-weight cattle (feeder cattle), thus forcing independent cattle feeders to pay more than fair market price for cattle, which squeezes their margins and forces them out of business. Packer overbidding also can prevent independent cattle feeders from filling their feedlots with fairly priced cattle, likewise forcing them out of business.

Second, because dominant packers control such a large share of the marketplace, they can prevent independent cattle feeders from having timely access to the market by refusing to buy any fed cattle when cattle prices are rising. They can do this by relying upon their packer-owned supplies to meet their immediate slaughter needs. Then, when cattle prices subside, the dominant packers can reenter the market to purchase cattle from independent cattle feeders. Thus, dominant packers can strategically use packer-owned cattle to reduce the profit potential for independent feeders, which squeezes independent feeders out of business.

On the one hand the dominant packers compete against independent cattle feeders to purchase available feeder cattle. On the other hand, they are the only market outlet available to independent cattle feeders when cattle are ready for slaughter – a market outlet that dominant packers restrict simply by slaughtering their packer-owned cattle.

Today, dominant packers are strategically using packer-owned cattle to defy competitive market fundamentals and are forcing independent cattle feeders out of business.

In just the past 16 years, 35,000 independent cattle feeders have exited the industry, all of which were smaller feedlots with capacities of less than 50,000 head. At the same time, the number of feedlots with capacities greater than 50,000 head, and the size of those larger feedlots, have increased dramatically, such as those owned by JBS, the worlds largest beef packer that now owns the largest feedlot company in the United States. 

• The collapse of the regional daily newspaper business is quickening.

Thursday it was reported that three newspapers in Alabama (Birmingham, Mobile and Huntsville) and the New Orleans Times-Picayune will all beginning printing newspapers only three days a week beginning this fall. The papers will be in stores and delivered only Wednesdays, Fridays and Sundays. 

Regional papers have already closed many of the bureaus in or around rural areas. Now, they are printing few days a week. The reduced publication schedule is expected to result in additional layoffs at the papers.

• The Texas Farm Bureau supports sow gestation crates.

The Humane Society of the U.S. asked shareholders of Domino’s Pizza to adopt a resolution that would have the company not use pork supplied by farms that use gestation crates. (McDonald’s Burger King and Wendy’s have said they will phase out pork from these suppliers.) Domino’s shareholders rejected this proposal — with the support of the TFB. 

• Vermont has committed to having broadband in all rural homes by the end of 2013. 

More than 9 out of ten of the state’s addresses are now covered, according to Karen Marshall, chief of Connect VT. However, at a meeting in Putney, residents and State Rep. Mike Mrowicki told Marshall that not all areas on the map that are shown to have broadband actually have the service.

• Lisa Rathke writes about the closing of the last dairy farm in Plainfield, Vermont. 

The MacLaren brothers are third-generation dairy farmers in a town where there were once dozens of milk producers. Now they’ve shut down, worn out by the long hours and the decline in milk prices.

In 2002, there were 92,000 dairy farms. Five years later, there were 70,000, and the declines have continued.

• The Atlantic’s Ta-Nehisi Coates writes about “White Resentment, Obama, and Appalachia.” 

 

 

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