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Cattle Network reports that a group of Midwestern U.S. Senators have introduced a bill that “would stop years of unfair and manipulative meat packer practices that negatively impact ranchers and farmers.” The Livestock Marketing Fairness Act is sponsored by two Democrats (Byron Dorgan of North Dakota and Tim Johnson of South Dakota) and two Republicans (Mike Enzi of Wyoming and Chuck Grassley of Iowa).
The bill seeks to insure that cattle raisers would have access to an open and competitive beef market. Meat packers have used contracts to control and to push down prices paid to hog and chicken raisers. These so called “captive supplies” have allowed “packers to stop bidding in cash markets whenever prices rise above packers’ preferred level,” according to the National Farmers Union. “Nearly every study on the issue has concluded that packers’ use of captive supplies leads to lower prices for ranchers and farmers.” The bill would outlaw these captive supply contracts, according to the NFU.
Most of the hogs and chickens grown in the U.S. are purchased under contract. Cattle raisers believe these captive contracts have depressed prices paid to raisers in these industries — and they don’t want to see the same transformation occur in their markets. “Captive supply is one of the most serious problems faced by cattle producers in Canada and the US,” said NFU Ontario Board member Grant Robertson. “Farmers are receiving prices that echo those of the Great Depression, and a big factor behind those low prices is packers’ using captive supply contracts and herds to depress prices.”