Rcalf has a point here

[rkaiser]

I don't imagine our ABP/CCA has even looked at this document in front of the US government. Any time the issue is brought up at the AGM through a resolution, it is dumped as fast as BSE testing..............

The most important part of the document in my eyes is the LIST of plants. Could you imagine the changes this would make in Canada....

Support the Senate’s Packer Ownership Prohibition



The Senate version of the 2007 Farm Bill contains a prohibition on packers owning, feeding, or controlling livestock. This “Packer Ownership Prohibition” would affect only the largest U.S. packing plants that, because of their size and dominant market power, are positioned to use packer-owned livestock to control producers’ access to the market and depress livestock prices.



The Packer Ownership Prohibition would increase marketing opportunities for livestock producers by eliminating the anti-competitive practice of using packer-owned livestock to artificially create over-supply, thus limiting producers’ access to the market and depressing prices. The prohibition would increase market transparency and reduce market distortion, creating more competition.



Marketing options for producers are preserved by prohibiting the largest packers from having legal title to (owning) and day-to-day management control over (ownership-like control) livestock for more than 14 days prior to slaughter. Producers who own, and materially participate in the management of their livestock, will continue to enjoy forward-contracting options.



All but the largest packers are excluded from the Packer Ownership Prohibition. Packers that own only one livestock processing plant are excluded. About 11 of the approximately 800 meat-slaughter packers registered with the U.S. Department of Agriculture (USDA) own more than one plant.[1] These 11 packers own about 85 slaughter plants.[2] Approximately 92% of cattle and hog plants are excluded also because they are not subject to price reporting[3]– there are only 52 cattle and 53 hog plants that would not meet this exemption,[4] most of which would be owned by the 11 packers with multiple plants. The effect of these exemptions is that only the largest packers, representing a very small number of packers, would be subject to the prohibition. Thus, the prohibition is carefully crafted to eliminate the specific harm at its specific source.



The harm to U.S. livestock producers due to packer-owned livestock is significant – amounting to hundreds of millions of dollars annually. The comprehensive econometric analysis documented in Pickett v. Tyson Fresh Meats, Inc., which covered the period 1994-2004, showed that for each 1% increase in captive supply cattle (of which packer-owned cattle is a subset), cattle prices decreased 0.155%.[5] Assuming that 5% of cattle are packer-owned,[6] cattle prices are lowered by $0.70 per cwt., or $8.72 per animal. A USDA-funded study found that each 1% increase in packer-owned hogs causes a 0.24% decline in price.[7] Assuming 20% of hogs marketed are packer-owned,[8] the negative price impact is $2.16 per cwt., or $6.05 per hog.



The Packer Ownership Prohibition is needed to reverse the unfavorable trends from 1980 to 2005 identified by the USDA regarding the erosion of the U.S. livestock industry:



U.S. sheep and lamb operations declined from 120,000 to 68,000.
U.S. hog and pig operations declined from 667,000 to 67,000.
U.S. cattle operations declined from 1.6 million to 983,000.[9]


The Packer Ownership Prohibition would help restore market integrity for livestock producers by preventing the largest packers from controlling market access and depressing market prices.





--------------------------------------------------------------------------------

[1] See Meat, Poultry, and Egg Product Inspection Directory, U.S. Department of Agriculture Food Safety Inspection Service, December 7, 2007, available at http://www.fsis.usda.gov/regulations_&_policies/Meat_Poultry_Egg_Inspection_Directory/index.asp (R-CALF USA has condensed the directory to include only packing firms that slaughter meat (as opposed to poultry), and that slaughter animals (as opposed to only processing animals). The condensed list contains approximately 800 firms and is available by contacting R-CALF USA at 406-252-2515 or e-mail: r-calfusa@r-calfusa.com, also available is a summary of the 11 U.S. meat-slaughter packers that own more than one packing plant.).

[2] Ibid.

[3] See 72 Federal Register, August 8, 2007, at 44,688.

[4] See Livestock Slaughter 2006 Summary, U.S. Department of Agriculture National Agricultural Statistics Service, March 2007, at 56 (Numbers cited are for cattle slaughtering plants that slaughter over 125,000 cattle and hog slaughtering plants that slaughter over 100,000 hogs.).

[5] See Trial Transcript in Pickett et al. v. Tyson Fresh Meats, Inc. (IBP, Inc.) Civil No. 96-A-1103 N, U.S. District Court for the Middle District of Alabama, Northern Division.

[6] See GIPSA Livestock and Meat Marketing Study, January 2007, Volume 3, at ES-4.

[7] See GIPSA Livestock and Meat Marketing Study, January 2007, Volume 4, at 2-41.

[8] See id., at 2-13.

[9] See 72 Federal Register, August 8, 2007, at 44,681.





Here is the list of the 11 packers that could be subject to the Packer Ownership Prohibition because they own more than one processing plant:



U.S. Meat Slaughter Plants that Own More than One Packing Plant



Firm Name (No. of Plants) Number of Plants

1. Tyson 24

Tyson Foods (1)

Tyson Foods Inc. (9)

Tyson Fresh Meats, Inc. (14)

2. Cargill 16

Cargill Beef Packers, Inc (1)

Cargill Meat Solutions, Corp. (11)

Hormel Foods Corp. (1)

Jennie-O Turkey Store Sales (2)

Cargill Regional Beef (1)

3. Smithfield 13

Smithfield Beef Group – Souderton (1)

Smithfield Beef Group – Tolleson (1)

Smithfield Beef Plainwell, Inc. (1)

Smithfield Beef Group – Greenbay (1)

Smithfield Packing (1)

Smithfield Packing Co. Inc., - Tar Heel (1)

Smithfield Packing Co. Inc., - Smithfield (1)

Farmland Foods, Inc, (4)

John Morrell & Co. (2)

4. Swift 12

Swift & Company (1)

Butterball, LLC (3)

Foster Poultry Farms (1)

Swift Beef Company (5)

Swift Pork Company (2)

5. American Foods Group 4

Cimpl’s Inc. (1)

Dakota Premium Foods, LLC (1)

Green Bay Dressed Beef, LLC (1)

Long Prairie Packing Co., Inc. (1)

6. Bob Evans Farms 4

7. National Beef 3

National Beef (1)

National Beef Packing Co. LLC (2)

8. Pilgrim’s Pride Corporation 3

9. XL Four Star Beef Inc. 2

10. Fernandez Packing Co., Inc. 2

11. Hampton Meat Processing 2



Total: 85



Source: Meat, Poultry, and Egg Product Inspection Directory, U.S. Department of Agriculture Food Safety Inspection Service, December 7, 2007, available at http://www.fsis.usda.gov/regulations_&_policies/Meat_Poultry_Egg_Inspection_Directory/index.asp (R-CALF USA has condensed the directory to include only packing firms that slaughter meat (as opposed to poultry), and that slaughter animals (as opposed to only processing animals). The condensed list contains approximately 800 firms and is available by contacting R-CALF USA at 406-252-2515 or e-mail: r-calfusa@r-calfusa.com.).

[per]

7 cents for 5% of captive supply. What is the average packer owned supply here? I would go digging but I am sure one of you well researched statistical folks have that on the top of your head. The ratios must be similar. It would be great if we could borrow a little bit of R Calfs attitude and pride and start looking at ways to protect our own industry. Maybe when Big Brother leads the way we could have a new look at this ourselves.

[farmers_son]

I agree with you on the most important part is the list of plants. Compared to Canada, that is a lot of packing plants. There would appear to be way more packing plant competition for live finished cattle in the United States.

If packing plants were prohibited from owning cattle that would instantly end any prospects for producer owned packing plants.

Has anyone considered that cattle producers should be able to sell cattle to whomever they want, whenever they want and when it's in their best interest? Even if that means the unfinished calves are sold to a packing plant.

Obviously there is the concern with someone who is selling fat cattle on a given week that the packer may own their own fat cattle and as a result would not necessarily be forced to bid up in the market that day or even that week.

The other side of the coin is the packers had to buy that live calf at some earlier point in order to own it and someone sold them that calf. That person would have been expected to benefit from an extra buyer in market when he was selling.

The only way that I could see that the packers could use owned cattle to depress the overall cattle market is if they owned the calf from birth. Otherwise at some point they have to come into the market to buy the unfinished calf which should support market prices at that time in order to own the calf when it is slaughtered later.

It has always my impression that it is impossible to stop packer ownership of cattle. There are people wanting to sell them cattle and it will happen one way or another. But if you own cattle of any age and you anticipate that the market is going to go down in the future you want to be able to sell those calves to the highest bidder and not have any potential buyer be prohibited from offering you a better price on your calves.

No, R-Calf does not have a point here and this is just another example of R-Calf working to the overall detriment of the cattle producer.

[rkaiser]

Obviously you did not read the article farmers_son. How on earth would you come to the conclusion that producer owned plants would fail. 11 plants out of close to 800. Did you read that part or not?...

[rkaiser]

I guess you will not only have Rcalf to deal with when you oppose limiting packer ownership farmers_son. Already laws in some states and I would suggest that it will be a national law soon.

How are you going to continue to kiss the USDA's ass while you are slapping it at the same time farmers_son?

[grassfarmer]

farmers_son, "The only way that I could see that the packers could use owned cattle to depress the overall cattle market is if they owned the calf from birth." I suggest you read the excellent book by Ben Roberts on the history of the American packing industry. Market manipulation by packer ownership of fed cattle is now in its third century. I thought a learned chap like yourself would be well aware of that.

[per]

We can either see how we can make things work or why ideas won't work. The best solutions come out of positive, forward consideration. Take a walk on the positive side farmers_son and see some of these ideas for what they are. Possible solutions to move our industry forward. We can learn from the past but we're not going to go back there. We can either plow our own path or hope we have enough provisions until spring.

[rkaiser]

I thought old farmers_son told us he had received a copy of Ben Roberts book from a friend on one of his posts.....

[rkaiser]

Hay batman,
I see ABP has added a few words to their BSE testing policy.

----- why we oppose BSE testing AT THIS TIME.

Interesting --- are they preparing to flip flop when this thing becomes too much for them to hold back on anymore?

[perfecho]

Totally agree,,,,limiting packer owned cattle would limit the manipulation. Today, fewer feeders own their own cattle and they feed for one of the majors, feeling at least they can guarantee a profit on their feed. This limits, again, the number of bidders on our cattle, basically the majors bidding and a few feedlot operators.
I have stated to many; if myself and one other controlled over 70% of the land rent around this area, it would not take long for the cash rent to be half of what it is today......and I wouldn't even have to talk to my competitor.

[farmers_son]

Myself, I believe the packing plants do indeed manipulate the price of live cattle, certainly here in Canada. I do quite a bit of reading, cannot say I have read Mr. Roberts book but I think the financial statements of Tyson Foods make an interesting read:

http://ir.tyson.com/phoenix.zhtml?c=65476&p=irol-reportsAnnual

Tyson Food Inc. has 104,000 employees, that is more than the number of men, women and children in the city of Red Deer. In fiscal 2007, Tyson exported products to more than 80 countries, including Canada, Central America, China, the European Union, Japan, Mexico, Russia, South Korea and Taiwan. Tyson is the world largest meat protein company. It would be naïve to suggest that companies with that kind of market power would not manipulate the live cattle price.

I do not think there was any question that the packing plants fixed the price of live cattle in 2004. Did it make any difference whether they owned any live cattle at the time. No it did not.

Tyson alone has 13 beef processing plants, it has the resources to arbitrarily decide to lower the live cattle price paid at any one of its plants. Tyson does not need to own live cattle in order to do that.

I guess I see the best protection we have against the packers manipulating the live cattle price is not to restrict who can and cannot own live cattle but to have access to other packing plants that are paying a fair price. Since the border has opened to live cattle trade we have that (although it is threatened by COOL). I do think cattle producers need to be able to sell their cattle to whoever they want, whenever they want and we do not want to put restrictions on that.

Besides that how can you ever stop someone from owning an animal? The U.S. law that R-Calf was pushing would have restricted packers from having legal title for more than 14 days. While legal title may have significance for the income tax people it would not stop the packers from controlling when live cattle came to market, one way or another. These kind of laws do not work and only serve as a smokescreen.

And I cannot say that I have much use for anything R-Calf supports. Just my opinion.

[grassfarmer]

You agree packers manipulate live cattle prices, I would suggest owning live cattle prior to slaughter is the easiest way for them to accomplish that. I have moved resolutions at ABP meetings to ban or limit packer ownership of cattle - thus far ABP refuses to approve these resolutions. I have also moved resolutions that would lobby for stronger anti-competition laws to control the packer manipulation of fed prices. Again, ABP refuses to approve these resolutions.

ABP - Against Beef Producers - facilitators of US packer manipulation of Cdn cattle prices.

[rkaiser]

Did not make a difference in 2004 farmers_son? Maybe you could consider the multi millions of dollars that were pumped in to Lakeside farms from Federal and Provincial aid payments. Is that a difference? Had producers owned those cattle - those aid dollars would have gone to producers. If Lakeside farms had not been able to bid on those cattle - would the prices to the cow calf changed much. Not in the theory of trickle down that Shirley and your ABP gang talked of in those years. And in fact some of those millions may have trickled down more the next year had producers received those dollars rather than shareholders of a company who could give a rats ass if this industry survives or not.

Just as they could truly give a rats ass right now. Do you see Tyson or Cargill coming up with any game plans as to how to make things work? Hell no. Just threaten to leave ---

You say that market manipulation will occur whether they own cattle or not. Fine then - taking away the right to own cattle should not hurt them or our system then. A replacement buyer will be found. It may actually create more competition as the fear from private feeders will be less.

How is it that you know more than the feedlots on this issue farmers_son. Why is it that resolutions about packer ownership at the ABP AGM come from the feedlot sector? Do you think they can think for themselves or do you feel like so many other issues that ABP executive needs to decide.

Once again one of the problems with ABP structure. In no way does the current ABP structure allow for sharing of concepts within all aspects of our industry. There is more than ample division at the ABP AGM between sectors of the industry.

The system is out of control like I said on the other thread and a lot of it has to do with leadership from folks like farmers_son who will not find ways for all sectors of our industry to work together.

[wd40]

Boy what planet do you get off at. FmSon

Whats not mentioned in this concept is the timing. The packers only need to have cattle in their ownership at the RIGHT TIME.
They have a microscopic view of retail needs (which they totally control) [fact] Therefore they only (as was the case is Canada) get into the market in a significant way at THE RIGHT TIME.

Packer ownership in Canada is not as big an issue now as they now have renched control from producers anyhow.

When Northwest Cattle Producers packing plant proposal (Alberta)was working on our business plan our 5 consultants who were ex-CFO's, CEO's, and COO's from Tyson and Excel(Cargil)including a independent packing plant GM would give you a sever change of mind FarmSon.

A typical board room meeting consisted of "Well we've keep the beef industry on it's knees long enough it's time to let them up for air". One member mad it clear that Cargill will not build a significant capital project without being sure it can capatilize it out in 3 to 4 years.


"If packing plants were prohibited from owning cattle that would instantly end any prospects for producer owned packing plants".

You better pull out the plug to your light bulb and reverse the current.

Packer owned cattle is the reverse of producer owned packing plant.

[farmers_son]

I understood that Grassfarmer had moved resolutions about packer ownership. It was a good resolution and packer ownership is an important issue.

So is the right of backgrounders and the cow calf producers to sell calves whenever we want to whoever is willing to pay the highest price. That is an important issue too.

Laws on packer ownership just plain do not work. There are too many laws besides making more that will do nothing. We will be far more successful taking our limited resources and lobbying government for reduced trade barriers with the United States. Maintaining and improving market access with the United States will do more to improve our live cattle prices than any attempts we could make to fall into bed with R-Calf.