No collusion by packers say Feds

[SASH]

Watchdog finds no collusion to keep beef prices high during mad cow crisis




OTTAWA, Apr 29, 2005 (The Canadian Press via COMTEX) -- Consumer demand for Canadian beef has kept prices stable even though cattle prices have dropped since the mad cow crisis hit the industry, the federal Competition Bureau has concluded. The bureau began its examination in February 2004 to determine if there was collusion among beef packers to lower prices paid to cattle producers or among grocers to raise or maintain retail prices for beef.

The bureau also examined whether pricing patterns were the result of one or more dominant firms engaging in a practice of anti-competitive acts that restricted competition.

"We found no evidence of collusion or abuse of dominance by beef packers or grocers," Richard Taylor, the bureau's deputy commissioner, said in a statement Friday.

"The bureau will continue to examine complaints of alleged anti-competitive activity in these industries, especially within the context of the U.S. border being closed to Canadian cattle."

The bureau found that:

-Beef prices are set on a North American basis because of the reopening of the U.S. border to boneless beef exports from cattle under 30 months of age.

-Cattle prices dropped because farmers are limited to selling their animals to Canadian slaughterhouses, resulting in a massive oversupply that far exceeded Canadian slaughter capacity.

-Cattle prices tend to be volatile since they are normally set in auction markets.

-Lower cattle prices do not necessarily lead to lower consumer prices for beef; and the final consumer price of beef includes a number of fixed costs, such as transportation and labour, in addition to the price of cattle.

As part of its review, the bureau contacted and analysed information from farmers and their associations, beef packers and other players in the beef and cattle industries. The bureau also retained an industry expert to write a comprehensive report, and commissioned economic reports.

After the discovery of a case of bovine spongiform encephalopathy (BSE) in Canada in May 2003, the U.S. and 33 other countries banned all imports of Canadian cattle and beef.

Since then, the U.S. border reopened in September 2003 to boneless beef from cattle aged less than 30 months, but the border has remained closed to Canadian exports of live cattle and certain beef products.

The economic effects have been devastating to the Canadian cattle industry.

[ALLFARMER]

Are they on the Liberal party donor list?

[grassfarmer]

What a joke ... "Consumer demand for Canadian beef has kept prices stable even though cattle prices have dropped since the mad cow crisis hit the industry, the federal Competition Bureau has concluded."

What the h### does that mean? doesn't that statement prove the inequity of the system?

[food4u]

Is this the same group that cannot find price fixing in the retail fuel prices?

[grassfarmer]

Here are some quotes from a member of the competition bureau April 25th:

"we’re concerned about downstream lessening of competition - at the retail level, increased prices - and also upstream and the effect it will have on farmers’ prices at the farm gate"
"the Competition Act – applies to all industries except certain regulated ones – we’re concerned about the increase in prices downstream, or reduction in prices to producers upstream"
"to prove a criminal conspiracy to fix prices requires hard evidence and proof beyond a reasonable doubt , as before a criminal court – this would be an a agreement to unduly lessen competition"

"on the Abuse side, however, we’re concerned about the impact, whether there are boycotts of auction markets, or whether there is a captive supply of cattle through feedlots, that sort of thing"

"we’re prepared to accept submissions from farmers, competitiors, etc. – we would be very interested in your analsysis of the overall situation and what this means."

Were these the thoughts of the bureau before they ran it past the Liberal Government for approval and then released "their" findings?
Again I would like to know know much input this investigation got from CCA/ABP who were invited to contribute - does anybody know if they even bothered?

[farmers_son]

http://www.competitionbureau.gc.ca/internet/index.cfm?itemID=1311&lg=e


"The Bureau received allegations against beef packers of refusal to deal, the use of captive supply to drive down cattle prices and margin squeezing. Other allegations included strategic bidding among packers to depress cattle prices, black listing or boycotting of auction houses, cattle producers or feedlots attempting to sell cattle, and reducing prices offered for cattle by an amount equivalent to government aid. The Bureau took these allegations very seriously and each complaint was thoroughly examined to gather and assess all relevant information. Evidence collected during the Bureau's examination did not support these allegations, except for an isolated incident of boycotting that the Bureau found did not have a harmful effect on competition and that ceased after the Bureau intervened."

I am interested in this isolated incident of boycotting...Would this have been one of the Canadian packers refusing to slaughter R-Calf cattle in an Alberta feedlot?

[cowman]

farmers son: That would be interesting to learn and stepping back from all the emotion, I guess it would definitely be a case of boycotting a legitimate producer? Whether we like it or not, those American cattlebuyers were not doing anything illegal by buying cattle in Canada, with the expectation that they would be treated in a fair manner?
I do know Burnt Lake auction(owned by Neilson Bros.) was refusing to take cows from producers who didn't sell their young stuff through their mart! Now is that "boycotting" or "blacklisting" or is that just taking care of their customers?
Years ago the competition board did find Canada Packers, Intercon, and Burns guilty of collusion to fix hog prices and fined them accordingly! I believe they had actual memos or something between the various head offices.
We should never think that IBP or Cargill invented captive supply or blacklisting or boycotting or predatory business practices! All of the above Canadian packers were very adept at the same practices and I suspect our own homegrown pirates from Clyde can swim with the best?
The solution lies with our government actually bringing in competition laws with some teeth...but you know that just isn't going to happen? Our federal government is all about supporting big business...not a bunch of rural peasants!...and that won't change whether you call that dog Liberal or Conservative?