Here is a move that surely everyone can support - even ABP? The following press release by the producer (voluntarily) funded NFU contains the details.
US INTRODUCES LAW TO PARTIALLY BAN CAPTIVE SUPPLY IN CATTLE:
CANADA MUST FOLLOW SUIT
SASKATOON, Sask.—Today in Washington, Republican and Democratic Senators from several cattle-producing states introduced a bill to curtail captive supply in cattle markets.
Captive supply is a technique wherein beef packing companies use cattle they own, or cattle they control through contracts that do not contain fixed prices, to push down prices to independent sellers. Captive supplies allow packers to stop bidding in cash markets whenever prices rise above packers’ preferred level. Nearly every study on the issue has concluded that packers’ use of captive supplies leads to lower prices for ranchers and farmers.
Senators Mike Enzi (Rep.-Wyoming), Byron Dorgan (Dem.-North Dakota), Chuck Grassley (Rep.-Iowa), and Tim Thompson (Dem.-South Dakota) introduced the “Livestock Marketing Fairness Act” today in the US Senate. The bill, if passed, would outlaw captive supply contracts.
Specifically, the bill would require that contracts specify actual prices. Captive supply contracts omit fixed prices and, instead, base values on cash-market prices at the time of delivery. But packers can push down those cash-market prices and, thus, push down prices for the contracted cattle. Further, the bill would require forward contracts to be made public and traded in public markets where all can observe bidding and bid themselves. The bill would not prevent forward contracting, but it would prevent packers from using non-priced contracts as a tool to depress markets. Additional moves are likely in the US—either through legislation or regulation—to ban packer ownership of cattle, thus outlawing all forms of captive supply.
US President Obama has made a ban on captive supply a priority. In point 2 of his rural agenda, the Obama commits to “Pass a packer ban,” explaining that “When meatpackers own livestock they can manipulate prices and discriminate against independent farmers.”
“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,” said Robertson.
NFU Manitoba Board member Fred Tait said that the move to ban captive supply contracts in the US means that Canada must quickly follow suit. “We’re constantly told, by politicians and cattle organizations, that we have an integrated North American market. For that reason, US moves to increase farmers’ prices must be matched by similar moves here. We’ve integrated a lot of the bad coming out of the US; it’s time to integrate some of the good,” said Tait.
NFU Alberta Board member Neil Peacock said that the problem of captive supply is even worse in Canada than in the US. According to US researchers, between 1/2 and 2/3 of the cattle entering the big Alberta packing plants are packers’ captive supplies. And Canada only has two packers. “The combination of few bidders and high levels of captive supply is the main reason Canadian cattle prices are so low,” said Peacock.
The NFU has made a Canadian law banning captive supply a top priority. To advance this work, the organization has held dozens of meetings with farmers and ranchers in nearly every province in Canada. The NFU has met with provincial governments and made an extended presentation before the House of Commons Standing Committee on Agriculture, where there was significant consensus that captive supply was a major concern and must be dealt with. The NFU’s “The Farm Crisis and the Cattle Sector” is the most comprehensive study of cattle prices and profits produced in the past two decades. Copies at www.nfu.ca .
US INTRODUCES LAW TO PARTIALLY BAN CAPTIVE SUPPLY IN CATTLE:
CANADA MUST FOLLOW SUIT
SASKATOON, Sask.—Today in Washington, Republican and Democratic Senators from several cattle-producing states introduced a bill to curtail captive supply in cattle markets.
Captive supply is a technique wherein beef packing companies use cattle they own, or cattle they control through contracts that do not contain fixed prices, to push down prices to independent sellers. Captive supplies allow packers to stop bidding in cash markets whenever prices rise above packers’ preferred level. Nearly every study on the issue has concluded that packers’ use of captive supplies leads to lower prices for ranchers and farmers.
Senators Mike Enzi (Rep.-Wyoming), Byron Dorgan (Dem.-North Dakota), Chuck Grassley (Rep.-Iowa), and Tim Thompson (Dem.-South Dakota) introduced the “Livestock Marketing Fairness Act” today in the US Senate. The bill, if passed, would outlaw captive supply contracts.
Specifically, the bill would require that contracts specify actual prices. Captive supply contracts omit fixed prices and, instead, base values on cash-market prices at the time of delivery. But packers can push down those cash-market prices and, thus, push down prices for the contracted cattle. Further, the bill would require forward contracts to be made public and traded in public markets where all can observe bidding and bid themselves. The bill would not prevent forward contracting, but it would prevent packers from using non-priced contracts as a tool to depress markets. Additional moves are likely in the US—either through legislation or regulation—to ban packer ownership of cattle, thus outlawing all forms of captive supply.
US President Obama has made a ban on captive supply a priority. In point 2 of his rural agenda, the Obama commits to “Pass a packer ban,” explaining that “When meatpackers own livestock they can manipulate prices and discriminate against independent farmers.”
“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,” said Robertson.
NFU Manitoba Board member Fred Tait said that the move to ban captive supply contracts in the US means that Canada must quickly follow suit. “We’re constantly told, by politicians and cattle organizations, that we have an integrated North American market. For that reason, US moves to increase farmers’ prices must be matched by similar moves here. We’ve integrated a lot of the bad coming out of the US; it’s time to integrate some of the good,” said Tait.
NFU Alberta Board member Neil Peacock said that the problem of captive supply is even worse in Canada than in the US. According to US researchers, between 1/2 and 2/3 of the cattle entering the big Alberta packing plants are packers’ captive supplies. And Canada only has two packers. “The combination of few bidders and high levels of captive supply is the main reason Canadian cattle prices are so low,” said Peacock.
The NFU has made a Canadian law banning captive supply a top priority. To advance this work, the organization has held dozens of meetings with farmers and ranchers in nearly every province in Canada. The NFU has met with provincial governments and made an extended presentation before the House of Commons Standing Committee on Agriculture, where there was significant consensus that captive supply was a major concern and must be dealt with. The NFU’s “The Farm Crisis and the Cattle Sector” is the most comprehensive study of cattle prices and profits produced in the past two decades. Copies at www.nfu.ca .
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