It’s true that commodity and livestock prices have been high and stable lately, giving rise to a healthy farm economy in the midst of economic angst across the rest of the economy, but tables can quickly turn and the fight to keep farmers competitive continues apace. What goes up can and will come down, and getting and remaining competitive can be vastly important for the long haul.
A group of U.S. senators has banded together to introduce a bill that would target unfair meat packer practices that they say negatively impacts independent farmers and ranchers. The senators are Mike Enzi (R-Wyoming), Tim Johnson D-South Dakota, Jon Tester, D-Montana, and Chuck Grassley, R-Iowa, a nicely bipartisan cross section of farm and ranch state representatives.
Grassley said, “America’s family farmers are the most productive in the world, yet they often have a hard time getting a fair shake in the marketplace. Bringing transparency to the marketplace and ending price manipulating practices carried on by some of the large packers will create a healthy, competitive environment for small and large producers and packer alike.” At least, that’s the goal, one not easily reached over time, but enhanced by this bipartisan legislative attempt. Montana’s Tester remarked that a level playing field in essential. Certainly.
Dubbed the Livestock Fairness Act, the bill would attempt put farmers and ranchers on an equal footing with packer-owned herds by, Grassley noted, amending the Packers and Stockyards Act of 1921 to end what he called anti-competitive forward marketing contracts and ensuring that farmers and ranchers have full access to the marketplace.
The problem is that in recent times the meat packing industry has become so concentrated that now just a handful of firms control the majority of domestic cattle and hog slaughter. And, a growing number of these firms now own herds and control them through forward contracting agreements. They can buy from themselves when prices are high and buy from others when they are low. Cozy arrangement, eh?
The senators’ bill would require marketing agreements to have a firm base price derived from an external source. That would guarantee that local contract prices would not be subject to manipulation by packer owned herds. It would also call for forward contracts in the future for cattle, hogs and lambs to be traded in public markets where buyers and sellers can witness bids and make their own offers. Multiple offers, the bill stated, would ensure market competition.
Additionally, the bill would exempt producer-owned coops, packers with low volumes and packers who own only one processing plant, thereby targeting, Grassley said, the source of price manipulation, while ensuring that the business practices of small family-owned processors are not impacted by the new law. It also guarantees that trading will be done in quantities that provide market access for both small and large livestock producers.
Best of all, Grassley said, the act would allow farmers and ranchers to continue choosing the best methods for selling their livestock and improve the stability and openness of forward contracting, providing producers more options to sell their livestock. Sounds like a good thing.
I’ll see ya.
An Iowa native, Peter Graham has been a rural newspaper editor for 40 years. He currently edits a twice-weekly paper in Western Iowa. You can contact him at (712) 642-2791 or news@missourivalley times.com