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Fighting Facts with Feel-good Rhetoric
Despite the latest
evidence—consistent other credible, third-party studies—that
leaving the cattle market to its own devices benefits both
producers and consumers, a handful of lawmakers are still doing
their best to legislate them.
“Outlawing packer
ownership of livestock would make sure the forces of the
marketplace would work for the benefit of the farmer just as
much as it does for the slaughterhouse. You could even say that
packer ownership of livestock frustrates and compromises the
marketplace so the farmer doesn’t get a fair price,” said
Senator Chuck Grassley of Iowa in January.
Grassley is pushing
what he terms a competitiveness agenda for agriculture in the
pending Farm Bill. As part of that he wants legislation to
prohibit packer ownership of cattle ahead of slaughter. Never
mind that such ownership is minimal (see Setting the Captives
Free) and that it helps buoy the market floor over time.
Also, forget the
fact that the U.S. has an excess of packing capacity, meaning
that packers will likely be forced into further consolidation in
the name of survival.
This Iowa Senator
also introduced the Transparency for Independent Livestock
Producers Act, which would require at least 25% of a packer’s
daily harvest to be procured in the spot cash market. That is,
of course, unless you happen to be a smaller packer.
The other favorite
target in this anti-competition for competition rhetoric is the
aforementioned industry concentration and consolidation.
“The concentration
in the livestock industry raises many concerns on what the
future may hold for independent producers,” said Representative
Leonard Boswell in May. “It is my hope that this legislation
will attempt to level the playing field for independent
producers.”
Boswell and Senator
Tom Harkin have introduced the Competitive and Fair Agricultural
Markets Act of 2007. Among other things, this legislation,
“Prevents discrimination against producers belonging to an
organization or cooperative by removing a disclaimer clause
allowing processors, handlers, or contractors to refuse to do
business with producers just because they belong to such
organizations...”
Why should anyone
have the right to tell you who you must buy from, any more than
someone should have the right to tell you who you must sell to?
In addressing the
bill, Harkin explains, “Independent producers need this bill
because the status quo threatens their existence. With so few
buyers left, a handful of companies can require
take-it-or-leave-it contracts forcing the producer to make a
fundamental decision: sign the contract and go along with unfair
terms, or just simply walk away from their family farm and find
another occupation. That is not right.”
What’s not right in
this case is the over-simplified assessment. If you use facts,
it’s easier to argue that what threatens some producers is their
own status quo and refusal to recognize what it takes to compete
in the 21st century. Visit with producers who understand exactly
what the market wants, folks who qualify their cattle for a
variety of markets and enjoy the competition they’ve created for
their offering, and you don’t hear these complaints.
“This legislation
does nothing to block contractual relationships between truly
independent producers and packers; it simply requires fairness
in those relationships. If we are serious about getting young
people into agriculture, then ensuring a fair marketplace is a
critical place to start.”
It’s tough to argue with the mom and apple pie sentiment of that
last sentence. It’s even tougher to believe that creating an
artificial market by demanding participants limit their freedom
to succeed or fail is somehow a fair market.
Besides which, it’s
easy to see how this legislation could prevent folks from
entering into specific contracts they have found to be
beneficial to them, as outlined in the GIPSA-commissioned study.
Perhaps it’s only a coincidence that all of these folks are from
Iowa, far and away the largest corn producing state, along with
Illinois. As such, plenty of their constituency is receiving
artificial competitive help with corn and ethanol subsidies.
Each of these bills has been officially introduced but no other
action has been taken so far.
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