NSAC's Blog

Over 100 Groups Urge Senators to Support Packer Ban Amendment to Senate Farm Bill

June 1, 2012

On Thursday, May 31, the National Sustainable Agriculture Coalition joined a total of 108 organizations on a letter delivered to U.S. Senators urging them to support an amendment that Senators Chuck Grassley (R-IA) and Kent Conrad (D-ND) are expected to offer during floor debate on the Senate farm bill.  The amendment would ban meatpackers from owning, feeding, or controlling livestock for more than 14 days before slaughter in order to prevent them from using livestock they own to manipulate livestock markets.  The amendment provides exemptions from the ban for cooperatives and for packers that slaughter 120,000 animals or fewer per year.

The amendment is similar to Senate Bill 2141, introduced earlier this year by Senators Grassley and Conrad and co-sponsored by Senators Tom Harkin (D-IA) and Tim Johnson (D-SD).

As the letter points out, large-scale meatpackers can use packer-owned livestock to exert unfair market power over farmers, ranchers, and independent feedlots. When market prices for livestock are high, the packers slaughter livestock they own or control under contract.  When prices fall, the packers purchase livestock from farmers and ranchers.  The result is a ratcheting down of the price paid to farmers and ranchers without a decrease in the prices paid to consumers.

In addition, packers that also feed livestock can outbid independent cattle feeders for light weight livestock, eventually driving independent feeders from the market.  According to R-CALF-USA, in just the past 16 years, 35,000 independent cattle feeders have exited the industry, all of which were smaller feedlots with capacities of less than 50,000 head of cattle.  The effects of this price manipulation, combined with lax anti-trust enforcement in the livestock markets, has allowed a few large companies to consolidate market power, manipulate prices, and create anti-competitive market structures.

The Grassley-Conrad packer ban amendment would prevent the opportunities for packers to manipulate livestock markets.  In addition, the ban could encourage more independent feeders to re-enter the livestock markets, which would provide greater market access to farmers and ranchers across the nation.

Categories: Competition & Anti-trust, Farm Bill, General Interest

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