'Livestock Marketing Fairness Act' introduced
May 20, 2011
by Bryan Salvage
WASHINGTON – On May 19, US Senators Mike Enzi (R-Wyo.), Tim Johnson (D-S.D.), Chuck Grassley (R-Iowa), and Jon Tester (D-Mon.), introduced a bill – The Livestock Marketing Fairness Act – that would target what they call “unfair meat-packer practices that negatively influence and impact independent ranchers and farmers.”
The top four multi-national meat-packing companies today control roughly 85 percent of the domestic slaughter capacity in the US, Johnson said. “It is increasingly tough for independent farmers and ranchers to gain fair market access,” he added. “This bipartisan bill will keep our farmers and ranchers in the fold and ensure that they get a fair price for their product.”
“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 packers alike,” Grassley said.
The Livestock Marketing Fairness Act would put ranchers and farmers on equal footing with packer-owned herds by amending the Packers and Stockyards Act of 1921 to end certain anti-competitive forward marketing contracts and ensure that the ranchers and farmers have full access to the marketplace, the senators said.
The US meat packing industry has become increasingly concentrated in recent years with only several firms controlling most of the domestic cattle and hog slaughter, they said. As a growing number of large packing operations own their own livestock or control them through forward contracting agreements, these firms are able to buy from themselves when prices are high and buy from others when prices are low, the Senators charged.
The bill would:
• Require marketing agreements to have a firm base price derived from an external source. This guarantees that local contract prices are not subject to manipulation by packer owned herds.
• Call for future forward contracts for livestock (cattle, hogs and lambs) to be traded in public markets where buyers and sellers can witness bids and make their own offers. This openness ensures market competition through multiple offers, they said.
• Exempts producer-owned cooperatives, packers with low volumes and packers who own only one processing plant. This exemption targets the source of price manipulation and ensures that the business practices of small family-owned processors are not impacted by the law, they said.
• Guarantees trading is done in quantities that provide market access for both small and large livestock producers.
According to the Senators, the legislation would allow ranchers and farmers to continue choosing the best methods for selling their livestock and would improve the stability and openness of forward contracting to provide ranchers and farmers more options to sell their animals.