The industry’s structure has been stable for the past 25 years, AMI relays. Changes in industry occurred in the 1980s, largely in response to new demands from consumers.
“In a consumer-oriented business such as the meat and poultry industry, you start with the customer,” said Mark Dopp, senior vice president of regulatory affairs and general counsel. “Our customers began sending strong signals that they wanted more consistent products, leaner products and niche products like natural meats or those that are free range. These demands necessitated a shift from our previous commodity mindset to a more focused, branded approach that delivers what consumers want. That’s what automakers have done. That’s what electronics manufacturers have done. And it was what our industry needed to do, too.”
Branded meat and poultry products require consistent raw materials so consumer expectations can be met purchase to purchase, he said. To achieve that, livestock and poultry producers began entering into marketing agreements and contracts with packers and processors to provide animals that were raised in a consistent manner, using genetics and other practices that could deliver a raw material to support the brand.
“Although some populist groups representing livestock producers who don’t like contracts or marketing agreements have sought to raise suspicions about the partnerships, these agreements are the very tools that have helped other livestock and poultry producers and packers and processors stay competitive in the domestic and international market,” Dopp said.
For the last two decades, the share of the consumer meat dollar going to meat and poultry companies has remained constant, Dopp added. Although the share that goes to the retailer has increased somewhat, that increase is tied to the value that retailers today add to these products by preparing them in convenient ways, such as precooked roasted chickens available in stores or marinated steaks.
“It’s noteworthy that the most outspoken critics of industry structure and livestock and marketing agreements are those who choose to reject them,” Dopp continued. “I respect their prerogative, that’s their choice. But they must respect the majority of livestock and poultry producers who choose to work in partnership with meat and poultry processors to provide a product that our restaurant and retail customers want and that consumers demand.”
Dopp added the meat and poultry industry has significant concerns about a proposed rule published in June 2010 by USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA). The proposal was published in response to language in the 2008 Farm Bill, but the published proposal exceeds its Congressional mandate dramatically and has received widespread criticism from lawmakers and from mainstream meat, ag and livestock groups.
“As we consider how to ensure that the industry is as competitive as we can make it at home and around the world, we must recognize that this proposed rule will make us less competitive and that it will harm the livestock and meat industries, consumers and the economy itself,” he concluded.