CATTLEMEN OPPOSE A BAN ON PACKER OWNERSHIP

NCBA Staff Contact: 
Colin Woodall, Executive Director of Legislative Affairs
202-347-0228
cwoodall@beef.org

Summary:
As Congress works to finalize the 2007 Farm Bill, there is some discussion regarding a proposed ban on packer ownership of cattle. 

NCBA policy supports a competitive, free-enterprise market.  In the Senate version of the Farm Bill, legislative language puts the government – not the cattleman – in charge of how cattle are marketed.  This language would prohibit packers from owning, feeding or controlling cattle more than 14 days before slaughter. 

NCBA opposes this language due to the larger unintended consequences it could have our on consumer-driven, producer-led marketing alliances.  This provision must be removed so that the heavy hand of government does not interfere with a cattle producer’s ability to provide the beef products that consumers want.

Background

NCBA has had member policy for nearly ten years to oppose legislation that would alter the competitive structure of the cattle industry or limit cattlemen’s marketing options. 

In communications with Capitol Hill offices during Farm Bill debate, hundreds of NCBA cattle producer-members voiced their strong opposition to a ban on packer ownership.  Below is an excerpt from one cattleman’s massage to his members of Congress: 

“If I want to sell my cattle as feeder calves, I want more buyers - not less - competing on the purchase of my cattle.  In order to get paid more for a better product, we have found that working directly with a packer and sharing the risk on the performance of the cattle we, our customers, the packers and the consumers all benefit.  Those who claim to be shut out of the market by these mutually-agreed upon arrangements are upset that they can no longer pass off their ‘Pig-In-a-Poke’ low quality commodity cattle for the same cash price as received by more progressive and quality minded producers.” 

NCBA Guiding Principles for the 2007 Farm Bill: 

NCBA members agreed to specific Guiding Principles for the 2007 Farm Bill.  This statement has guided NCBA’s actions on behalf of the cattle industry in influencing the formulation of the 2007 Farm Bill.

Under these Guiding Principles, NCBA’s priorities are to:

1. Support a reduction of the federal deficit while assuring funding for Farm Bill priorities, without agriculture bearing a disproportionate share of the reductions,
2. Minimize direct federal involvement in agricultural production methods,
3. Preserve the individual’s right to manage land, water, and other resources,
4. Provide an opportunity to compete in foreign markets, and
5. Support equitable farm policy.

Key Points:

·         A ban on packer ownership of cattle hurts the entrepreneurial spirit of cattle ranchers by inhibiting their participation in marketing alliances which can add value to their cattle.

·         The proponents of a packer ban want to put the government in control of the cattle producer’s business instead of letting the market reward a producer for the work he’s done to produce higher quality beef.

·         Historically, cattle were marketed in lots or pens with every animal in the lot receiving the same average price.  Many cattle producers, however, have made improvements to their herd genetics and management practices to produce higher quality cattle and higher quality beef. 

-          Consumers are demanding specialized beef products ranging from lean cuts to specialty branded beef.  To meet these demands, many producers have formed marketing alliances and developed alternative marketing arrangements such as forward contracting and packer ownership. 

-          These programs, which include Certified Angus Beef, Ranchers’ Renaissance, and U.S. Premium Beef, are consumer-focused, market-driven, and producer-led.  These programs were developed by cattle producers and not meat packers.  The goal behind these programs is to satisfy customer demand and get paid for the value that is added to our cattle. 

-          Consumers demand the convenience of buying beef whenever they want to, including specialty beef items.  Safeway cannot stay in the beef business by offering their “Rancher’s Reserve” beef only on Tuesdays.  They have to be able to offer it everyday and to do that, they have to be able to manage the supply of beef.  Packer ownership is just one tool that allows the beef industry to ensure there is a steady flow of the products that consumers demand.  This helps to build further demand and put money in cattle producers’ pockets.

·         GIPSA conducted a 3 ½ year study (costing 4.5 million taxpayer dollars) on the way livestock and meat are marketed in this country.  Their results concluded that alternative marketing arrangements, including packer ownership, have benefited all segments of the cattle industry and that eliminating or restricting their use would have negative implications from the cow/calf producer all the way down to the consumer.  They also determined that less that 5 percent of cattle in this country are owned by packers.

·         A ban on packer ownership of cattle will result in government intrusion into the cattle markets and it will disrupt the innovative and value-added programs that have been built by cattle producers.