Blog for Rural America

The Center for Rural Affairs, a private, non-profit organization, is working to strengthen small businesses, family farms and ranches, and rural communities. Permission to reprint items from this web log is hereby granted, on the condition that clear credit is given to the original source of the material. If the blog provides information for a story, please let us know by sending an email to johnc@cfra.org.

Thursday, July 07, 2005

Action Alert - Competitive Livestock Markets

- from the desk of John Crabtree, Center for Rural Affairs and our friends at the Western Organization of Resource Councils

Action Alert: Call your Senators to Return Competition to Livestock Markets

Ask your Senators to sponsor the Captive Supply Reform Act.

Senators Enzi (WY), Johnson (SD), Dorgan (ND) and Thomas (WY) have introduced S. 960, also known as the Captive Supply Reform Act. The Act would require packers to bid for livestock in an open, public market and pay a fair price to the farmers and rancherswho raise that livestock. Those sponsors are currently circulating a Dear Colleague letterto gain support and more sponsors for the Act. Your calls of support are needed to ensureyour Senator signs on to this important bill.

What You Can Do:

Your help is needed to encourage your Senators to sign on to this important bill.
Call your Senator and urge him or her to cosponsor S. 960, sponsored by Senators Enzi, Thomas, Johnson and Dorgan. Mention this important bill when you see your Senator at publicevents this Independence Day recess. Ask you Senator to urge the leadership of the SenateAgriculture Committee to hold hearings on S.960. Contact friends and family in other statesand ask them to take this action, too.

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You can reach your Senator by calling the Capitol Switchboard at 202-224-3121 and asking for your Senator by name. A list of Senators’ phone and fax numbers is available at http://www.senate.gov/general/resources/pdf/senators_phone_list.pdf
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What to Say When You Call:
I encourage you to sign on to the Captive Supply Reform Act, S.960. This Act is vital to returning competition to the livestock markets. I am a [consumer or livestock producer, you know what you are] and I support fair marketsand strong economies. This legislation would make the contracts fair, and open to everyone,instead of the secret backroom deals we have now. Encourage your Senate Agriculture Committee leadership to hold hearings on this important bill.

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Background:
Meatpackers acquire half of all cattle and hogs they slaughter through what are known ascaptive supplies—livestock they own themselves or control through contracts with farmersand ranchers. These livestock are called captive because they are tied to one packer instead of being subject to normal market forces of supply and demand.
Four companies buy 80% of the cattle and half of the hogs that end up as steaks and chopson American dinner tables. In such a concentrated market, buyers (the packers) can—and do—use captive supplies to manipulate markets.

The Captive Supply Reform Act, S.960, fixes the problems with captive supplies withoutprohibiting their use. Rather than banning contracts, the Captive Supply Reform Act wouldmake two reforms to restore competition in the market for livestock contracts.

The Act would:

- Require a fixed base price on contracts and marketing agreements Require that contracts be traded in open, public markets—no more secret deals.

- Restore competition by making packers and livestockproducers bid against each other to win contracts. Forward contracts and marketing agreements allow packers and producers to coordinate supply and reduce risk, but as currently negotiated—in secret, with all the bargaining power on one side—they depress prices and shut small and independent producers out of markets. The Captive Supply ReformAct would require such contracts be traded in open, public markets to which all buyers andsellers have access.

For more information on the Captive Supply Reform Act, log on to http://www.worc.org/ . You may also contact Jeri Lynn Bakken at jerilynn@worc.org or 701/376-7077.

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