Alert - Iowa Legislation Requires Hog Purchases From Independent Producers

Bill Requiring Hog Purchases From Independent Producers Passes Iowa Senate
Radio Iowa - Wednesday, March 21, 2007
By Stella Shaffer, Radio Iowa

...editor's note, I am posting this because this crucial legislation is stuck in the Iowa House Agriculture Committe. In order for farmers, independent producers and contract growers alike, to be treated fairly in the livestock marketplace, there must be an open (spot or cash) market with real competition where multiple buyers bid for hogs and, thereby, establish a competitive price. Livestock market competition is important to farmers, yes, but also to the rural communities in which they live. Competitive markets would also help forestall the environmental, economic and social catastrophe that awaits us as a result of consolidation and industrialization of hog production. Please contact your state Representative's and urge them to support SF 504, the 25% spot market bill (see below for additional contact information).

Meatpackers will have to purchase more of their hogs from independent family farmers under legislation approved by the Iowa Senate on Tuesday afternoon. Big meatpackers now buy many of their hogs on contract from farmers, and lock in the price without a sale at auction. The bill requires them to purchase at least 25-percent of their hogs from independent farmers.

Senator Jack Kibbie, a Democrat from Emmetsburg, urged the Senate to pass the bill. "I would ask the senate to think again about casting a vote for the small independent pork producers of this state, the ones that keep our fairs alive, our 4-H and our future farmers."

Kibbie said the market for independent hog producers has almost disappeared. He describes signs at packers' unloading docks that say "contract hogs only." Kibbie says we must provide a market for the independent producer. Supporters argued consumers would get a better price on meat if fewer hogs were produced on contract for the big packing companies.

Critics said you can't turn back the clock on Iowa agriculture. The drive to curtail packer ownership of livestock on the farm stems in part from the discovery that so few animals are sold at public auction these days that the open-market price is hard to determine. This bill puts into effect an agreement Iowa Attorney General Tom Miller worked out with meatpackers Smithfield, Cargill, and Hormel -- and extends the agreement to Tyson Foods as well.

...editor's note, the House switchboard number is 515-281-3221 and members of the agriculture committee are listed below, along with members of the subcommittee where the 25% spot market bill is being held up.

Dolores Mertz (D, District 8), Chair and subcommittee chair
John Whitaker (D, District 90), Vice Chair and subcommittee member
Jack Drake (R, District 57), Ranking Member
Mark Davitt (D, District 74)
Betty De Boef (R, District 76)
Cecil Dolecheck (R, District 96)
Marcella Frevert (D, District 7)
Elesha Gayman (D, District 84)
Sandy Greiner (R, District 89), subcommittee member
Dan Huseman (R, District 53)
Mark Kuhn (D, District 14)
Helen Miller (D, District 49)
Steven Olson (R, District 83)
Dawn Pettengill (D, District 39)
Henry Rayhons (R, District 11)
Mike Reasoner (D, District 95)
Nathan Reichert (D, District 80), subcommittee member
Doug Struyk (R, District 99) , subcommittee member
Kurt Swaim (D, District 94)
Andrew Wenthe (D, District 18)
Gary Worthan (R, District 52)

Under Secretary Bruce Knight - COOL is Like Liver

Mandatory Country of Origin Labeling implementation moving forward

Tuesday, February 20, 2007, by Tom Steever, Brownfield Radio News Network

Audio related to this story

editor's note... the views stated in this article are those of Bruce Knight, USDA Under Secretary for Marketing and Regulatory Programs and do not reflect the opinions of the Center for Rural Affairs... John Crabtree, Blog for Rural America editor.

Mandatory country of origin labeling is moving toward implementation over the next year and a half, but with some changes, according to Bruce Knight, USDA Under Secretary for Marketing and Regulatory Programs.

“I’ll be going through things to see if there’s options for flexibility or not,” Knight told Brownfield Tuesday in Jefferson City, Missouri.

Whether people embrace the issue or not, Knight says those who are on middle ground are rare, and most do not like the original proposed rule because of its exemptions of poultry and retail food service items.

“I want to re-launch that rule making process, I want to go through a robust economic analysis (and) figure out how to make this law that’s on the books workable and implementable by September 30, 2008,” Knight said.

The administration stance is that COOL should be voluntary and market driven, according to Knight, however he says consumers are not willing to voluntarily pay for a “grown-in-the-U.S.” label. “The debate will continue,” said Knight. “It is law, however, and we will move forward and implement that law.

Agree? Disagree? Post a comment here or contact John Crabtree, johnc@cfra.org

I encourage those that disagree with Under Secretary Knight to call him at 202-720-4256 and let him know.

Center for Rural Affairs
Values. Worth. Action.

Packer Owned Livestock Depress Prices

The Organization for Competitive Markets said a new USDA report confirms that packer owned livestock, in conjunction with long term contracts, push cattle and hog prices lower than competitive prices. At a cost of $4.5 million in taxpayer money, the study added very little new information to the captive supply debate and suffered many fundamental problems.

“In 2002, meat packers and members of Congress opposed to pro-competition measures requested this study as a diversion from real legislative action during the last Farm Bill debate,” said Keith Mudd, OCM President. “The authors either had no experience in antitrust economics, or were previously on record supporting packers' opposition to fair markets. Despite these flaws, the inescapable conclusion was that captive supplies drive livestock prices lower.”

“Captive supplies” are cattle and hog supplies that are committed to a packer more than 14 days in advance of slaughter because a packer owns the livestock or has them under contract. The livestock are moved outside the open (cash) market process in which negotiations determine the prices which are then reported to the public. Most credible studies have found that captive supplies lower prices, and consumers do not benefit.

USDA commissioned this report on livestock marketing in 2003. In the process, USDA rejected calls to focus on how packers manipulate prices through captive supply practices. Nevertheless, the study could not avoid this finding:

“The use of [captive supplies] is associated with lower cash market prices... .”

“Some of the authors of this report have longstanding, documented political bias against pro-competition rules,” continued Mudd. “Stephen Koontz of Colorado State University ridiculed criticism of captive supplies’ price effects in a 2002 BEEF magazine article entitled ‘Captive Supply Witch Hunt’.”

Koontz successfully lobbied to be on the team conducting this USDA study, as shown in his written comments submitted to USDA during the time period the study was being designed. He wrote the USDA, in June 2003:

“I would like to communicate that I would like to be involved in the proposal review process and that I intend – with a group of other agricultural economists – to submit a proposal or be part of a larger proposal.” …

“Lastly, I have heard indirectly a number of very troublesome statements attributed to government personnel with respect to the integrity of Land Grant University economists – that we are unscientific and unethical.”

Another author of the recent USDA report is John Lawrence of Iowa State University, who operates an institute receiving funding from beef checkoff dollars controlled by the anti-market competition group, National Cattlemens Beef Association. Lawrence has a record of attempting to prevent legislation to improve livestock markets. On January 14, 2002, Lawrence and Koontz and other Land Grant academics released a political report attacking legislation introduced by Senator Tim Johnson (D. SD) that would have restricted some captive supplies.
They collaborated with Ted Schroeder of Kansas State University, an expert witness hired by Tyson in captive supply litigation.

“The authors' bias was further revealed in an interim report to USDA during this $4.5 million taxpayer funded project, in which they documented ‘industry consultations’ with only special interest groups who oppose pro-competition reform,” said Mudd. “Organizations that favor competition were shut out of the process. The scientific method is supposed to be a search for the truth, but these authors let their pre-conceived opinions drive their conclusions.”

The authors completely omitted reference to a February 2004 jury verdict finding Tyson used captive supplies to manipulate cattle prices. They could have sought actual cattle transaction information, and viewed sworn testimony from scores of depositions and weeks of trial. They chose to ignore that information.

“The USDA report chose to exclude longstanding economic analysis designed to discover price manipulation,” said Mudd. “The industrial organization subspecialty of economics uses analytical tools to determine price impacts from large company conduct. USDA chose to exclude industrial organization economists from the study. This report will have very little impact on the pro-competition debate.”

Agree? Disagree? Post a comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Battle in Congress Over Packing Contracts

Battle set in Congress over packing contracts

Such deals reduce prices paid to farmers, a new study reports

By PHILIP BRASHER REGISTER WASHINGTON BUREAU

Washington, D.C. - When Iowa hog producer Max Schmidt signed a three-year contract with a big meatpacker he knew he was taking a risk that he might not make as much money as he could selling pigs the old-fashioned way - on the spot market.

He sure didn't. Schmidt, who kept meticulous records of what he was paid under the contract vs. what prices were on the spot market, calculates that he lost a full $1 million on the deal. "We left a pile of money there," he said.

To Schmidt, that's the way business works. But critics of the meatpacking industry said processors are unfairly driving down the prices paid to farmers by increasing their control of livestock supplies through contracting and outright ownership of the animals.

Iowa's senators - Democrat Tom Harkin, chairman of the Senate Agriculture Committee, and Republican Charles Grassley - will lead an effort in Congress this year to impose a series of marketing restrictions on packers, including a ban on their ownership of livestock supplies.

Other measures would allow producers to challenge contracts in court and require the U.S. Department of Agriculture to set up an office to investigate allegations of anti-competitive actions by processors and other agribusinesses.

A new study that was required by Congress says that meatpackers' use of contracts and ownership of livestock reduces the prices that producers are paid for livestock, including hogs...

Packers "put their thumb on the farmer and see the family farmer as an employee of theirs, kind of an indentured servant of theirs," Grassley said. "They want to control everything.

"In addition to the ban on packer ownership of livestock, the senators want to stop processors from imposing arbitration clauses on contract producers. Requiring arbitration prevents farmers from taking packers to court over contracts.

Grassley said the ban on packer ownership has a good chance of passing the Senate, as it did in 2002, but faces an uncertain future in the House. Meatpackers argue that the legislation could even outlaw contracts between processors and farms, a claim disputed by lawmakers and legal analysts at Iowa State University...

... Read the full article at...
http://desmoinesregister.com/apps/pbcs.dll/section?category=BUSINESS01

Agree? Disagree? Post a comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Harkin Bill Calls for Competition in Ag Markets

Senator Tom Harkin (D-IA) this week introduced legislation to correct deficiencies in USDA’s enforcement over agricultural markets and provide needed protections for producers involved in production contracts for agricultural commodities. The Competitive and Fair Agricultural Markets Act will be the basis for the development of a proposed competition title in the upcoming farm bill. Harkin is Chairman of the Senate Committee on Agriculture, Nutrition and Forestry.

“Producers need to have a fighting chance in an industry that is becoming far too consolidated and vertically integrated,” Harkin said. “I will propose and seek to include this legislation as part of a competition title in the farm bill.”

Last year, USDA’s Inspector General released a report commissioned by Harkin that detailed widespread inaction, the blocking of anti-competitive investigations, and efforts to cover up the lack of action by the Grain Inspection, Packers and Stockyards Administration (GIPSA). A hearing Harkin called to evaluate GIPSA’s enforcement dysfunctions also uncovered the lack of commitment towards preventing anti-competitive practices by USDA’s Office of General Counsel.

“If you take these facts together, it represents a complete lack of enforcement of the Packers and Stockyards Act passed by Congress in 1921, to protect producers from unfair, deceptive and anti-competitive practices in the marketplace,” Harkin said. “If we want to get serious about getting young people into agriculture, creating a fair and evenhanded marketplace is an obvious place to start.”

The Competitive and Fair Agricultural Markets Act would:

Reorganize USDA to streamline and improve enforcement of the Packers and Stockyards Act and Agricultural Fair Practices Act by establishing an Office of Special Counsel whose sole responsibility will be to investigate and prosecute violations on competition matters. The Special Counsel would be appointed by the President and confirmed by the Senate. This position will also serve as a liaison between the Department of Justice and Federal Trade Commission.

The legislation also amends the Packers and Stockyards Act:

Strengthens producer protections by making it easier for them to prove unfair actions by firms without additional burdens of having to prove adverse effects on competition across a region or sector and requires USDA to define the term "undue preference" - disallowing price premiums that are based solely on volume, or number of head, thereby discriminating agains smaller producers.

The bill also makes changes to the Agricultural Fair Practices Act...
...prohibiting unfair, unjustly discriminatory, anti-competitive or deceptive practices by a person that affects the marketing, receiving, purchasing, sale or contracting of crops... and provides needed contract protections to ensure that the production contract clearly spells out what is required of the producer... and prevents discrimination against producers belonging to an organization or cooperative...

Ranch Steakhouse Drops Natural Beef

Partners split over dropping products free of hormones, antibiotics

by Jim Bainbridge, Colorad Springs Gazette

Mike Callicrate, the face of the Ranch Steakhouse and Market since it opened in October 2005, has sold his minority partnership in the restaurant because of a disagreement over how the business should be run. Ranch Steakhouse was started as a showcase for the no-hormone, no-antibiotic brand of meats sold by Callicrate’s Ranch Foods Direct Co., and while it developed a loyal following — sales of $2.5 million last year — majority owner Neil McMurry wanted to try a new direction. McMurry is buying his meats from industry giant Iowa Beef Processors (IBP), a division of Tyson Foods.

“My partner and I didn’t agree on the concept for the restaurant,” Callicrate said. “Essentially, he owned the building and I was unwilling to compromise on our company’s pledge and purpose, so the relationship has ended.” The last meals with Ranch Foods Direct meat were served on Valentine’s Day, and the Ranch Food Direct market just inside the front entrance at 575 Garden of the Gods Road closed Thursday, soon to be replaced by a bar.

The restaurant will undergo a name change — it may be announced as early as today, according to manager Steve Abeyta — and has placed notices on each table letting customers know about the change of meat providers. “I can’t tell you what it felt like to walk into the cooler at the restaurant and see IBP beef there,” Callicrate said. “These are the people I’ve been fighting for years.”

Callicrate, 55, was the lead plaintiff in a class-action antitrust lawsuit against Tyson Foods-IBP a decade ago — the first such challenge to a major meatpacker since 1921 — and has been an ardent opponent of big agribusiness all of his career. Callicrate said he attempted to buy the majority interest in the restaurant, but that McMurry, 83, “was not willing to work with me. It is a very big disappointment. I put a lot of money into the business, not to mention time and effort.” McMurry was not available for comment Thursday. Terms of the buyout have not been finalized.

Callicrate said that McMurry once believed in the Ranch Steakhouse concept, but thought that his advisers had convinced him that he could do better “with less expensive meats.” “I think these guys see a place like Outback Steakhouse with the parking lot full,” Callicrate said, “and don’t see the value of buying a better product.” Callicrate will continue to operate his other Ranch Foods Direct stores and online at www.ranchfoodsdirect.com.

Post a comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.