0208RMFUCallsforAdditionalL.cfm RMFU calls for more controls on livestock markets
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RMFU calls for more controls on livestock markets


Rocky Mountain Farmers Union joined R-CALF USA, along with state Farmers Unions and independent cattle growers associations across the nation, in calling on Secretary of Agriculture Tom Vilsack to take additional steps to address the alarming erosion of competition in the cash - or spot - market for livestock.

A joint letter to Secretary Vilsack urges the USDA to initiate a rulemaking process to address eroding competition for livestock by prohibiting the meatpackers' practice of leveraging captive supplies (livestock committed to them either through direct ownership or by forward contracts made days, weeks, or even months prior to slaughter) so they can force prices down in the cash market. "The effect of this anticompetitive practice is to artificially lower livestock prices for all livestock producers, regardless of whether they market livestock in the cash market or through the various forms of forward contracts or marketing agreements," the letter points out.

"Collectively, these 85 organizations represent the new catalyst for change--the new leaders in rural America," said R-CALF USA CEO Bill Bullard. "Representing hundreds of thousands, if not millions, of livestock producers and consumers both nationally and in 26 states, these groups are the heart and soul of America's food production and food consumption economy. Their urgent request must be honored as they offer a genuine solution to the acute economic erosion that persists unabated in rural communities all across America. Restoring a meaningful market to independent livestock producers is the first step to restoring economic opportunities for everyone in Rural America."

The letter states that testimony at the August 2010 competition workshop in Fort Collins, Colo., revealed that the cash market for livestock is imperiled by virtual monopolies on the buyer side. One panelist said his research reveals that in some cattle marketing regions, cattle producers go for weeks with only one prospective buyer for their slaughter-ready cattle because meatpackers hoard captive supplies to avoid bidding in the cash market, which allows them to force producers to sell at unfair prices.

As the cash market for livestock continues to evaporate, the letter explains, competition evaporates with it, and without competition, the market power exerted by dominant meatpackers fixes livestock prices for the independent cattle grower. It is "the antithesis of competition."

"Based on testimonies and information gathered during the 2010 competition workshops, the need is undeniably urgent for USDA-GIPSA to exercise its pre-existing authority under the Packers and Stockyards Act to address this disastrous loss of competition," the letter concludes. "Please initiate, as quickly as possible, a rulemaking process to reverse the alarming erosion of competition for livestock by prohibiting meatpackers from leveraging their captive supplies to lower the price-discovery market."

The corporate meatpacking industry, virtually controlled by three or four multinational corporations, has been lobbying fiercely to protect itself from regulation, posturing as the consumer's friend and making the usual corporate threats about price increases and job losses. The "GIPSA Rules" (Grain Inspection, Packers Stockyards Administration regulations imposing controls on the meatpacker monopoly) have been obstructed and delayed by meat commodity lobbies, but the USDA seems determined to move forward to protect consumers and producers from price manipulation by corporate interests. "The GIPSA rules are a Bill of Rights for small ranchers," RMFU President Kent Peppler said. "America's food supply is controlled by a handful of multinational CEOs. Ranchers who actually grow the cattle support the GIPSA rule and demand controls on market manipulation by packing plants and meat speculators."

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