Ranchers Battle Meatpacking Industry
Saturday, August 25, 2007; 4:00 AM
MOVILLE, Iowa -- Eric Nelson, a fourth-generation rancher and farmer who operates a feedlot, isn't looking for more government cash. He just wants a little help from the Senate when it debates a farm bill this fall.
Nelson and many other family ranchers in the Midwest and West are hoping Congress can help them fight the gradual consolidation of the meat industry, which they say is hurting their business. A handful of large meatpacking companies slaughtered 80 percent of steers and heifers in 2005, up 30 percent from 20 years ago.
"We just want a level playing field, an environment in which we can be profitable," Nelson said. "Give us true competition and we'll take care of ourselves."
Ranchers with smaller operations have long sought changes in the law that would help stem competition from the larger companies. With new political dynamics in Congress, they could happen this year.
The changes are bound to face strong opposition from some cattle groups. The National Cattlemen's Beef Association, which represents many of the larger meatpackers, says changing the way the cattle business operates is a challenge to the free market.
"We have no doubt we will have to continue to explain why a cattleman should continue to be able to sell cattle to whoever he wants," said Jay Truitt, a lobbyist for NCBA.
Many of the ranchers advocating change would like to ban meatpackers from owning or contracting for cattle more than a week or two before slaughter. That way, the large companies couldn't have control over the cattle for a long period of time and would be forced to pay current market prices for meat.
Supporters of the reform say meatpackers can manipulate the prices they pay for cattle with "captive supplies," or stock they own or control through contracts and marketing agreements. They argue that such control lets meatpackers time their purchases, allowing them to save money but also depress prices.
Sen. Mike Enzi, R-Wyo., is expected to offer an amendment on the Senate floor that would require packers to have a fixed base price in their contracts and to put contracts up for bid in the open market. Enzi maintains this would prevent the large meatpacking companies from manipulating the base price after the point of sale.
Some cattle ranchers say those advocating the changes aren't working in the modern era.
Cevin Jones, a feedlot operator in Eden, Idaho, says changing the rules would, for him, be equivalent to "stepping back in time 50 years." He does much of his business with Tyson Foods Inc., one of the biggest packer operations, and he says limiting the period in which he could sell to the company would dramatically hinder his business.
Jones negotiates with the packer companies periodically, selling cattle when they need it and when he wants to unload it. Sometimes these deals are made more than a couple of weeks out.
"When you take options away from me, that limits my ability to be profitable," Jones said.
The House passed its version of the farm bill in July, but that legislation didn't include any major livestock reforms. Those will be left up to the Senate, which is expected to take up the bill this fall.
The Senate passed a ban on packer ownership of cattle as part of debate on the 2002 farm bill, but the provision was dropped in negotiations with the House.
This time, many House Republicans who opposed the ban have left Congress. The Democratic chairman of the House Agriculture Committee, Minnesota Rep. Collin Peterson, has said he is sympathetic to both sides of the issue.
The Democratic chairman of the Senate Agriculture Committee, Iowa Sen. Tom Harkin, has supported a ban on packer ownership.
Associated Press Writer Mary Clare Jalonick reported from Washington.