R-CALF: NCBA, NPPC Help Packers Capture U.S. Cattle Supply Chain

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In its 72-page formal comments (comments) filed Nov. 22, 2010, with the U.S. Department of Agriculture’s (USDA’s) Grain Inspection, Packers and Stockyards Administration (GIPSA) regarding the agency’s proposed competition rule (GIPSA rule), R-CALF USA accuses the National Cattlemen’s Beef Association (NCBA) of deceiving and misleading the public regarding the condition of the U.S. cattle industry in an effort to help multinational meatpackers capture “control of the live cattle supply chain away from the nation’s independent cattle farmers and ranchers.”

The group’s comments quote a statement by the meatpacker trade association American Meat Institute (AMI), which the group states is evidence of the packers’ intention to capture the live cattle supply chain:

“The entire U.S. economy - from manufacturers to service providers - has moved towards both vertical and horizontal integration as a means of survival and striving for excellence. Barring one sector of the economy, meatpackers, from utilizing this model is unfair, punitive and lacking in any credible evidence.”

“By definition, the vertical integration of the cattle industry requires beef packers to capture control of their supply chain, which is the U.S. live cattle industry, and as such, the packers’ intentions could not be any clearer than this,” said R-CALF USA CEO Bill Bullard of AMI’s quote.

The group accuses NCBA of opposing the GIPSA rule because NCBA represents meatpackers that would be subject to the rule’s competition provisions, and specifically named NCBA board member Ken Bull, who also is vice president for cattle procurement for meatpacker Cargill Beef, as an example of packer control over NCBA. Throughout its comments, R-CALF USA collectively refers to the meatpackers’ trade associations, NCBA, AMI and the National Pork Producers Council (NPPC) as “NCBA et al.”

R-CALF USA’s comments call the GIPSA rule “an absolutely essential first step to prevent dominant beef packers from unlawfully capturing control of the live cattle supply chain away from the nation’s independent cattle farmers and ranchers” and state that cattle producers need only look at the concentration in the hog industry “to comprehend the cattle industry’s destiny should no action be taken to alter the industry’s current trajectory.”

Using copies of numerous NCBA charts within its comprehensive comments, R-CALF USA charges that NCBA et al are masking the true condition of the cattle industry by disseminating only partial and ambiguous industry data and omitting relevant data. R-CALF USA states that NCBA et al’s actions “have effectively misled many cattle producers by deflecting their attention away from the serious crisis presently facing the U.S. cattle industry.”

R-CALF USA also ridiculed NCBA et al’s study completed by Informa Economics that claims packers likely would avoid the cost of keeping records on premiums as required by the GIPSA rule by paying only a standard price for animals, which would eliminate premiums and cause producers to begin producing poorer quality beef.

R-CALF USA’s comments state: “This entire argument by NCBA et al is outrageous and deceitful. Packers already are required to maintain records on premiums and discounts paid for steers, heifers, cows and bulls, as well as on a variety of other livestock transaction characteristics under the Agricultural Marketing Service’s regulations for Livestock Mandatory Reporting. In addition, hog packers are required to report non-carcass merit premiums that include any price premiums added to the base price based on any factor other than the characteristics of the carcass.”

“NCBA et al’s entire opposition against the GIPSA rule is baseless and their only true reason for opposing the GIPSA rule is to prevent GIPSA from stopping the beef packers from chickenizing the cattle industry as these same packers have already accomplished in the pork and hog industries,” said Bullard.

The group’s comments also accuse AMI of deceitfully claiming the Packers and Stockyards Act was intended only to prevent overall harm to competition and not to regulate the fairness of the packers’ trade or business practices, which is a key component of the GIPSA rule. R-CALF USA’s comments state: “The packers are well aware that it was the intent of Congress to regulate unfair trade practices targeted at livestock producers as evidenced by AMI’s, the meatpackers’ trade association’s, acknowledgment that the purpose of the P&S Act was to ensure fair trade practices in addition to assuring fair competition in 2002 when it stated, “[The P&S Act] is an additional layer of fair business practice mandates on meatpackers, above and beyond the Sherman Act and Clayton Act. . .”

“Our comments are hard-hitting and well documented,” said Bullard. “Our goal is to provide the entire industry with information it can use to determine who is telling the truth. This is the first time R-CALF USA information and NCBA information have been provided side-by-side, and we hope every cattle producer will take the time to give our comments a very critical review.

“The GIPSA rule represents the first opportunity in the past 90 years of our industry’s history to stop the packers’ unscrupulous efforts to further control and shrink our industry,” he concluded. “The GIPSA rule is far too important for any representative of the cattle industry to not be putting all their cards on the table for everyone to see.”



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