AFF Sentinel Vol.4#14

Organizations were vociferous in Washington, D.C., recently, describing what they thought the Beast was doing, who controlled the Beast and who were the victims of the Beast. What Beast?

Well, consider testimony to a U.S. House subcommittee on beef industry structure:

"Independent producers cannot be successful in the absence of protection from unfair and anti-competitive practices." Tom Buis gave no examples or specific complaints, just referred to his list of the largest feeders, packers and grain companies and their market share, as if that proved something. Buis is National Farmer's Union president.

Buis reminded us of the anti-Wal-Mart spokeswoman who screeched in a news interview that Wal-Mart made $10 billion, as if that was sufficient proof of Wal-Mart's guilt alone. She didn't mention that profit was about 4 percent of sales. Likewise, Buis didn't mention that the packers on his list own just 5 percent of the cattle on feed.

"In a nation where packers and processors own all of the livestock, what need is there of farmers and ranchers?" This hyperbole came from John Crabtree, Center for Rural Affairs. Crabtree didn't clarify whether he meant we were there now or soon would be.

"Packers use vertical integration and captive supplies to manipulate livestock markets," Crabtree said.

There it is, out in the open - the Beast, Bigfoot, the unseen monster controlling puppet cattlemen. Manipulation. But Crabtree offered no proof either.

"A non-competitive marketplace is code for farmers and ranchers being robbed; without price discovery, producers are almost always paid less for their products than the true and fair value of those commodities," Buis said. "... how can you have a free market when there is no competition?"

While chasing the phantom Beast, neither Buis nor Crabtree made much mention of relevant facts, like the recent GIPSA study that again confirmed that innovations in cattle marketing have not damaged the level of competition. The study found alternative marketing arrangements Buis and Crabtree oppose had increased the quality of beef to consumers, cut costs for packers, provided incentives and market access for feeders and had negligible impact on average cash cattle prices.

They didn't mention that more than 60 percent of cattle are still bought on the cash market or that the marketing agreements (28.8 percent) and contracts (4.5 percent) they refer to as "captive" supply, while significant, hardly indicate complete packer control of the market on its face. That is separate from the statistical analysis the GIPSA study economists conducted to show concentration had not reached a level that was damaging competition.

So where is the proof that the Beast exists?

Crabtree echoed charges we've heard before from R-CALF and the Organization for Competitive Markets (OCM). He noted that of the 1,800 investigations the Packer & Stockyards Administration (P&S) conducted between 1999 and 2005, some 1,739 could not be traced to a specific complaint, producer, packer... " Interpretation: in six years, only 61 complaints were even filed with P&S and only a handful actually was deemed prosecutable. GIPSA administrator Jim Link confirmed the low number of actionable cases.

It is true that before Link took over, many routine compliance audits were classified as "investigations." But what this meant was that a government bureaucracy - all bureaucracies fear obsolescence - was covering and hoped no one noticed they hadn't much to do. With thousands of cattlemen and a federal bureaucracy looking for transgressions in dealings with auctions and packers, very few were found.

So then the charge is that P&S rules are not being enforced. Critics give no consideration to the possibility that we are not awash in violations. They know the Beast is there - they just can't prove it.

Crabtree supported a bill in Congress that would "bring secret, long-term contracts between packers and producers into the open ... "

They are sure there are deep, dark secrets there that, if revealed, would totally heal the cattle market permanently.

Buis presented a letter from some competition and concentration coalition calling for bringing "secret, long-term contracts between packers and producers out into the open ... ." (Did they collude on their testimony?)

Where is it in the Constitution that businesses are forbidden to have confidential business dealings, that the government - and, of course, concerned citizens - must know everything about your business?

And what about record prices three years running for calves, feeder cattle and fed cattle?

"Congress must intervene and accept responsibility for our dysfunctional livestock markets ... ," Buis said.

They're certain Sasquatch really exists!

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