Beef, cattle groups talk competition at White House
Valerie Demo |
The White House convened a listening session with representatives from 16 food and agriculture advocacy organizations to discuss the need for more competition in agricultural markets. According to a White House brief, senior White House and Department of Agriculture officials told attendees that promoting competition is a priority for President Biden and went on to explain to the panel “how industry consolidation—whether in meat and poultry processing, ocean shipping, or other fields—can decrease options for inputs like seeds, fertilizer, and farm equipment and limit channels for selling products.”
During the listening session, Secretary of Agriculture Tom Vilsack announced the USDA’s launch of what they call a historic partnership with bipartisan state attorneys general to reduce anticompetitive barriers across food, agriculture, and supply chains. The attorneys general span 31 states and the District of Columbia.
According to the Biden administration, the USDA has taken action to fight for fair, competitive, and transparent markets through investing billions to expand meat and poultry processing capacity, promote fertilizer production that “is independent, made-in-America, innovative, sustainable and farmer-focused,” proposed rules to promote transparency in poultry contracting and tournaments, proposed a rule to protect people at higher risk of unjust treatment in the marketplace, based on their race, gender, sexual orientation, and religious affiliation and ban retaliatory practices, tightened the application of the Product of USA or Made in the USA labels, made whole-of-government efforts to address supply chain disruptions related to ports, truck driver availability, and poor service to exporters by ocean carriers.
National Cattlemen’s Beef Association president Todd Wilkinson did not attend the meeting, (Ethan Lane spoke on behalf of NCBA) but Wilkinson spoke to TSLN about some of the hot button issues of the day.
Increased competition is “always good,” he said. “Allowing greater competition at the local and regional level for packers and processors is extremely helpful for the cow-calf producer and the feeder,” he said.
Wilkinson said NCBA has advocated for more small and medium sized packers to enter the industry. While some government funding has helped with the “brick and mortar” aspect of actually building facilities in some cases, more needs to be done to help ensure a more secure labor force and keep working capital available for the processors.
As for the labor issue, Wilkinson said the administration needs to “move forward” with some current initiatives that would help with immigration and visa concerns for legal workers. “It just seems like this administration is a lot about talking about issues but not a lot about producing results,” he said.
Reauthorizing (rather than simply extending) the Livestock Market Reporting program (mandatory price reporting) is another issue NCBA is focused on.
Regarding the contract library – a pilot program which will expire in September, Wlkinson said “the jury’s still out” on that project. Sufficient data hasn’t been produced to determine whether or not the program could be helpful to the industry.
The improved cattle market is evidence of a functional market, he believes. “The market has turned around and we have excellent prices for all the sectors right now,” he said. “And that wasn’t the result of any government action, that was simply the market responding to a reduction in the cowherd,” he said. “We have some leverage back from the packer. We’re in the drivers’ seat and it looks like this won’t be a short term deal like it was in ’14 and ’15.”
One big concern of Wilkinson’s is the level of involvement of animal rights activists in the farm bill discussions this year. “Animal activists getting involved to this degree in the farm bill is unheard of. They are trying to affect every producer’s way of life. They think they know better than America’s producers and that’s a scary thought,” he said.
As for updates to the Packers and Stockyards Act, the NCBA believes that the Act itself needs to be reauthorized and that no “market manipulating” changes should be included, he said.
He emphasized that his organization doesn’t support government mandates that would impact the market. “It would cause more problems than it solves,” he said.
R-CALF USA president Brett Kenzy, a cattle feeder and cow/calf producer from Gregory, South Dakota, told the officials that he was participating in the event because he’s tired of seeing cattlemen leave the industry. He explained that the U.S. cow herd had shrunk to a 60-year low, and the industry has lost over 40% of its cow/calf producers and over 70% of its independent feedlots.
Checkoff reform, Packers and Stockyards Act updates and Mandatory Country of Origin Labeling could all improve competition for live cattle in this country, he said.
He believes that the current uptick in the cattle market is due to the significant reduction in cow numbers, which happened over the years due to drought as well as low market conditions. “We think we built this new price, but in reality we are standing on the backs of our neighbors who sold their herds. Those who were tired of burning generational equity and no longer able to support their families on the minimal margins in the cattle industry.”
Kenzy believes competition is the cornerstone of the entire cattle industry. The thinning of the cash market is the problem, he said. “It doesn’t matter if it’s fed cattle, feeder cattle, or the cow-calf man selling his calves, if you don’t have a market for what you try to grow, you don’t have much,” he said. “Competition is the only way to do this. We can keep throwing tax dollars at it, but government money withers away. Competition gives the guy with a fire in his belly a chance at survival.”
Kenzy shared a quote from Dr. Robert Taylor’s 2022 competition research paper. “Who controls the food system? Who do the people want to control the food system? Will entry as a producer be by invitation only? Will exit from production be due to bad business practices of an individual, or triggered by predatory activities of dominant corporations? Is the system fair? These are critical questions,” said Taylor.
“They tell us vertical integration is efficient. Why do these companies want to become more efficient? They have a fiduciary responsibility to shareholders to return profits. If we are going to go that route, we are going to rely on the benevolence of those corporations to sell their product cheaply to consumers. With adequate competition, that works. But the market needs to set those prices, not concentration and power,” he said. “It’s really about valuing small business,” he said.
Kenzy briefed officials on the difference between the cattle producers he represents that sell live cattle and the beef producers represented by other organizations that purchase those live cattle and sell beef. Kenzy said there is an inherent business conflict between those that sell cattle and those that purchase cattle to produce beef. Differing opinions from different organizations is no surprise, he said, as each group has a different perspective about the industry.
Kenzy said that cattle producers need the protections Congress offered in the Packers and Stockyards Act because the marketplace is out of balance, with the beef industry possessing market power that has made markets brittle, unreliable, and unattractive to new entrants. He urged officials to put an end to the unpriced formula contracts that contribute to the ongoing disparity in market power between cattle producers and beef producers.
“This is absolutely personal for me. I’m fighting for my place and trying to take people with me. The policies pushed by R-CALF USA are principled. If enacted, they don’t put anybody out of business,” he said.
USCA Executive Vice President Lia Biondo, who attended the convening, issued the following statement:
“Today’s discussion marks continued progress on the Biden-Harris Action Plan for a fairer, more competitive producer marketplace. Since its release in 2022, the Action Plan has guided administrative and legislative action to build a more resilient meat and poultry supply chain.
“USCA is pleased with the Biden Administration’s support of critical cattle market reform legislation, as outlined in the Action Plan. A study compiled byTexas A&M’s Agricultural and Food Policy Center forecasted that without enactment of legislation like the Cattle Price Discovery and Transparency Act, negotiated trade in Texas-Oklahoma-New Mexico is expected to fall to zero percent by 2026. Zero percent negotiated trade is a wholly, vertically consolidated industry.
“USCA looks forward to working with the Biden Administration and Congress to build a better business climate for independent producers, as outlined in the Action Plan and discussed at today’s listening session,” she said.
Kenzy says only if American ranchers and consumers get involved, will positive changes be made. “If the individual has freedom, the individual has responsibility.”
Wilkinson and Kenzy shared frustration with the current political climate.
“It just seems like this administration is a lot about talking about issues but not a lot about producing results,” said Wilkinson.
“It’s a quagmire out there,” said Kenzy. “The American public and small businesses are left to navigate a minefield and they have to call the balls and strikes as the political pitches are thrown at them.”
In a statement, Vilsack said, “The Biden-Harris Administration is committed to addressing corporate consolidation and its negative effects on the U.S. economy, such as unfair competition and increased prices,” said Agriculture Secretary Tom Vilsack. “By placing necessary resources where they are needed most and helping states identify and address anticompetitive and anti-consumer behavior, in partnership with federal authorities, through these cooperative agreements we can ensure a more robust and competitive agricultural sector. I’m pleased to see that a bipartisan group of states have committed to joining USDA in better protecting the fair and competitive markets that are a critical cornerstone of the American economy.”
According to a release, this initiative will enhance the capacity of state attorneys general to conduct on-the-ground assessments of competition and consumer issues, enhance coordination between federal and state agriculture and competition authorities, create new and more independent research programs, and ultimately result in fairer and competitive markets and more resilient supply chains.
At the request of the states, USDA is partnering with the Center for State Enforcement of Antitrust and Consumer Protection Laws, a neutral, nonpartisan organization that provides similar support to the states. The State Center is establishing the necessary mechanisms for the attorneys general to cooperate with USDA. These mechanisms include an oversight committee to establish the project governance and transparency standards for the partnership, and a project selection advisory committee that will review project requests and recommend approval. USDA is dedicating $15 million for competition-related partnerships, the bulk of which is with the State Center for the Agricultural Competition Partnership to support joint efforts with state Attorneys General. Both committees will be composed of participating state attorney general offices. Additionally, USDA has engaged the American Antitrust Institute to be a resource for the states on this project.
Agriculture groups included American Economic Liberties Project; Campaign for Family Farmers and the Environment; Farm Action; National Association of State Departments of Agriculture; Campaign for Contract Agriculture Reform; National Farmers Union; Organization for Competitive Markets; Rural Advancement Foundation International; Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America; American Farm Bureau Federation; Organic Seed Alliance; U.S. Cattlemen’s Association; National Cattlemen’s Beef Association; Western Organization of Resource Councils; P Street Project; United Food and Commercial Workers International Union (UFCW)
Government participants included Bharat Ramamurti, Deputy Assistant to the President & Deputy Director, National Economic Council; Hannah Garden-Monheit, Special Assistant to the President for Economic Policy, National Economic Council; Alex Jacquez, Special Assistant to the President for Economic Development and Industrial Strategy, National Economic Council; Kelliann Blazek, Special Assistant to the President for Rural & Agriculture Policy, Domestic Policy Council; Will McIntee, Senior Advisor for Public Engagement, White House Office of Public Engagement; Alejandro Molina, Senior Policy Advisor, National Economic Council; Michael Schmidt, Senior Advisor, Office of the Secretary, USDA; Andy Green, Senior Advisor for Fair & Competitive Markets, USDA; and Valerie McMakin, Chief of Staff, USDA Office of Congressional Relations.
