Meat CEOs defend themselves at House Ag hearing

The CEOs of the four major meat packing companies today defended their business practices during a House Agriculture Committee hearing titled An Examination of Price Discrepancies, Transparency, and Alleged Unfair Practices in Cattle Markets.

The four CEOs – David MacLennan of Cargill, Tim Schellpeper of JBS USA Holdings Inc., Tim Klein of National Beef Packing Co. LLC and Donnie King of Tyson Foods – all said that larger economic and market forces have been responsible for the ups and downs of the cattle markets.

The hearing was called due to complaints from some ranchers that concentration in the meat industry and anticompetitive practices have made it difficult for them to make a living and led to a decline in the number of ranchers in recent years.

House Agriculture Committee Chairman David Scott, D-Ga., went back and forth with the CEOs, both welcoming them and telling them the only way to resolve the problems in the cattle sector is to find a solution that involves both the ranchers and the meatpackers and asking tough questions.

Scott asked all four if they had ever cooperated together on issues impacting supply or pricing.

To the question of collusion, all four meatpacking executives said no.

Scott noted that he had studied anticompetitive behavior at the Wharton School of Finance at the University of Pennsylvania and said that the companies’ success in recent years had raised questions about collusion on both sides of the aisle.

Scott, who had also sworn in the witnesses, added, “I wanted to get that out of the way and make sure you had answered under oath.

The meatpackers all said they were pleased by the invitation to testify, but Rep. Glenn Thompson, R-Pa., said in an opening statement that he had been told the hearing would be held “as letters were sent to the packer CEOs, and the threat of subpoenas began to fly.”

“That’s just not the way this committee should conduct its business,” Thompson added.

Some members of the committee veered far from the meat issue when they had the opportunity to question the four CEOs. (See following story.)

Before the CEOs testified, most members of a panel of ranchers testified that government intervention in the markets is needed, but Don Schiefelbein, a Minnesota cattle producer who is president of the National Cattlemen’s Beef Association, urged the committee members to support key policies with broad, unified support across the entire cattle industry including a cattle contract library, Livestock Mandatory Reporting (LMR) reauthorization, and investments in small regional processing capacity expansion.

Scott said that both the House and the Senate need to write legislation to help the ranchers. The hearing did not focus on any particular bills, but Sen. Chuck Grassley, R-Iowa, who has written a bill with other senators that would require government intervention to assure cash markets for cattle as opposed to other marketing methods, attended the House session with the CEOs.

Scott also noted that Sen. Deb Fischer, R-Neb., had said at a Senate Agriculture Committee hearing Tuesday that Nebraska ranchers declined to testify because they feared retribution from others in the cattle business and that such intimidation should be investigated.

The hearing lasted a total of five hours and was divided into two periods.

–The Hagstrom Report

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