Meatpackers cite outdated studies in attack on Grassley’s Ban on Packer Ownership Legislation
May 13, 2016
Billings, Mont. – According to R-CALF USA, Barry Carpenter, President and CEO of the packers' largest international trade association, the North American Meat Institute (NAMI), cited outdated studies in his attack against Senator Charles Grassley's (R-Iowa) legislation to ban packer ownership of livestock.
"Mr. Carpenter's claim that packers must own and feed their own cattle to maintain an effective and efficient marketplace is baseless, deceptive and self-serving," said R-CALF USA CEO Bill Bullard.
Bullard said Carpenter is wrong to rely on the outdated, 2007 Research Triangle Institute's (RTI's) Livestock and Meat Marketing Study to assert that the cattle market is dynamic and competitive and that Grassley's ban would hurt U.S. cattle producers.
"The sweeping changes that occurred in our cattle markets since 2007 render the RTI study inapplicable in today's marketplace," said Bullard adding, "The study was done when packers purchased the majority of their cattle (61.7 percent) in the price-discovering cash market and only 38.3 percent through non-cash arrangements, including packer-owned cattle."
“The sweeping changes that occurred in our cattle markets since 2007 render the RTI study inapplicable in today’s marketplace.” Bill Bullard, R-CALF USA CEO
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According to the U.S. Department of Agriculture (USDA), the volume of cattle purchased by packers in the price-discovering cash market fell to only 21.3 percent nationally and 2.6 percent in the Texas, Oklahoma and New Mexico fed cattle market by 2015. Conversely, the volume of cattle procured by packer-owned and other non-cash arrangements skyrocketed by 2015, jumping to 78.7 percent nationally and 97.4 percent in the regional market.
"The RTI assumptions regarding how packers procure cattle have literally been turned on their head since 2007 due to the radical changes the packers have caused in our fed cattle market," Bullard added.
Bullard explained that packers have significantly restricted access to the market since 2007 by closing no fewer than nine packing plants that were located across the United States. He said nearly 70 percent of U.S. cattle feedlots ceased operations between 2007 and 2015, which he said is not surprising given that cattle feeders suffered an average monthly loss of about $51 per head for cattle sold to the packers during that entire period.
"It is absurd for Mr. Carpenter's group to pretend that cattle markets are functioning properly," Bullard said adding, "Just last year fed cattle prices fell farther and faster than at any time in history and domestic beef production fell to a 20-year low while consumers continued paying near record prices for beef.
"Our cattle markets are seriously broken and Senator Grassley's long-needed legislation to ban the largest packers from owning and feeding their own cattle will provide immediate relief from the abusive control that packers are exerting in our markets," he concluded.