Nebraska Unicameral passes LB 176, votes to overturn ban on packers owning hogs
March 17, 2016
LB 176 overturned a portion of Nebraska's Competitive Livestock Act that banned packing houses from owning hogs from gestation to the slaughter house and allows farmers to contract with packers. Nebraska was the last remaining state to carry a ban on meatpackers owning or controlling livestock.
This was the third time Nebraska State Sen. Ken Schilz of Ogallala introduced the bill.
At the end of the 2015 legislative session, LB 176 received hours of debate but went nowhere. The bill was revived this session and was signed by the governor Feb. 11.
"We've lost opportunities to have packers in the state because they cannot do this," said Sen. John Stinner of Gering. "We're the only state that has this restriction on just in-state packers."
“I want my farmers to have opportunities to decide how they want to operate.”
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Sen. Al Davis of Hyannis filibustered the bill each time it came up and worked toward preventing its passage. John Crabtree, media director for the Center for Rural Affairs said Davis has been instrumental in fighting the bill, standing up for the people in his district, small towns and family ranchers.
"We've always believed farmers and ranchers should own livestock," said Brian Depew, executive director of CRA. "When packers can own hogs, the packers have all the opportunity to gain and farmers become paid employees."
Farmers carry all the risk, including putting up the capital and carrying the debt when the packers own the hogs from birth, as proposed in LB 176, Depew said.
Depew grew up in north central Iowa, where packers are allowed to own hogs.
"I saw a transition from hog producers who had 50-100 hogs, to a system of vertically integrated hog producers held captive by producers," Depew said.
Proponents worried that if LB 176 was not passed, packers could sue for the right to be treated equally, costing Nebraska taxpayers, and the packers could close their plants and move across the border, potentially costing the more than 10,000 jobs that the pork industry supports in the state.
Stinner said the law was discriminatory and builds barriers.
"I want my farmers to have opportunities to decide how they want to operate," Stinner said.
LB 176 removed the restriction to allow "care and feed" contracts for in-state packing houses, Stinner said.
"When in care and feed, it de-risks an organization," Stinner said. "It gives you a predictable cash flow."
Stinner, who is also a banker, said if a young farmer walks into a bank, the bank will look at how predictable his business is when judging if the farmer can repay a loan. The bank is more apt to provide that loan if the farmer has a predicable cash flow.
Proponents pointed to the decline of small hog farms over the past two decades, claiming the ban hurt hog production growth. Opponents said Nebraska retained more independent hog farmers because of the ban.
Nebraska Farm Bureau President Steve Nelson said LB 176 creates opportunities for Nebraska producers to expand and grow livestock in the state and keeps Nebraska at a level playing field with the rest of the nation.
"The potential is there for significant economic benefit," Nelson said.
Opponents also cited dangers to Nebraska's water as to why LB 176 should not be passed. Jane Kleeb of Bold Nebraska is worried that, although Nebraska has water protections, state budgets can still get cut.
"Inspectors are among the first to get cut," Kleeb said. "When it comes to contaminations, we think it will never happen to us."
Stinner said he is sure the stringent requirements of the EPA and DEQ will monitor the water supply to try to prevent contamination.
"There is always an opportunity for contamination," Stinner said. "I think we have enough balance in that I think we can grow hogs and grow the industry and keep the water clean."
Depew said water and air quality have suffered in Iowa. The Raccoon River watershed, which the city of Des Moines draws water from, is polluted by nitrates from hog farms, Depew said.
"They have a water quality crisis and they have been tangled in a mess for years about what to do about it," Depew said.
Both sides worry about how LB 176 will affect rural Nebraska. Stinner said out-migration from rural Nebraska is a big challenge. Crabtree wonders if packers own the livestock, what need there will be for farmers and ranchers.
Crabtree said members of the cattle industry that he's heard from have expressed concern they will be next.
"It's only the beginning," Crabtree said. "The clock begins ticking on cattle, too."
LB 176 undermines the open, or spot, market and remaining independent producers who own their hogs are faced with a weak market because it is no longer competitive, Depew said.
"Packers have a number for slaughter every day. They have to go and bid," Depew said. "If packers can hold the supply captive, they don't have to go out and bid on any given day."
Stinner disagrees LB 176 will lead to corporate ownership of Nebraska land and would fight against that if it were to begin to happen.
"The corporations won't come in because the family farmer will continue to own the land," Stinner said.