R-CALF USA to Nebraska senators: defend competition
February 2, 2016
Billings, Mont.- In a letter sent yesterday to Nebraska's unicameral senators, R-CALF USA urged the defeat of a bill that would weaken the state's Competitive Livestock Markets Act. Nebraska's legislative bill, LB 176, would allow Chinese-owned Smithfield Farms and other vertically integrated corporate hog processors to begin owning, controlling and feeding Nebraska hogs from birth to plate.
The group's letter states the bill would "gift to corporate integrators a licensee to destroy market outlets for Nebraska livestock and inflict abusive market power upon Nebraska's independent livestock producers."
In support of its contention, the group cites a U.S. Department of Agriculture (USDA) study that found a statistically significant presence of market power in hog markets dominated by corporate ownership and control. The study found that shifting hogs out of the competitive livestock market and into the hands of corporate ownership or control causes hog prices paid to farmers to decline.
"In economic terms, this market power is also known as abusive monopsony power because it projects market-destroying, monopoly-like effects back through the supply chain rather than forward to consumers," the group states.
The group argues the bill is the antithesis to free market capitalism because it eliminates free markets and creates an entirely new economic risk for independent farmers and ranchers known as market access risk, which it defines as the risk of not having a timely and appropriate market outlet.
"By procuring their hog supply needs through direct- and contract-ownership, Smithfield Farms and other corporate integrators can avoid participating in the free-functioning livestock market. This will effectively destroy timely and appropriate market outlets for Nebraska's remaining independent hog producers because a market without buyers is no market at all," the letter states.
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The group refers to Nebraska as "the last bastion of free markets for livestock producers" and states that even though LB 176 is specific to hogs, there is no doubt that it is a precursor to allowing corporate ownership and control of cattle.
R-CALF USA successfully helped urge Nebraska Senators to defeat LB 176 during last year's legislative session, but it resurfaced again this year and is expected to be brought to a vote on Friday.
"Foreign-owned multinational corporations are trying desperately to capture the U.S. livestock supply chains away from family farmers and ranchers and Nebraska has the unique opportunity to say it won't happen in their state," said R-CALF USA CEO Bill Bullard.
"We urge everyone who supports family farmers and ranchers to contact the Nebraska Unicameral Legislature to urge defeat of LB 176 before Friday," he concluded.