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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

Grassley-Fischer Bill Criticized By Both Packers And Producers

05/01/2022

Egg-NewsThe Cattle Price Discovery and Transparency Act (S.4030) motivated by Senator Chuck Grassley (R-IA) was intended to protect producers by achieving greater transparency in marketing live cattle.

 

In hearings on April 27th, the proposed legislation was criticized by both representatives of the meat packers and by livestock producers.  Ethan Lane, Vice President for Government Affairs for the National Cattlemen’s Beef Association (NCBA), stated, “A one-size-fits-all solution such as the government mandate on cattle sales included in S.4030 is not the solution the industry is looking for.”  He added, “What is being proposed right now concentrates on what works for one region and simply doesn’t work for the rest of the country.”  The NCBA is advocating a cattle contract library, 14-day delivery, expedited weighing of carcasses with reporting and incentives to increase regional processing.

 

SEgg-Newshawn Tiffany of the Kansas Livestock Association is opposed to any government mandate since this would result in less incentive for producers to invest in innovative production techniques and genetics that would contribute to meat of higher quality.  He stated, “I do not support a government mandate of any kind, regardless of how well-intentioned the concept of helping producers obtain fair-market value for their animals.”  

 

The North American Meat Institute (NAMI) is opposed to mandates. For the record the hearing received a study conducted by Texas A&M University that the proposed S.4030 would impose an estimate of at least $112 million in additional cost over five years. Projections show that S.4030 would severely impact ranchers in Kansas, Texas and Oklahoma.

 

 Julie Anna Potts, President of NAMI, the attributed high cost of meat at retail to a disparity caused by an increase in demand coinciding with a lower herd. 

 

In a prepared statement and testimony, Donnie King, President and CEO of Tyson Foods attributed the rise in the price of beef to basic supply and demand economics that cannot be “rectified” by mandates and government intervention. These measures in the opinion of the packing sector would only exacerbate existing problems and create new difficulties for both sides of the transaction. King avowed that, “Tyson does not set the prices for either the cattle we buy or the beef our customers purchase.”  Following the advent of COVID, the packing industry was confronted with a major labor shortage.  Plants could not operate at an effective level reducing volume of throughput contributing to an oversupply of live cattle that drove down prices.  Cost inflation, especially in corn and soybeans, has increased the cost of producing cattle, hogs and chickens.  King stressed that there is no evidence that businesses are to blame for escalation in the price of beef.  He quoted Dr. Lawrence Summers, former Treasury Secretary, as noting, “Rising demand with capacity and labor constraints are fully sufficient to account for what we observe in meat packing.”

 

King stressed that industry consolidation with four major producers responsible for 80 percent of cattle processed was not a factor in high prices at the checkout counter. Over the past 30 years with the same level of concentration, there has been considerable fluctuation in profit among both ranchers and packers.

 

Quoting the policies and business practices that are typical in the packing industry, King noted the progressive increase in salaries, health programs, improved educational opportunities and potential for promotion of line workers.  Packers currently directly support more than 11,000 independent farmers and feed-lot operators.

 

So it should be back to the drawing board for Sen. Grassley with the gentle admonition that if it’s not broken don’t try to fix it! Obtaining input from both sides of the issue and studying the economic factors involved before drafting legislation would have been more productive. The ongoing fear is that once legislators have “resolved” the problems in the beef and pork they would roll right on over to fix the chicken industry.


 
Copyright © 2022 Simon M. Shane