April 20, 2007

US producers call for laws to stop consolidation in meat industry
 

A group of livestock producers and agricultural experts urged a Senate committee Wednesday for legislation to reduce market concentration in the meat and poultry markets.

In the US, five companies -- Tyson Foods, Cargill Meat Solutions, Swift & Co., National Beef and Smithfield -- make up more than 80 percent of the meat-packing industry.

The group said the dominance of large companies has led to lower prices for smaller producers and restricted the number of outlets for farmers to sell their produce.

The group, testifying before the Senate Agriculture Committee, wants limits on the amount of livestock big companies can own, more market pricing information and a reduction of forward contracts between meat packers and livestock producers.

Those contracts hurt the cash market as it became a means packing companies use to force farmers to sell at low prices, the group said.

In the group was Peter Carstensen, a law professor at the University of Wisconsin who specializes in agricultural markets. He said it is essential that the next farm bill address ensures fair competition for the American farmer.

Carstensen and several senators on the committee disagreed with a study commissioned by the Agriculture Department which found that alternative marketing arrangements, such as forward contracts, worked in favor of both the meat packers and livestock producers.

Hog farmers said that nowadays, they could only sell their hogs to just one company, compared to 10 years ago when there were competing bids which drove prices higher.

However, John Queen president of the National Cattlemen's Beef Association supported the study, saying that forward contracting allows producers to make a price that allows them to be profitable.

The assurance of a buyer at a fixed price makes it easier for farmers to manage their business and focus on operational improvements, he added.