April 23, 2007

Livestock producers summon US lawmakers for help

A group of livestock producers and agricultural experts have asked the US Senate committee to create legislative action aimed to reduce market concentration in the meat and poultry markets, stating the dominance of large livestock firms has led to lower prices for smaller producers and prohibited a number of outlets where small farmers can sell their cattle or chickens.

The group, testifying before the Senate Agriculture Committee, said the conglomerates should reveal within mandated limits on the real amount of livestock they can own and demanded there should be more market pricing information as well as reduction of forward contracts between meat packers and livestock producers.

Livestock owners contend that the contracts affect the cash flow because large packing companies already arranged fixed prices on cattle and hog sales prices long before the slaughter date. According to them, packers use their financial gain to turn away cattle, forcing farmers to take the sale at all costs.

Peter Carstensen, a law professor at the University of Wisconsin who specializes in agricultural markets, told the committee hearing that it is essential that the next farm bill should address the problem of "creating and maintaining fair, transparent, accessible and efficient markets".

Cartensen said the changing characteristics of those markets are "steadily eroding the capacity of the American farmer to get the benefit of workable competition."

Carstensen and several senators on the committee discussed the recently published, US$4.3 million study commissioned by the Agriculture Department which revealed allegations of price fixing and market concentration in the livestock industry. The study found that alternative marketing arrangements, such as forward contracts, worked in favour of both the meat packers and livestock producers.

Tim Schmidt, a hog farmer from Sioux County, Iowa, disagreed. He said that such contracts mean that he and his farming partners now sell their usual lot of 80 hogs a week to just one company, compared with 10 years ago when they had offers from several packing companies.