May 15, 2007

South Dakota's congress to seek rigid antitrust laws for meat markets

The congress of South Dakota will push for tougher antitrust laws and legislation intended to reduce concentration on meat markets over the merging of what is deemed as the biggest joint agriculture joint venture of the year. 

Smithfield Foods completed an US$800 million purchase of Premium Standard Farms last week, an agreement that put forth the US' biggest hog producers together and giving Smithfield control of more than a fourth of the nation's swine market.

With Smithfield having big influence on the hog market, pundits claim it will be able to suppress competition, command lower prices for independent hog producers and increase prices for pork consumers.

Representative Stephanie Herseth Sandlin, D-S.D., is seeking to approve a House bill to require livestock marketing agreements - often called forward contracts - to have a firm base price. The bill would also require meatpackers to bid publicly to help farmers ensure getting the best prices for their livestock.

Karen Englehart, a rancher from Bison, said the bill will mot eliminate forward contracts but just to make transparent the marketing of livestock and ensure level playing field for hog producers who cannot pass the high cost of production to consumers.

Englehart and other critics maintain that forward contracts allow large meatpackers such as Smithfield to set up hog sales at fixed prices well ahead of the date that producers intend to deliver their livestock for slaughter. Critics say meatpackers insist on set prices or turn away livestock, leaving farmers to accept poor prices or no sale at all.