Sen. Chuck Grassley (R-IA) has introduced legislation to ban packer ownership of livestock after seeing continued consolidation within the livestock industry.
“An effective and efficient marketplace is one where packers that control all harvest capacity of the industry do not also own a majority of the animals to be processed,” Grassley said. “The fact of the matter is that the market continues to become less competitive. It’s time to see if ending packer ownership of livestock will reverse that trend.”
Over the last several years, large companies have joined forces to create new business giants in every sector of the economy, including agriculture. Tyson has purchased Hillshire Brands and JBS purchased Cargill pork. Smithfield, by far the largest pork producer in the world, was sold to the Chinese. And, in the beef industry, packing plants have closed in West Texas and Denison, Iowa, which further concentrated power in that industry.
This means independent producers are seeing fewer choices of who to buy from and who to sell to. More and more family farmers and independent producers are feeling the pressure and impact of concentration in agriculture.
Grassley’s bill contains four exceptions to the ban for:
- an arrangement entered into within seven days (excluding any Saturday or Sunday) before slaughter of the livestock by a packer, a person acting through the packer, or a person who directly or indirectly controls, or is controlled by or under common control with, the packer;
- a cooperative or entity owned by a cooperative, if a majority of the ownership interest in the cooperative is held by active cooperative members who own, feed or control livestock; and provide the livestock to the cooperative for slaughter;
- a packer that is not subject to mandatory price reporting laws; or
- a packer that owns one livestock processing plant.
Grassley introduced similar versions of the packer ban in previous Congress sessions. He has long-standing concerns about concentration in agriculture and the impact on the family farmer.
Meat industry opposes
The North American Meat Institute reiterated its position after Grassley again introduced legislation previously considered and rejected that would make it illegal for vertically integrated companies to raise and process livestock and that could also make marketing agreements between packers and producers illegal. The Meat Institute affirmed its longstanding opposition to efforts to prohibit a meat packing company’s ability to own livestock and a producer’s ability to choose to forward contract with packers.
A Congressionally mandated and USDA-Grain Inspection Packers and Stockyards Administration-funded Research Triangle Institute Livestock and Meat Marketing Study analyzed the issue when similar efforts to ban packer ownership of livestock were under consideration. That report concluded that such a ban would not cause livestock prices to increase and would harm producers for a variety of reasons. The report also found the U.S. livestock and meat marketing complex to be dynamic and competitive.
“We share Sen. Grassley’s desire for an ‘effective and efficient marketplace’ and that is exactly what dozens of studies affirm we have,” said Meat Institute President and CEO Barry Carpenter. “Dismantling our dynamic livestock and meat production and marketing system will only turn the clock back on progress and hurt producers, packers and the consuming public in the process.”