USCA Participates in Competition Workshop Roundtable

Contact: Allan Sents 785/546-2216 - usca@uscattlemen.org

USCA (August 31, 2010) - Cattle feeder and U.S. Cattlemen’s Association (USCA) Director Allan Sents, Marquette, KS, participated in the August 27 joint Department of Justice and Department of Agriculture competition workshop held in Fort Collins, Colorado as a member of a panel discussing marketing issues.

"The workshop drew a large crowd and entailed lively discussion," commented Sents. "This first ever venue between the two departments provided an opportunity for market participants to share their experiences and concerns about the livestock markets. Discussion of marketing issues at this level of government, with this level of sincerity, is long overdue and I commend Secretary Tom Vilsack and Attorney General Eric Holder for undertaking this."

"As a panelist, I was able to share personal experiences encountered over the last thirty-plus years in the feedlot business," said Sents. "For example, we used to have five different packers to sell to from our feed yard; today we have three. Of those three, only two normally participate actively when the trade develops. One of the greatest challenges we face each week is to determine the likelihood of the packers we deal with to be in the market when trade develops. If we sense that likelihood to be low we must consider accessing a 'captive supply' arrangement to ensure moving the cattle or take our chances in the cash trade when it develops. If we wait for the cash trade, our resolve is certainly reduced when we know the packer will likely have limited interest because of a big inventory of captive supplies. We have experienced bullying tactics by the packer, which reinforces the need for a ‘referee’ in the marketplace. GIPSA is that referee and an update of its 89 year-old mandate is needed."

Some workshop speakers highlighted the freedom of producers and packers to make their own “deals.” However, none of them spoke of the effect of denying that freedom to others when their actions limit market access to others. Consolidation in the livestock industry was once driven by economy of scale decisions. However, many now believe consolidation occurs to obtain market power. In fact, the first and still the largest “captive supply” arrangements had and have nothing to do with promoting consumer desired product. Rather, these arrangements secure supply and give the packer leverage in the cash market.

Sents said many of the concerns raised at the workshop are addressed by GIPSA on its web site at http://archive.gipsa.usda.gov/psp/rulefacts.pdf.

"There are a number of misconceptions out there that, frankly, are at times being used to distract the debate," noted Sents. "There are no provisions in the rule that limit or eliminate marketing agreements; there are no provisions that will limit or eliminate the ability of companies to provide premiums to reward producers for providing a certain quantity or quality of livestock. There is nothing in the proposed rule that suggests GIPSA would review all business transactions, nor require that all these transactions be made available on its web site. GIPSA is proposing that packers, swine contractors and live poultry dealers provide sample contracts and growing arrangements to GIPSA. The proposed rule requires the submission of sample contracts, not every transaction. Trade secrets, confidential business information and personally identifiable information submitted would be removed and not made available."

"Many seem to doubt the sincerity of GIPSA regulators to hold to their intentions," continued Sents. "Yet, unlike most other regulatory agencies, these regulators have farm and ranch backgrounds. They have genuine concern for our industry. In addition, they recognize all of their actions will be scrutinized by the courts and legislators alike. What they need instead of blanket acceptance or rejection of their proposed rules is constructive comments to enact meaningful reform to our marketplace."

Established in March 2007, USCA is committed to concentrating its efforts in Washington, DC to enhance and expand the cattle industry’s voice on Capitol Hill. USCA has a full-time presence in Washington, giving cattle producers across the country a strong influence on policy development. For more information go to www.uscattlemen.org.