ACTION ALERT:
Fight Corporate Concentration in the Livestock Industry

Act Now to Ban Packer Ownership of Livestock & Support Other
Competition Reforms in the 2007 Farm Bill

4/24/07
The Land Stewardship Project’s members are advancing a 2007 Farm Bill platform to promote family farm agriculture and environmental stewardship.  One of our priorities is increasing fairness and decreasing concentration in the livestock industry.  Giant corporate meatpackers like Smithfield Foods—which owns 1.2 million sows for example—continue to expand their control over U.S. hog production and processing with little or no reaction from USDA or Congress. Meanwhile, independent livestock producers are forced out of business because of increasing corporate consolidation and loss of markets. 

The Competition Title needs to be reformed and strengthened to limit corporate control of the livestock industry, increase antitrust enforcement and help level the playing field for independent livestock producers. The proposed reforms include a ban on packer ownership of livestock, mandatory Country of Origin Labeling (COOL) and increased enforcement and strengthening of the Packers and Stockyards Act (PSA). For more details on these reforms, see the background material below.

RECENT NEWS
On Wednesday, April 18, Senator Tom Harkin (D-IA) Chairman of the Senate Agriculture Committee, convened a hearing on livestock and competition issues.  Senator Harkin has been a strong leader on competition issues and Minnesota U.S. Senators Amy Klobuchar and Norm Coleman should follow his lead.  Both senators serve on the Ag Committee and represent thousands of Minnesota livestock producers.

Senators Coleman and Klobuchar need to hear from you today.  Corporate and commodity group lobbyists are telling the Ag Committee everything is fine, and no changes are needed. The first step towards increased fairness in the livestock industry is to pass these needed reforms out of the Ag Committee, and we need your help to do it.  Please take a minute today to call your senators with the brief message outlined below.  If you have any questions, please call the Land Stewardship Project office at 612-722-6377.

Contact MN U.S. Senators:
Amy Klobuchar at (202) 224-3244    Norm Coleman at (202)-224-5641

Here is the basic message:
It’s critical the 2007 Farm Bill increases fairness and decrease concentration in the livestock industry.  As my Senator and a member of the Agriculture Committee I want you to support a ban on packer ownership of livestock, full implementation of Country of Origin Labeling (COOL) and increased enforcement and strengthening of the Packers and Stockyards Act.  Will you support these measures? 

When you call, tell whoever answers the telephone you want to leave a message for the Senator. Ask them to write down your note and make sure to say who you are and where you’re from.  We know it’s a busy time of year, but if you can make two quick calls and urge Minnesota U.S. Senators to support a strong, comprehensive Competition Title in the Farm Bill it will make a big difference in moving this effort forward.

Background Information

Today, a small handful of corporations dominate our food supply. The concentration of market control in the top four firms in U.S. food retailing, grain processing, red meat processing and nearly every category of food manufacturing is at an all time high (see http://www.nfu.org/news/2007/04/16/nfu-study-shows-ag-market-concentration-increasing.html for a recent report on this issue). Corporate mergers and buyouts have concentrated the power of these firms and increased their ability to unfairly manipulate markets in their favor while at the same time putting family farmers out of business.  

Making it worse is the rapid trend toward vertical integration. Meatpackers like Smithfield Foods, for example, increasingly control all stages of production through direct ownership of hogs.  This corporate structure of production leaves family farm livestock at a competitive disadvantage.  In addition, inadequate federal legislation and the lack of enforcement of antitrust policies has allowed a handful of corporations to continue to consolidate power, manipulate prices and create anti-competitive markets. It is time for Congress to act and adopt reforms that increase and ensure fairness in the livestock sector and increase choices for consumers.

To address these problems, farmers and consumers need a, comprehensive Competition Title in the 2007 Farm Bill that includes some of the items below:

• Prohibition on Packer-Owned Livestock: Passed in the U.S. Senate in 2002 but stripped out in conference committee, a ban on packer ownership has been re-introduced by Senator Charles Grassley (R-IA) as Senate File 305. Meatpackers such as Tyson, Cargill and Smithfield Foods use packer-owned livestock as a major tool for exerting unfair market power over farmers and ranchers. This practice fosters industrial livestock production and freezes independent farmers out of the markets. Packer-owned livestock has been proven to artificially lower farm gate prices to farmers and ranchers while consumer food prices continue to rise. By prohibiting direct ownership of livestock by major meatpackers, a packer ban addresses a significant percentage of the problem of captive supply which packers use to manipulate markets, and would help increase market access for America's independent producers who currently experience great restrictions in market access due in part to packer ownership of livestock.

• Clarification of "Undue Preferences" in the Packers & Stockyards Act (PSA): Packers commonly make unjustified, preferential deals that provide unfair economic advantages to large-scale agriculture production over family farms.  Legislative language is needed in the Packers and Stockyards Act (PSA) to strengthen the law and clarify that preferential pricing structures (those that provide different prices to different producers) are justified only for real differences in product value or actual and quantifiable differences in acquisition and transaction costs.  Specifically, we are asking to:
(a) Make clear that farmers damaged by the unfair and deceptive practices of packers/processors need not prove "harm to competition to the industry" in order to win their case.
(b) Make clear that "pro-competitive effects" or "legitimate business justifications" are not recognized packer legal defenses, and not necessary for farmer-plaintiffs to prove the absence of, in a court case under the PSA.
(c) Require courts to award attorney’s fees to successful producer plaintiffs under the PSA.

• Mandatory Country of Origin Labeling: The Country of origin labeling (COOL) for beef, lamb, fresh fruits, fish and shellfish was passed as a provision of the 2002 Farm Bill but never fully implemented. Mandatory COOL for the fish and shellfish commodities was implemented by USDA in April 2005, but the meatpackers and retailers have successfully stymied COOL implementation for all other commodities. Country of origin labeling is a popular measure that allows consumers to determine where their food is produced and also enables U.S. producers to showcase their products for quality and safety. It also limits the ability of global food companies to source farm products from other countries and pass them off as U.S. in origin. Congress should reauthorize COOL to reiterate its benefits to producers and consumers and should provide funding to ensure that USDA undertakes immediate implementation of COOL.

For more information, contact LSP’s Adam Warthesen at 612-722-6377 or adamw@landstewardshipproject.org.