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R-Calf Presses Claims That Packers are Depressing Domestic Cattle Prices

By Oklahoma Farm Report

R-CALF USA CEO Bill Bullard recently met with Grain Inspection, Packers and Stockyards Administration (GIPSA) Administrator J. Dudley Butler to communicate the R-CALF USA Marketing Committee’s request that immediate steps be taken to halt the meatpackers’ use of captive supply cattle to depress domestic cattle prices.

R-CALF USA provided numerous examples of various packer purchasing practices that need to be investigated. Such practices include:

* packers accumulating increased numbers of packer-owned cattle, which has resulted in fewer cattle in the fed cattle market, particularly now that JBS S.A. was allowed to purchase the largest U.S. feedlot company;

* packers paying some large feeders the full market price for low quality cattle while imposing significant quality discounts on independent feeders;

* packers gaming the loophole in the country-of-origin labeling (COOL) law to prevent an increase in demand for USA born-and-raised cattle;

* packers working in concert with retailers to keep beef prices high and consumption low so the market cannot properly respond to the current short supply of cattle with higher cattle prices;

* and, packers shifting large numbers of cattle from the cash market to formula contracts and then establishing a base price for all the formula contracts on the very small percentage of fed cattle sold in the cash market.

“R-CALF USA believes the U.S. cattle industry likely has lost thousands more independent feeders in 2009 due to horrendous financial losses, and that these losses will mean considerably less competition for feeder cattle sold by U.S. cow/calf producers in 2010,” said Bullard.

“We are requesting that GIPSA take immediate action to halt the packers’ anticompetitive use of packer-owned cattle, formula cattle contracts and other captive supply schemes, and we specifically asked for a moratorium on the packer practice of removing cattle from the competitive marketplace without establishing a price,” he emphasized.

“If immediate steps are not taken to end captive supply use, including packer-owned cattle, we will soon lose the cattle industry as we know it,” said R-CALF USA Marketing Committee Chair Dennis Thornsberry. “There is a real urgency behind our request due to the horrendous losses already experienced by U.S. cattle feeders in 2007, 2008 and 2009.”

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