Des Moines Register
11-24-07
Bill revives meatpacker restriction
By PHILIP BRASHER • REGISTER WASHINGTON BUREAU
Washington, D.C. - The last time Congress came close to stopping meatpackers
from fattening their own livestock, the Iowa Pork Producers Association
supported the proposed ban.
Five years later, the Iowa group opposes such a prohibition on packers, fearing it
would upset the marketing arrangements farmers have made with processors.
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Many producers say they like the certainty of raising livestock under contract with
a packer. But promoters of the ban are trying to get it enacted as part of the next
farm bill.
"Our bottom line is that we acknowledge the right of all producers of any size or
type of production to have market access and oppose anything that would hinder
that market access," said Eugene Ver Steeg of Inwood, a past president of the
group.
A provision inserted into the Senate's farm bill would prohibit processors from
owning or controlling livestock supplies within 14 days of slaughter.
The ban's leading proponent in the Senate, Sen. Charles Grassley, R-Ia., has
long argued that packers drive down livestock prices by controlling supplies. But
he said some producers' attitudes on the issue have been changing.
When Congress last considered such a prohibition, as part of the 2002 farm bill,
Iowa had a statewide ban in place. However, a federal judge subsequently ruled
the prohibition unconstitutional, and Iowa Attorney General Tom Miller later
reached agreements with several major pork processors, starting with Smithfield
Foods, to allow them to contract with farms in the state. The Iowa pork
association then reversed its position on the packer ban in 2006, Ver Steeg said.
Grassley said the Senate bill shouldn't affect the marketing contracts farmers
have with packers, but producers have been telling him otherwise.
"These packers may lead these farmers who have these contracts to believe we
are affecting them," he said.
A study commissioned by Congress released earlier this year supported
Grassley's argument that meatpackers' use of contracts and ownership of
livestock reduces the prices farms are paid for their animals.
But the study, conducted by an independent consulting firm, also said that
restricting the way processors buy livestock would drive up retail meat prices
without adding to farmers' bottom lines. Packers would be less efficient and
consumers would buy less meat, the analysts said.
"Simply banning certain activities doesn't mean that you're going to get a better
outcome," said John Lawrence, an Iowa State University economist who
assisted in the study.
Beef production in Iowa continues to be dominated by independent farms and
relatively small feedlots, and the Iowa Cattlemen's Association supports the
proposed restrictions on packers, said Bruce Berven, a spokesman for the group.
The group's members "just feel that packer ownership works to the advantage of
a large commercial feedlot and meatpacker, and we don't have a predominance
of either in Iowa," Berven said.
The ban was ultimately dropped from the 2002 farm bill before the legislation was
sent to President Bush. Prospects for the packer provision are again uncertain
because of opposition in the House and the Bush administration.
Rep. Leonard Boswell, D-Ia., supports the provision and is likely to be one of the
House negotiators who work with senators on the final version of the farm bill.
But the chairman of the House Agriculture Committee, Collin Peterson, D-Minn.,
said that it's unlikely a majority of the House negotiators will support the packer
measure.
The White House has said it "strongly opposes" the provision, arguing that it
would raise consumer prices, unfairly force packers to sell assets and interfere
with the marketing arrangements of producers.
The negotiations with the House won't start until the Senate approves its version
of the farm bill. Democrats and Republicans have been unable to agree on which
amendments to consider, but the Senate is expected to take up the bill again in
December.