In the closing moments of finalizing its Farm Bill the Senate voted to include a proposed ban to keep packers from owning hogs, cattle and sheep. Poultry is exempt.

The Senate did amend the original proposal, stating that marketing contracts were okay, as long as producers still "materially participated" in the production and marketing of the hogs. That means if you still take some financial risk and if you have to pay taxes on any profits, the contract will be legal, points out John Lawrence, Iowa State University agricultural economist.

Production contracts where packers own hogs, however, look to remain in violation of the proposal. All in all, there's lots of room for interpretation remaining in the provision

The proposed packer ban will be debated in the House/Senate conference committee who will be responsible for drafting the final farm bill. The House Farm Bill proposal includes no such provision on packer livestock ownership. Should the ban make the final Farm Bill cut, it will still have to go to President Bush for approval. There's also the prospect that some of the packers would challenge the legality of the ban.

Whatever the case, this issue is far from over, whether it's included in new the Farm Bill or not.

Many senators see this as a way to halt corporate pork production. Some also see it as a starting point, meaning they want to tackle other institutions, such as banking.

The thing is, such a ban would only limit U.S. pork industry opportunities. It would force some packers to sell production operations and end production contracts. In the end this would result in nothing more than creative purchasing, with production units simply changing hands. It will not end the shift toward large or coordinated production.

It also will temper pork's ability to expand its value-added pork products. Packer directives within marketing contracts concerning such things as genetics, feeding regimens, animal weight and carcass standards have helped narrow product variation. In a time when retail and foodservice outlets are demanding more specific production criteria from their suppliers, this ban could be a step backward.

Producers and packers were just beginning to establish more alliances, as were packers and retailers. The result, while it still had long way to go, was a more coordinated marketing chain.

Ultimately, the packer-ownership ban would make pork less competitive with the consolidated poultry industry, as well as in the pork export market. Consumers, like those in Japan, want product to meet and animals to be raised under certain specifications.

"I don't know that anyone would benefit from eliminating marketing agreements," says Glenn Grimes, University of Missouri agricultural economist. "We can't prove that they have been negative to prices.

"Studies have shown such a ban could range from a slightly positive to a slightly negative effect on live-hog prices," he adds. \