Competitive livestock markets and a transparent agricultural marketplace are vital to sustaining the livelihoods of U.S. farmers and ranchers, American Farm Bureau Federation officials told Congress today. 

“Consolidation and concentration within the agricultural sector could have adverse economic impacts on U.S. farmers and ranchers,” said AFBF President Bob Stallman in testimony presented to a subcommittee of the House Agriculture Committee. “It is important that markets be accessible to all producers and that they offer competitive prices.”

The landscape has changed tremendously for crop and livestock producers in recent decades, both in terms of input costs and in how they market their finished livestock, grain and fiber, according to AFBF.

Stallman cited trends that illustrate this, including the share of steer and heifer slaughter for the four largest beef packers increasing from 36 percent to 80 percent from 1980 to 2004 and the share of hog slaughter for the four largest packers increasing from 32 percent to 64 percent from 1985 to 2004. He also noted that four companies currently control 50 percent of the market for broilers, while the three largest soybean processors control more than 70 percent of that market.

The potential impact of increased use of alternative marketing arrangements (AMAs) on cash cattle and hog markets also concerns AFBF members. According to a recent report commissioned by the Grain Inspection Packers and Stockyards Administration, AMAs are associated with lower cash market prices, with a much larger effect for finished hogs compared to fed cattle.

Stallman urged the subcommittee to consider enhancing USDA’s oversight of the Packers and Stockyards Act, through the establishment of an Office of Special Counsel for Competition with a designated agricultural counsel.

“USDA, in conjunction with the Department of Justice, should closely investigate all mergers, ownership changes or other trends in the meat packing industry for actions that limit the availability of a competitive market for livestock producers,” Stallman said.

Regarding poultry meat and eggs, AFBF supports amending the PSA to increase USDA’s authority to enforce current marketing regulations, with the goal of ensuring breeder hen and pullet operations are treated the same as broiler operations.

In addition, AFBF supports prohibiting confidentiality clauses in producer contracts and establishment of GIPSA as the overall authority on livestock contracts. AFBFalso supports new legislation that would prohibit mandatory arbitration.

“Producers should not be required to submit to arbitration and give up their rights to seek remedy in court to resolve disputes with companies,” Stallman said.

AFBF also expressed support for several other livestock issues to the subcommittee, including approval of interstate shipping of meat and poultry products, voluntary country-of-origin labeling, and the establishment of a voluntary national animal identification system for animal disease control and eradication.

Source: American Farm Bureau Federation