Officials from both the American Meat Institute and National Farmers Union spoke to the Senate Committee on Agriculture in a hearing regarding packer ownership of livestock on Tuesday, July 16. Not surprisingly, the two groups delivered a different message to the committee.

J. Patrick Boyle, AMI president, says the group will oppose any effort to restrict meatpackers who comply with existing antitrust and fair business practice laws from sourcing their raw materials in any way. Boyle adds that it is unfair to make it illegal for the meat industry to compete effectively for the consumer’s dollar with the vertically integrated poultry industry and many other vertically integrated industries.

In addition to federal antitrust laws, like the Sherman and Clayton Acts, meatpackers also are subject to the Packers and Stockyards Act, a statute unique to the meat industry. “To my knowledge, there is no other sector of the U.S. manufacturing or service economy in which government plays such a watchdog role with respect to raw material suppliers,” says Boyle.

Boyle told lawmakers that the meatpacking industry has increased coordination with livestock producers and moved toward owning some livestock. Boyle says this has all been done to ensure that meat products meet consumer expectations. As a result of such strategic alliances, packers sell beef that is 27 percent leaner today than it was in the 1980s and pork that is 31 percent leaner than it was in the 1980s, says Boyle. Coordination and vertical integration also have created beef and pork products that are convenient, consistent and offer value-added features such as marinades and sauces, says Boyle.

Farmers Union member Nolan Jungclaus from Lake Lillian, Minn., also testified before the committee hearing, saying that concentration in the livestock industry, especially meatpackers who own and feed their own livestock, is “sucking the lifeblood out of rural communities.”

“A study will do nothing for family farmers while allowing the packers the opportunity to control the rest of the hog industry and an increasing share of the beef industry until there is nothing left for the American farmer except raising the owner’s livestock for them on contract,” says Jungclaus.

Paul Jackson, an Oklahoma stocker cattle producer and NFU member, told the committee that meatpackers, which already control up to 80 percent of the processing, have been able to undercut market competition by owning cattle and staying out of the cash market for extended periods of time.

In addition to the ban on packer ownership, Jackson says Congress must modernize the Packers and Stockyards Act. “The Packers and Stockyards Act is over 80 years old and we don’t market in the same way as we did in the 1920s,” says Jackson.

Sources: American Meat Institute, National Farmers Union