ORGANIZATION FOR COMPETITIVE MARKETS

P.O. Box 6486

Lincoln, NE 68506

Web site: www.competitivemarkets.com

Date: December 14, 2001 For Immediate Release

Contact: Fred Stokes: 662-476-5568

Michael C. Stumo: 860-379-6199

OCM Hails Senate Vote for Competition and Against Packer Ownership

The Organization for Competitive Markets (OCM) hailed the Senate vote yesterday passing a ban on packer ownership. “Farmers and ranchers have been working a long time to increase market competition at the farm gate level by prohibiting packer ownership,” said Fred Stokes, president of OCM. “In the past, too many members of the Senate Agriculture Committee only did the bidding of agribusiness. However, yesterday’s vote on the Senate floor proved that democracy can prevail.”

The packer ownership ban amendment to the farm bill was sponsored by Senators Johnson (SD), Grassley (IA), Wellstone (MN), Harkin (IA), Thomas (WY) and Dorgan (ND). It prohibits meat packers from owning cattle, swine or sheep more than 14 days before slaughter. However, it exempts all cooperatives as well as all producer owned plants with less than two percent of the national slaughter.

“Packer ownership and control of livestock has been disrupting markets and hampering competition at the farm gate level for years,” said Keith Mudd, vice president of OCM. “This amendment is a major first step towards correcting the problem. Meat packers will now have less opportunity for self dealing and giving preference to their own supplies. Rather, they will have to go out on the market and compete for livestock.”

Packer ownership of livestock is a major part of the larger problem of captive supplies. Captive supplies are all livestock that are controlled by packers through ownership of contracts. These supplies allow packers to tremendously increase their market power by pulling out of the market at will to depress prices while still keeping their plants full. They are thus insulated from the rigors of supply and demand.

“The Holy Grail for packers and processors is to withdraw from and eliminate the open market. Market discipline at the farm gate level is the major impediment for their increasing control and market power,” said Michael Stumo, OCM general counsel. “By passing the packer ownership ban, the Senate is saying that they want the livestock markets to function properly without undue influence and with the ability for independent farmers to access those markets.”

The Organization for Competitive Markets is a multidisciplinary, nonprofit group of farmers, ranchers, academics, attorneys, and policy makers dedicated to reclaiming the agricultural marketplace for independent farmers, ranchers and rural communities.

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