P.O. Box 6486
Lincoln, NE 68506
Web site: www.competitivemarkets.com
Date: March 13, 2002 For Immediate Release
Contact: Fred Stokes: 662.476.5568
Michael C. Stumo: 860.379.6199
OCM Praises Legal and Economic Report Supporting Packer Ownership Bill
OCM praised a report released today by four university law professors and economists from four different land grant universities in favor of the packer feeding ban. The report documented the lack of competition due to concentration in the livestock processing sector. Co-authors of the report include John Connor, ag economist from Purdue, Roger McEowen, an agricultural law professor in the Kansas State University ag economics department; Peter Carstensen, an antitrust law professor at the University of Wisconsin; and Neil E. Harl, a lawyer and ag economist at Iowa State University.
The report documented the motive and opportunity for meat packers to manipulate the increasingly thin cash markets in hogs and cattle. “The motive is undeniable because any exercise of market power results in decreased procurement prices for packers in both hogs and cattle,” the authors wrote.
“This study not only shows that the packer ownership legislation is a necessary first step to bringing competition back to the livestock markets,” said Fred Stokes, OCM president, “it illustrates how easy and attractive price manipulation is when packers have company owned and contracted livestock.”
The packer ownership legislation was introduced by a bi-partisan group of Senators on the Senate side and is now contained in the Senate version of the farm bill. A bi-partisan group of Representatives from the House have introduced two similar bills. House ag committee chairman Larry Combest and ranking member Charles Stenholm have announced their opposition to this legislation despite strong producer support. Press reports today state that Combest has received $238,000 from business interests, most with an interest in agriculture policy, in the last 14 months.
Despite this clarification, the packer lobby – including the American Meat Institute and the National Cattleman’s Beef Association – said that the report just adds confusion so we must study it more. Unfortunately, the packer lobby contributed to this so-called “confusion” in that eight university ag economists, most or all of whom have received packer money in the past but failed to disclose it in their report, wrote an opinion article containing outrageous claims of harm that are not supported by any data. This new report was written by university scholars who have received no money from either side in the debate.
Additionally, today’s legal and economic analysis contains a direct rebuttal – in point, counterpoint form – to the unsubstantiated and overblown meat packer claims of harm. The authors point out that the packing industry is one of the most studied industries of the 20th Century. “Thus, a lack of hearings claim is not a persuasive reason to refrain from legislating in this area.”
The full text of the report will be available soon on the OCM website under “What’s New.”
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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