P.O. Box 6486
Lincoln, NE 68506
Web site: www.competitivemarkets.com
Date: March 18, 2002 For Immediate Release
Contact: Fred Stokes: 662.476.5568
Michael C. Stumo: 860.379.6199
OCM Criticizes New Meat Packer Study
OCM criticized a new report released today by Sparks Companies Inc., a major consultant to the agribusinesses that oppose the packer ownership prohibition in the farm bill. The study parroted erroneous predictions of dire consequences promoted by the meat packer lobby. The only independent report not funded by the meat packer lobby, or anyone else, has found that the packer ownership amendment will improve competition in the livestock industry. That study was co-authored by professors John Connor (Purdue), Roger McEowen (Kansas State), Peter Carstensen (Wisconsin) and Neil Harl (Iowa State) and released last week.
“This new meat packer report is yet another example of the breathtaking misinformation which the meat packer lobbyists are spreading,” said Fred Stokes, president of OCM. “They did not even look to actual and factual history – the packer ownership prohibitions in Nebraska and Iowa. In those states, independent producers own most of the livestock production while meat packing capacity remains steady.”
Sparks consulting receives most revenue from the very agribusinesses which are fighting against the amendment. Further, Sparks is reported to have very favorable contract terms with meat packers in marketing cattle from the large Sparks feedlots. The new meat packer report is rife with incorrect or one-sided opinions, including:
1. It fails to acknowledge the fact that farm gate demand for livestock is reduced when packers process company-owned animals, rather than buying from independent producers, thereby creating downward pressure on cash prices.
2. It fails to acknowledge the risk of packer price manipulation stemming from packer owned or contracted cattle. That risk is not seriously disputed by credible economists.
3. It fails to quantify the economic loss to producers stemming from price manipulation or reduced livestock prices. Most studies show that price suffers in periods where packers are processing company-owned or contracted livestock rather than buying from the marketplace.
4. It fails to acknowledge the economic loss to producers stemming from the certain packer bidding practices which are enabled by packer owned or contracted cattle.
5. It falsely assumes that increased consumer demand comes from packers owning livestock, rather than from product promotion and increased disposable income.
6. It fails to consider the tremendous economic disincentives to packers moving overseas stemming from tariff policy, lack of cheap and abundant feedstuffs, and the prospect of ceding market share to other companies to fill the void.
7. It fails to consider that the predicted negative results have not occurred in states that already have analogous packer feeding prohibitions.
“This new meat packer study shows that Sparks, the National Pork Producers Council, and the National Cattlemen’s Beef Association have irrevocably chosen to go where the money is,” said Michael C. Stumo, OCM general counsel. “Unfortunately, both producers and the facts are the casualties. Their credibility grows less and less in the eyes of farmers and ranchers as they increasingly launder packer claims through their organizations.”
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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