OCM Disappointed with Packer Disinformation Campaign

The Organization for Competitive Markets (OCM) expressed disappointment today with the packer disinformation campaign aimed at gutting the recently passed ban on packer feeding.  The packer feeding ban was approved by the full Senate on December 13, 2001 as part of the Farm Bill.  It prohibits packers from owning, feeding or controlling livestock with exemptions for cooperatives and packers with less than 2% of the national slaughter.  The following are some myths presented by the packer lobby.

Myth # 1:  This bill would prohibit forward contracting and marketing agreements.

Reality:  The bill does not prohibit forward contracting and marketing agreements.  The terms "own, feed or control" merely prevent packers from owning livestock outright or from engaging in substantial operational control of livestock production in a manner that is not technically ownership.  The term "control" in the bill is simply an attempt to prevent
clever corporate lawyers from undoing Congressional intent through a loophole.

For example, under the law of the State of Iowa, packers cannot own, control or operate a feeding operation.  Forward contracting and marketing agreements are permitted because the producer has not ceded ownership or control to a packer.  Rather, the producer merely has a contractual obligation to deliver the end product, i.e. the livestock subject to the contract, to a particular packer.

Myth #2:  This bill would prohibit packers from entering joint ventures with  farm cooperatives for the purpose of operating packing plants where the cooperative members supply the animals.

Reality:  The bill does not prohibit the packer/cooperative joint ventures to operate packing plants because the packing plant will not own or control the livestock production.  If the joint venture entity owns the packing plant, producer members of the cooperative merely commit to delivering their livestock to the plant through a contract and/or through a cooperative membership agreement.  The joint venture packing plant does not own the livestock before slaughter, nor does the plant exercise significant operational control over livestock production, except for defining product
specifications.  The joint venture packing plant simply has the contractual right to receive livestock produced by cooperative members.

Myth #3:  Livestock prices will go down because packers will need to have a "fire sale" on all their livestock.

Reality:  No fire sale is necessary because the bill includes a transition period in which packers can slaughter all livestock on feed without placing them on the open market.  They will not be required to sell live animals. They will merely need to halt the purchasing of new packer owned livestock for future slaughter.

Thus, the packer feeding bill is a sensible method to bring competition to the agricultural marketplace, minimize self dealing by packers, fostering independent family agriculture, and eliminating the market dysfunction caused by packer owned livestock.

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.