Requiring meat packers to reveal private business arrangements with producers is too much intervention in the marketplace, says a longtime American lobbyist.
“This will drastically change the way we do business with producers,” said Chandler Keys, who represents the multinational meat company JBS.
The U.S. Department of Agriculture is proposing changes to the nearly 100-year-old Packers and Stockyards Act that would include revealing private contracts between producers and packers.
The deadline for public comment on the proposals is Aug. 23.
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Past Congresses have defeated proposals to end what is commonly known as captive supply, in which packers own livestock entirely or through special contracts.
JBS has 25 contracts at any given time with producers who request special agreements.
In the past, packers bought large groups of cattle on an average price until some groups proposed value-added contracts to earn more money.
“Under this regulation, for any of these kind of deals, we have to hand the business plans to the USDA and then they would have to OK them,” Keys said Aug. 11 at an international livestock conference held in Calgary.
He said the demand for change in the United States is a political debate between the ideologically opposed National Cattlemen’s Beef Association and R-CALF.
“At the end of the day, packers are still going to be there,” he said.
As a long-time government lobbyist, he decried the lack of knowledge among legislators about what agriculture needs to do to feed the world in the future.
He also said the debates are the result of a disconnect between players in the meat chain who do not know each other. Cow-calf operators need to tour packing plants and retailers need to visit ranches to see the difficulties in raising cattle.
Similar controversy over packer ownership and consolidation exists in Canada.
The market analysis firm Canfax is conducting a market power study that will include domestic facts and figures, said Travis Toews, president of the Canadian Cattlemen’s Association.
“The reality is in Canada there is some different dynamics than there is in the U.S., but we felt it was important to do one from the Canadian side,” he said.
Past studies using mostly American information have found captive supply does not affect cash prices and often rewards producers with quality premiums when they meet certain requirements for branded products.
The National Farmers Union wants the Canadian government to ban captive supply, but these deals are often proposed by producers who are trying to build value chains.
“We have for years really stressed the need for the supply chain to differentiate on quality so there can be true market signals on what is valuable to both the packer and ultimately the retailer and consumer,” Toews said.
“We want that differentiation to continue so that producers are rewarded for providing the product that is demanded.… The minute you start to impede those types of market signals, we are concerned the industry is not going to get the right signals to improve efficiencies.”
