Should packers control livestock?

WASHINGTON – Sen. Tom Harkin, D-Iowa, recently joined a bipartisan group of senators in introducing legislation that would make it unlawful for a packer to own, feed, or control livestock, either through a subsidiary or an arrangement that gives the packer operational, managerial, or supervisory control prior to seven days before slaughter.
Harkin is chairman of the Committee on Agriculture, Nutrition and Forestry.
Dysfunctional. “The livestock marketing system will become dysfunctional if the industry becomes overly-vertically integrated,” Harkin said.
“We need some federal limits to how far packing and processing firms can go in controlling all phases of the livestock production and processing industry.”
Harkin was instrumental in including a ban on packer ownership in the Senate version of the 2002 farm bill.
However, leaders from the House of Representatives flatly refused to consider accepting the packer ownership ban during farm bill conference negotiations.
Packers owning or controlling livestock from growing to finishing to slaughter has increased steadily in the last 15 years and has undermined opportunities for independent livestock producers.
The top four packers in the United States directly own roughly 10 percent of fed cattle.
Deadlines. Of the various pricing arrangements used by the hog industry, over 20 percent of hogs are packer owned.
Hog packers would have 18 months to divest their direct ownership of hogs and packers of all other livestock would need to divest their ownership of livestock in 180 days.
The increasing vertical integration will make including a ban on packer ownership even more challenging than in 2002.
This legislation would not prohibit pricing methods involving contracts.