Island, Neb.) – R-CALF USA Beef Checkoff Committee Chair Jim Hanna testified today before a U.S. Senate Agriculture Committee hearing on the upcoming Farm Bill. Hanna, a fifth-generation cow/calf producer from Brownlee, also is a director of the Independent Cattlemen of Nebraska (ICON), an R-CALF-USA affiliate organization.
Hanna commented that government subsidization, rural development, and the like, are secondary to the more pressing problem of the lack of profitability in agriculture today, and that until a business climate is created in which enough income is generated to pay for land, cover the operating debt and overhead, as well as provide a modest profit, young people will never be attracted back to the land, and rural communities will continue to decline.
“U.S. consumers have access to the safest, most diverse and inexpensive food supply in the world; however, they must understand that the cost to produce it is constantly on the rise,” Hanna said. “While it is true that cattle have reached new, but certainly not unreasonable, price levels, it should be noted that…cattle producers are receiving an ever smaller share of each dollar generated by the retail sale of beef.
“With these comments in mind, the following items are critical for inclusion in the 2007 Farm Bill,” Hanna continued. “First, a comprehensive Competition Title must be drafted in order to assure that the more concentrated segments of our industry do not unduly influence the independent business structure that is the hallmark of our farmers and ranchers.”
According to Hanna, this title, at a minimum, should address topics such as:
* Limits on a meat packer's ability to own and control cattle in excess of 14 days prior to
* Prohibiting discriminatory pricing, and enacting reforms that would end unfair practices in
* Before the 2007 Farm Bill is written, the Livestock Mandatory Price Reporting bill, including
Provisions proposed by Sen. Charles Grassley, R-Iowa, and Sen. Tom Harkin, D-Iowa, should
immediately be reauthorized, and recent recommendations by the Government
Accountability Office (GAO) also should be strongly considered.
“Another concern is that a least-cost and logical Mandatory Country-of-Origin Labeling (M-COOL) law remain a part of the Farm Bill package,” Hanna noted. “Recent free trade agreements continue to expose the domestic live cattle industry to greater and greater threats from imports of cattle and beef products. U.S. producers must be given a tool to delineate and differentiate their product.
“Implementation costs can be lowered if processors can distinguish U.S. and foreign cattle entering into production lines,” Hanna explained. “Currently, all cattle from Canada and Mexico are branded for health and safety reasons. Allowing packers to rely on these markings will greatly lower the cost of COOL.
“Immediately removing cattle from the J-List will make such markings of imports permanent, and universal, while cutting the cost for COOL and simplifying animal traceback,” Hanna explained. “We need to recognize that the consumer doesn't have a good concept of what it is they're able to purchase. We're able to apply a USDA grade stamp to product that comes into the U.S., so there's no differentiation. We believe…that given the choice…the consumer will be willing to pay a higher price for those (U.S.) products, in so much so that we firmly believe it's a necessary part of the Farm Bill and something that we're going to continue to pursue aggressively.”
Regarding Livestock Mandatory Price Reporting, Hanna said it is critical to cattle producers that there is transparency in the marketplace because business decisions are dependent on what is happening in the current marketplace. If that information is not available, Hanna said, neither forward contracting, nor the futures markets, operate in a logical manner.
Commenting on forward contracting, Hanna said it is important that the rules be written so that those contracts are handled in a fair manner so that certain entities in the business are not using their leverage to force producers into contracts that, essentially, are not good for a producer's bottom line.
“We need to make sure that we don't confuse that with the idea of forward contracting through the use of futures markets,” Hanna added. “That's a viable thing for our industry, and we need to maintain that ability to access those futures and options contracts.
“We're looking at a situation right now where we have four companies in the beef-packing industry that control over 80 percent of that production,” Hanna continued. “Generally, economists will tell you when you have a four-firm concentration over 40 percent, you need to start scrutinizing those industries very carefully, (and) with the kind of leverage and power they're holding over the rest of the industry, I think it's just critical to the survival of independent small farms and ranches here in the state of Nebraska that we make sure we're being dealt with fairly, that all the transactions are open and available to all producers.”
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R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) is a national, non-profit organization and is dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. R-CALF USA represents thousands of U.S. cattle producers on both domestic and international trade and marketing issues. Members are located across 47 states and are primarily cow/calf operators, cattle backgrounders, and/or feedlot owners. R-CALF USA has more than 60 affiliate organizations and various main-street businesses are associate members. For more information, visit www.r-calfusa.com or, call 406-252-2516.