Falls, Mont.) – R-CALF USA Past President and Co-Founder Leo McDonnell submitted written and oral testimony on Thursday before a U.S. Senate Agriculture Committee field hearing on the upcoming Farm Bill. McDonnell is a cow/calf producer, feedlot owner, and seed stock producer from Columbus, Mont.
McDonnell pointed out that, historically, cattle producers have not asked for price assistance from the government and would like to keep it that way, but in today's business climate, independent cattle producers are facing significant obstacles.
“Barriers to our exports and mismatched import standards have created a large U.S. trade deficit in cattle and beef,” McDonnell said. “Meanwhile, here at home, cattle producers must negotiate in a market that is terribly distorted at times, with increasing concentrations and poor marketing practices. And, we are unable to differentiate our product, even though we are in an increasing global market. Hardly makes sense.”
McDonnell urged the panel to make certain the 2007 Farm Bill gives cattle producers an opportunity to address some of these problems.
“First, the Farm Bill should offer a competition chapter that addresses price-distorting practices such as captive supplies, non-price-negotiated forward contracts, exclusive marketing and purchasing agreements, and maybe even packer ownership,” he said. “Concentration should be revisited, and transparent market information should be a priority. Capitalism comes in many forms. A free and competitive enterprise is a founding value in this country, and it's what's made us the greatest country in the world. Let's not lose it.”
In written testimony, McDonnell also noted that captive-supply practices push risks of price instability on to cattle producers and hold down cattle prices.1 As prices for cattle are artificially depressed and become more volatile, it is cattle producers who pay the price, even when broader demand and supply trends should be increasing returns to producers.
Secondly, McDonnell suggested Congress address the impact of current U.S. trade policy, and because the U.S. Department of Agriculture (USDA) is involved in trade negotiations at this time, the agency needs clearer policy from the industry. McDonnell noted that the U.S. cattle and beef industries had more than a $3 billion trade deficit last year. United States' competitiveness also is undermined by large subsidies and high tariffs on cattle and beef in other countries, while the U.S. market is one of the most open in the world and U.S. cattle producers receive no trade-distorting subsidies. It will also be important that USDA become more engaged in researching how exchange rates play into agricultural trade flows and to become more engaged in monitoring the manipulation of exchange rates.
McDonnell explained that the U.S. has special rules for perishable and cyclical agriculture products passed through Trade Promotion Authority (TPA) and signed into law, yet USDA held back on getting that information submitted in the Doha round of negotiations. When the agency did submit that information, McDonnell said, cattle and beef were left out. He described the global beef market as the most distorted market and suggested that Congress look at the possibility of tax write-offs, capital gains breaks, or estate tax relief until these distortions are addressed.
McDonnell also noted that while the U.S. has struggled to negotiate even limited access for U.S. cattle and beef exports to foreign markets, the domestic market has been thrown open to a much broader range of imports from abroad. The Farm Bill should direct USDA to engage with other countries to upwardly harmonize global import standards for beef.
Third on McDonnell's list of priorities was Country-of-Origin Labeling (COOL), which became law when Congress passed the 2002 Farm Bill.
“We put together one of the largest coalitions in the history of this
country and passed Country-of-Origin Labeling. It was signed into law, and
that needs to be honored,” McDonnell emphasized. “We have three
of our extended family over in Iraq and Afghanistan, fighting for democracy
over there. We need to honor the ones here.
“We look forward to your
help,” McDonnell concluded. “Both
Senator Baucus and Senator Burns have been champions for COOL, and stay in
there for us. As we found out in the fish rules, it’s not all that bad.”
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,