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CATTLE PRODUCERS URGE SENATE, HOUSE AG COMMITTEES TO ADOPT COOL, MARKET COMPETITION REFORMS

Washington, D.C. – R-CALF USA on Wednesday sent a letter to the chairman and ranking members of the Senate Agriculture Committee and the House Agriculture Committee to urge them to encourage the 2007 Farm Bill Conference Committee not only to adopt mandatory country-of-origin labeling (COOL), but also to adopt critical competition reforms to restore the competitiveness of the U.S. cattle industry.

“We appreciate the considerable work that both the House and Senate have expended to move the 2007 Farm Bill forward,” said R-CALF USA President/Region VI Director Max Thornsberry. “Our members are farmers and ranchers who raise and sell cattle, and they have communicated to us in no uncertain terms that Congress must update the antiquated rules that define our U.S. cattle market to ensure the future success of their U.S. cattle industry.

“R-CALF's priorities reflect our members' understanding that the U.S. cattle industry is the last frontier for the concentrated meatpacking industry, as it is the only major livestock sector not vertically integrated from birth to plate,” he continued. “U.S. cattle producers seek to restore market competition by preventing concentrated meatpackers from exerting economic control over their industry, an action that leads to vertical integration and industry contraction.”

Thornsberry wrote that, “The ongoing contraction of U.S. livestock industries is well advanced as evidenced by trends documented by the U.S. Department of Agriculture (USDA)…” USDA documented the following trends that show an alarming contraction of U.S. livestock industries from 1980 to 2005:

•      U.S. sheep and lamb operations declined from 120,000 to 68,000.

•      U.S. hog and pig operations declined from 667,000 to 67,000.

•      U.S. cattle operations declined from 1.6 million to 983,000.

“Unless Congress takes aggressive steps to restore the competitiveness of the U.S. cattle industry, the contraction of our industry will accelerate,” Thornsberry warned. “The opponents of the prohibition on packer ownership are coming unglued – claiming the sky will fall if packers can't continue owning cattle, but that's simply not the case at all.

“The 2007 Farm Bill is the appropriate vehicle to restore competition to the U.S. cattle industry, and the following priorities already contained in one or both versions of the 2007 Farm Bill are needed to accomplish this important objective,” he emphasized.

R-CALF USA's seven priorities are:

1) Adopt House and Senate Mandatory Country-of-Origin Labeling (COOL) Language: Mandatory COOL is needed to allow U.S. cattle producers to maintain the separate identity of their U.S. cattle industry and compete with the growing volumes of imported beef and cattle.

2) Adopt Senate Ban on Packer Ownership of Livestock: This ban would restore market integrity by targeting large packers that use packer-owned livestock to limit producers' market access and depress prices. The ban only prohibits large packers from owning and having day-to-day management control over livestock for more than 14 days before slaughter. The ban exempts small packers and does not interfere with alternative marketing arrangements where the producer maintains ownership and management control of livestock prior to slaughter.

3) Adopt Senate Establishment of Office of Special Council for Agricultural Competition: This measure is needed to ensure proper enforcement of the Packers and Stockyards Act (PSA). In 2006, the USDA Inspector General identified serious enforcement problems regarding the PSA, spanning over a five-year period, which were not corrected by USDA officials. This measure would improve transparency and coordination between USDA and the Department of Justice in carrying out proper enforcement actions to protect independent producers from unfair and deceptive practices.

4) Adopt Senate Authorization for Voluntary Arbitration: This measure is needed to make arbitration of disputes between producers and livestock and poultry companies voluntary, instead of forcing producers to sign binding, mandatory arbitration clauses as part of non-negotiable contracts. Arbitration is prohibitively expensive for producers, and limits their legal rights. Producers should not be denied a choice of whether to arbitrate a dispute.

5) Adopt Senate Requirement to Define “Unreasonable Preference or Advantage”: The USDA has not defined this term under the PSA, though a definition is needed to ensure that packers do not discriminate against producers who market smaller volumes of livestock.

6) Adopt Senate Authorization for State-Inspected Packing Plants to Engage in Interstate Commerce: This measure is needed to allow state-inspected packers to sell meat across state lines, a practice that currently is prohibited under current law. This prohibition inhibits expansion of smaller state-inspected packing plants thus minimizing competition in the packing industry.

7) Remove Senate Language Regarding a National Animal Identification System (NAIS): The Senate included language to facilitate an NAIS even before Congress has determined if it is feasible, let alone needed. This language is premature as it provides tacit justification for a potentially onerous system that Congress has not explicitly authorized. R-CALF USA requests that this language be removed from the 2007 Farm Bill.

“A final 2007 Farm Bill that adopts the foregoing recommendations would greatly enhance the competitiveness of the U.S. cattle industry for independent farmers and ranchers,” Thornsberry asserted. “Specifically, it would ensure that independent U.S. cattle producers' opportunities for profitability are not restrained by the concentrated meatpackers' desire to exert greater control over their industry. We encourage the 2007 Farm Bill Conference Committee to make certain Rural America has the opportunity to flourish through the implementation of these direly needed competition reforms.”

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