Last week, the Farmers Pride, a bi-weekly Kentucky agricultural publication, printed an op-ed from CFA board member Hoppy Henton in support of the new GIPSA rule that would protect cattle farmers from the excesses of the big four meatpackers.
GIPSA Rule Would Protect Kentucky Cattle Farmers
Kentucky has a proud tradition of independent, family-scale cattle farmers raising some of the best quality beef cattle found anywhere in the United States. Nearly half of all farmers in Kentucky are cattle farmers and together they raise over a million head of beef cattle annually. That’s more than any other state east of the Mississippi River.
With the decline of tobacco, many farmers doubled up on their beef herds as a means to remain on the farm and to keep their land in agriculture. These farmers are some of the best stewards of the land and their hard work helps preserve the rural character of our landscape that is the envy of the nation.
But all is not well within the beef industry. Nationally, four meatpackers—the Brazilian-owned JBS, Tyson, Cargill and National Beef—buy over 80% of all slaughter-ready beef cattle on the market. As a result, they exert a tremendous amount of power to negatively influence the price ultimately paid to Kentucky cattle farmers.
While the packers do purchase some cattle on the open market, they increasingly purchase cattle from feedlots already under their ownership. This practice, called “captive supply,” usually depresses the price paid to farmers for cattle on the cash market because the packers require fewer cattle to fill their orders since they can just “dip into their own pool,” as it were.
Packers also purchase cattle from ranchers by contract in advance of delivery. Unfortunately, ranchers that enter into some of these agreements with packers cannot compare the terms of their contract to those of other contracts to determine if another rancher received a similar price for a similar quality product as can be done on the open market. It is not uncommon for larger ranchers to be given preferential treatment because of the number of cattle in their lot and for other ranchers to receive a lower price for a smaller lot in spite of providing a premium product.
These practices, brought about by market concentration, cause farmers in Kentucky to lose anywhere from hundreds of dollars to many thousands depending on both the size of their lot and the weight at which they sell their steers.
The big question that Kentucky agricultre needs to ask itself is this: what kind of cattle industry would we like to have in this state? Would Kentucky like to have a cattle industry that is made up of many, independent family farmers who make their own decisions about how to manage their herd, run their farm, and to whom to sell their cattle? Or would we accept an industry comprised of fewer but significantly larger cattle farms where the “farmer” would essentially be an employee of a Brazilian-owned meatpacker?
Thankfully, the USDA’s federal Grain Inspection, Packers and Stockyard Administration (GIPSA), has promulgated rules pursuant under the 2008 Farm Bill in which Congress called on GIPSA to enforce sections of the 1921 Packers and Stockyards Act that protected farmers and consumers alike from the excesses of a similarly concentrated meat market. Put simply, these new rules would promote fair and open markets and create transparency in how contracts are drawn up and traded.
Regrettably, and perhaps at the bidding of the multinational meatpacking industry, several members of Kentucky’s Congressional delegation—Representatives Davis, Rogers and Guthrie—signed onto a letter earlier this month urging GIPSA to scuttle the rule. Now the House Appropriations Committee, chaired by Congressman Hal Rogers from Kentucky’s 6th district, has proposed to eliminate funding for FY 2012 for the USDA to finalize the GIPSA rule. This is in spite of the fact that even the American Farm Bureau Federation sent a letter to the Committee requesting that the USDA be allowed to carry on with the rule-making process.
I urge our Kentucky lawmakers to stand up for the future of Kentucky cattle farmers by supporting fair and open markets as the best and only way to maintain the vitality of an independent cattle industry. We believe that the GIPSA rule is a step in the right direction and we call on our Congressional delegation to support this rule by fully funding the USDA to finish the job.
Chair, Community Farm Alliance (CFA) Farm Policy Committe | Owner/Operator of Henton Farms Inc, Versailles, KY