Corporate Farming Notes: Provision requires USDA establish regulations defining “unreasonable preference or advantage”
There were not a lot of highlights in the 2008 farm bill. But one was a provision that requires USDA to write regulations that define an “unreasonable preference or advantage” under the Packers and Stockyards Act. The Act prohibits the kind of “sweetheart deals” that packers give large, industrial livestock operations. But USDA has never effectively enforced the law.
In October the Packers and Stockyards Administration held three listening sessions regarding this farm bill provision – in Arkansas, Iowa and Georgia. I attended the session in Ames, Iowa, and provided input for the Center.
First and foremost it is necessary for USDA to understand the impact of volume-based discounts on family farm livestock producers. For example, I pointed out that a family farmer with a 150 sow farrow-to-finish operation receiving a volume discount of 6 cents per pound would lose more than $56,000 annually just because he is small. Little wonder the big, industrial operations often win out. To read more about what we have to say, go to www.cfra.org/competition.
A November GAO report identified 2,700 so-called “farmers” who made over $2.5 million annually and received farm program payments totaling $49 million between 2003 and 2006. The report detailed hundreds of thousands of dollars going to insurance and financial service company executives, professional basketball franchise owners, and nine recipients who reside outside the United States, including residents of Hong Kong and Saudi Arabia.
Pilgrim’s Pride, the nation’s largest chicken producer, filed for Chapter 11 bankruptcy protection on December 1. The Pittsburg, Texas, poultry integrator has struggled with its debt, which dramatically increased after acquiring rival poultry integrator Gold Kist in 2007. A Texas court approved the company’s petition to access $365 million in financing. Pilgrim’s Pride says that financing, plus cash receipts, will allow them to meet their business obligations.
I would add that those “business obligations” had best include payments to their growers and that this situation is further evidence that mergers in the meatpacking and poultry processing sectors are not always good for business. We already know these mergers are rarely good for producers.
Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 for more information.
In October the Packers and Stockyards Administration held three listening sessions regarding this farm bill provision – in Arkansas, Iowa and Georgia. I attended the session in Ames, Iowa, and provided input for the Center.
First and foremost it is necessary for USDA to understand the impact of volume-based discounts on family farm livestock producers. For example, I pointed out that a family farmer with a 150 sow farrow-to-finish operation receiving a volume discount of 6 cents per pound would lose more than $56,000 annually just because he is small. Little wonder the big, industrial operations often win out. To read more about what we have to say, go to www.cfra.org/competition.
A November GAO report identified 2,700 so-called “farmers” who made over $2.5 million annually and received farm program payments totaling $49 million between 2003 and 2006. The report detailed hundreds of thousands of dollars going to insurance and financial service company executives, professional basketball franchise owners, and nine recipients who reside outside the United States, including residents of Hong Kong and Saudi Arabia.
Pilgrim’s Pride, the nation’s largest chicken producer, filed for Chapter 11 bankruptcy protection on December 1. The Pittsburg, Texas, poultry integrator has struggled with its debt, which dramatically increased after acquiring rival poultry integrator Gold Kist in 2007. A Texas court approved the company’s petition to access $365 million in financing. Pilgrim’s Pride says that financing, plus cash receipts, will allow them to meet their business obligations.
I would add that those “business obligations” had best include payments to their growers and that this situation is further evidence that mergers in the meatpacking and poultry processing sectors are not always good for business. We already know these mergers are rarely good for producers.
Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 for more information.
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