Testimony Presented to U.S. House Agriculture Subcommittee

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John Crabtree, johnc@cfra.org, (402) 687-2103 ext 1010
Lyons, Nebraska On April 17, 2007 in Washington D.C, Development and Outreach Officer for the Center for Rural Affairs, John Crabtree will testify on competition and concentration issues within the livestock industry to the U.S. House Agriculture Subcommittee on Livestock, Dairy and Poultry.
“If we hope to create a farm bill that can be held up as a solution to some of the challenges that family farmers, ranchers and rural communities face, then we should all support a federal ban on packer ownership of livestock and a comprehensive competition title in the farm bill,” commented Crabtree.

Currently, a handful of corporations dominate the American food system. The concentration of market control in the top four firms in U.S. food retailing, grain processing, red meat processing, poultry processing, milk processing and nearly every category of food processing has reached unprecedented levels.

Moreover, the rapid trend toward vertical integration further exacerbates the horizontal concentration in packing, processing and production. As the livestock sector has become increasingly concentrated and integrated, packers and processors increasingly control production at all stages.

In many rural places where livestock are raised there are only a few, or even just one, packer or processor for a given livestock species. This is especially true in the livestock and poultry sectors. At the same time there has been a dramatic increase in the use of production and marketing contracts that further diminish the bargaining power of farmers and ranchers. Currently, fully 89% of hogs are either owned outright by packers or tightly controlled through various contracting devices. Many farmers and ranchers face price discrimination and severely limited market access as a result.

USDA has demonstrated a nearly complete inability to enforce the Packers and Stockyards Act and other livestock market competition laws. The audit of the Packers and Stockyards Administration performed by USDA's Office of Inspector General that was released in February 2006 revealed that the Packers and Stockyards Administration has utterly failed to enforce the very law that gives the agency a reason to exist.

Repeated calls for competition reforms from farmers and ranchers as well as the National Commission on Small Farms, General Accounting Office, and Inspector General have fallen on deaf ears at USDA.

That is why Congress must act to define the rules of livestock market competition and provide clear direction for USDA’s enforcement. Congress should not let another farm bill go by without making changes in the Packers and Stockyards Act and Agricultural Fair Practices Act that are necessary to breathe some life and competition back into livestock markets.

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