Cattle Producer Calls for Better Enforcement of Antitrust Laws

Article excerpt

Enforcing existing federal antitrust laws would go a long way toward stemming the lack of competitive marketing in the cattle industry, lawmakers were told Monday.

Bob Drake, co-owner and operator of Drake Farms, said that only four packing firms control about 81.4 percent of cattle killed.

Equally troublesome, he said, some of these same mega-companies control sizable portions of the hog, poultry and/or grain markets.

It would appear that mandatory price reporting would ease the situation somewhat, Drake said, but due to how these regulations are written only about 52 of 700 packagers must report their prices.

Drake said giants such as ConAgra and Cargill, which are also large grain companies, and IBP, about to merge with Tyson Foods, a large poultry concern, are almost "food clusters," or multi-market segments, on their own.

Drake said the IBP/Tyson merger, awaiting a Securities and Exchange Commission inquiry, will result in the nation's largest chicken producer and beef packer in one, worth about $23 billion.

The merger has already been cleared by the U.S. Justice Department. The Springdale, Ark.-based company on Monday said the waiting period for federal regulatory review had expired without any further action by the Department of Justice.

"I'll leave it to you," said Drake. "Do we have (market) concentration?"

"This is very ticklish," Drake said of the competition issue. "It definitely causes you to take sides."

Drake said that farms and ranches at the midlevel are hurt the most by the existing situation. He said that operations small enough to allow the owner to work outside the farm survive because the producer does not depend solely upon them for a livelihood.

At the other end of the spectrum, he said those above 750-800 head of cattle can make it due to sheer economies of scale.

"We're losing the middle," Drake said. "It's like taking the nerves out of our nation."

Conceding that there can be arguments about what constitutes a middle-sized cattle operation, Drake said one thing is clear.

"In between is a very dangerous area," Drake said. "It's that middle that I identify as family farms that we are losing."

Drake quoted former Clinton administration agriculture secretary Dan Glickman as recently testifying before Congress about market concentration in the agriculture industry.

"Where in blazes has he been the last six years?" he asked.

Decades ago, Drake said, the government broke up several meatpacking concerns when they constituted 60 percent of the market. Now that it is closer to 81.4 percent, he said, the government has been saying there is no concentration.

"I'm not against big, if big is fair," Drake said.

He also believes that the United States should balance the trade tables that make it easy for Brazil to export its soy products, and Argentina to export its beef, but make it so difficult for American producers to do the same.

"Fair and free trade -- you've got to have them together," Drake said.

Although there are some steps that can only be taken federally, Drake said that legislation such as a "country of origin" would help Oklahoma producers. Such a measure has yet to make it through both houses of the Legislature.

Drake also suggested that the Legislature pass measures urging Congress to see that antitrust laws are enforced.

State agriculture Secretary Dennis Howard said that the amount farmers receive out of what consumers spend for food have not risen appreciably in more than 10 years. In fact, according to historical data on food marketing and price spreads from the U.S. Department of Agriculture, the actual percentage farm-value share has fallen from 37 percent in 1954 to about 20 percent in 1999. …