“Coordination and even vertical integration between manufacturers and their suppliers is driven largely by consumer demand for consistent product quality at the lowest possible price,” AMI President and CEO J. Patrick Boyle noted. “This is the way business is done today – and the meat industry is no exception.”
Although the packer ban was defeated when proposed as an amendment to the 2002 Farm Bill, the issue has attracted renewed attention for Members of Congress in both houses. In its testimony AMI detailed its rationale for opposing a measure that would undermine the many benefits both industry and consumers have enjoyed as a result of both packer control of livestock, as well as the cooperative agreements between producers, feeders and packers responsible for positive changes in product quality.
AMI argued that the industry’s transactions with its producer-suppliers are already heavily regulated.
“There is no other sector of the U.S. manufacturing or service economy in which the federal government plays such a watchdog role regarding raw material suppliers as it does with meat packing,” said Boyle said. “Yet, ironically, despite daily government oversight of our business transactions with livestock producers, we have to debate whether meat packers should receive additional scrutiny, enforcement or business restrictions in order to protect or benefit livestock producers.”
Boyle noted that the meat industry’s business practices are governed nationally by the Sherman Act, the Clayton Act, the Robinson-Patman Act, the Agricultural Marketing Act and the Uniform Commercial Code, as well as the Packers and Stockyards Act that prohibits packers from engaging in unfair or deceptive business practices that disadvantage livestock suppliers.
Among the benefits of packer ownership and control of livestock are the following:
- Exponential growth in meat exports to meet the “robust global appetite for U.S. meat and poultry products.”
- Improved communications throughout the meat chain among retailers, packers and producers, resulting in clear signals from consumers back to producers, so they can deliver the type of livestock yielding the meat products most in demand.
- Increased coordination among all segments to improve herd management and optimize livestock delivery, essential components in producing a leaner, more competitive product.
- Increased use of contracting and creative risk management plans to reduce the volatility inherent to farming and ranching for livestock producers.
- Contracting options, marketing agreements and other arrangements that allow younger producers access the capital necessary to enter the livestock production business.
“Over the last three decades, Americans have benefited from increasing meat industry efficiency that has made meat more affordable, abundant, convenient and varied. Each year, consumers spend less of their disposable income on meat and poultry. Today, that number stands at 1.9 percent, compared to 4.1 percent in 1970. This is a trend of which we are proud – and one that provides consumers a distinct benefit. We should not rush to undo the foundations of this success without understanding the ramifications for everyone involved,” said Boyle.
AMI represents the interests of packers and processors of beef, pork, lamb, veal and turkey products and their suppliers throughout North America. Together, AMI's members produce 95 percent of the beef, pork, lamb and veal products and 70 percent of the turkey products in the U.S. Headquartered in Washington, DC, the Institute provides legislative, regulatory, public relations, technical, scientific and educational services to the industry. Its affiliate, the AMI Foundation, is a separate 501(c)3 organization that conducts research, education and information projects for the industry.