AMI President J. Patrick Boyle
today told the House Committee on Agriculture,
Subcommittee on Livestock, Dairy, and Poultry
that the U.S. meat packing industry is dynamic
and competitive and that the industry will
oppose legislative and regulatory efforts to
restrict livestock marketing and packing
procurement opportunities that have helped grow
the industry and provided consumers the most
affordable meat supply in the world.
“We believe the strength of the
livestock marketing system in the U.S. is the
flexibility it provides to producers,
packers/processors and retailers in responding
to market signals and offering an increasing
variety of alternatives for the producer
through to the consumer,” Boyle said.
According to Boyle, producer options
include: spot market transactions, production
contracts, cooperatives, bargaining
associations, marketing agreements, and other
options that allow them to align themselves
with consumer demands through contractual
arrangements to manage risk and produce a
desired product.
“These measures aid a
livestock producer’s ability to manage price
and weather risks, access credit, and
participate in valued-added, branded product
lines. Within the last decade, we have
witnessed significant sales growth in branded
beef and pork products and the corresponding
response to market signals by producers to
increase production,” Boyle said. “We
believe that the most appropriate government
role in today's livestock marketing system is
to enforce the existing laws and regulations
that ensure fair and nondiscriminatory business
practices among producers and packers, while
allowing producers the freedom of choice on how
best to market their livestock.”
Boyle told committee members that the
many marketing options provide producers the
ability to diversify or concentrate their
livestock marketing plan to best match their
skills, experiences, capital base, or tolerance
of weather and price risks. One of the more
common reasons producers and packers enter
arrangements is to manage price risks to aid in
the access of credit and capital, he said.
“Producers and packers recognize that
managing this volatility is critical to their
long-term economic well-being and livelihood.
This is true across agriculture, where more
than 40 percent of all agricultural goods are
produced via contracts or related
agreements,” he said.
Consumers also
have benefited from more products that meet
their needs and values as well as price
competitiveness from improved efficiencies,
Boyle said. According to the Bureau of Labor
and Statistics, an item such as ground beef
has, on average, since 1984 consistently lagged
behind the larger consumer price index
increases, thereby, consistently improving the
value returned to consumers for their food
dollar relative to all other expenditures.
Further, the amount of income that consumers
spend on all meat and poultry products has
shrunk to less than two percent of
income.
“Attempts to limit packers’
and producers’ abilities to engage in
contracts, marketing agreements, and strategic
mergers reduce capacity to respond to consumers
and pursue economic, social, and environmental
goals in rural America,” he said.
Two
recently released studies – both mandated by
Congress – affirm AMI’s assessment of the
competitive and rational nature of the
livestock and meat market, as well as the
resulting benefits to American
consumers.
In February, the Agriculture
Department released a “Livestock and Meat
Marketing Study.” It was conducted in
cooperation with the Department of Justice, the
Federal Trade Commission and the Commodity
Futures Trading Commission. This four year,
$4.5 million analysis, now complete, is the
most comprehensive and far reaching study that
has ever been conducted on livestock and meat
marketing. On the beef complex alone,
transaction data was secured from the 29
largest beef packing plants and the report
focused on the sales of 58 million cattle in
590,000 business transactions.
The
report found that contractual, marketing
arrangements between livestock producers and
meat packers increase the economic efficiency
of the cattle, hog, and lamb markets, and that
these economic benefits are distributed to
consumers, as well as to producers and packers.
Conversely, the study concluded that
restrictions on the use of these contractual
arrangements would have negative economic
effects on livestock producers, meat packers,
and consumers.
A second multi-year,
Congressionally-mandated report from the
bipartisan Antitrust Modernization Commission
was released earlier this month. It concludes
that “government should not displace free
market competition absent extensive careful
analysis and strong evidence that a market
failure requires the regulation of prices,
costs, and entry in place of competition.”
“These are but two recent studies, in
a long line of similar studies over the past
twenty years that have reached the same
conclusions about the legality and vibrancy of
the livestock marketing system,” Boyle
concluded. “And they have all – every one
of them, without exception – reached the same
conclusions as the two studies I have cited in
my testimony: That the livestock and
meatpacking market is competitive and that
current oversight and enforcement are
effective.”
American Meat Institute Says Government Data and Economic Analyses Show Meat Packing Industry Is Dynamic, Competitive
Tuesday, April 17, 2007
For more information
contact:
Dave Ray Vice President, Public Affairs 202-587-4243 dray@meatinstitute.org |
Janet Riley Sr. Vice President, Public Affairs 202-587-4245 jriley@meatinstitute.org |

