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Letter to Senate Ag Committee Outlines 2018 Farm Bill Priorities

Kansas Cattlemen’s Association has signed onto a letter to the members of the Senate Committee on Agriculture, Nutrition, and Forestry. With over 200 other industry organizations signing on, the letter highlights some key priorities for the 2018 Farm Bill. The letter states that U.S. farm income is significantly depressed, with disastrous ripple effects through our rural economy. Since the last Farm Bill debate, these trends have only worsened. Agribusinesses continue to consolidate at a frenzied pace, robbing our farmers of competitive markets for the sale of their products. Foreign and multinational interests continue to expand their control of key U.S. agricultural markets, using their control to extract revenue from U.S. producers to return to their countries of origin. The model of vertical integration and contract production pioneered by large poultry companies continues to expand to other sectors, resulting in loss of farmers’ control over their own farms, increased risk for the farmers who produce under this system, and a downward spiral in viability.

The organizations express that lessons learned from the global financial crisis are a telling sign that bigger is not better. Enforcement of important antitrust, farmer, labor or consumer protections are necessary in preventing further consolidation of the agriculture industry. The letter states that our market economy relies on the long-established role of the federal government to enforce antitrust law, ensuring fair and open competition that promotes a thriving economy, and limiting the control of those markets by a few large entities that destabilizes our economy. To ignore these responsibilities is to imperil our economy and the well-being of our farmers, ranchers, farm and food chain workers, consumers and rural communities.

We further explain that foreign investment in the U.S. agriculture sector is one thing, but the extraction of U.S. resources from our rural communities by foreign agribusinesses, and the increasing control of U.S. farmland and other key aspects of the U.S. food system by foreign entities should raise alarm bells. These trends are becoming increasingly evident in our dairy, beef, poultry, organic, farm input and seed sectors, and cannot be ignored.

The consolidation of the meat packing industry is of serious concern with regard to competition in the industry. The market power of the big 4 enables them to use marketing and pricing strategies that shift economic risks onto the backs of farmers and ranchers. Meatpackers use packer-owned livestock as a major tool to exert unfair market power over farmers and ranchers, freezing independent farmers out of the market and artificially lowering farmgate prices to farmers and ranchers — while consumer food prices continue to rise. Meatpackers also use formula contracts, with no fixed base price, that are prone to manipulation, giving meatpackers unfair market leverage comparable to direct packer ownership. Another livestock procurement tool, marketing agreements that are often negotiated in secret, result in the same market distorting outcome because the packers enjoy unequal information and power.

Our country’s tradition of independent farmers making production and marketing decisions for their own farms is rapidly disappearing. The newer model of vertical integration coerces farmers to surrender that independence to a large integrator company that takes over control of all decisions, and pays the contract farmer for their labor, land, and facilities. History has shown that once farmers relinquish their independence, their pay, contract terms, and overall treatment by the integrator deteriorates. Not surprisingly, when the U.S. Department of Agriculture has attempted to establish basic protections for contract livestock and poultry farmers, the companies who impose and control these contracts have vigorously fought those efforts. We understand why these firms want to protect their own interests by fighting against any federal oversight or scrutiny of their practices, but such oversight is an appropriate federal responsibility, and Congress must not allow unfair, abusive or deceptive integrator behavior to go unchecked.

Market transparency is a basic tenet of a fully functioning market economy. Policies should be enacted to establish open and transparent pricing practices for agricultural products, ensure clear access by farmers to information about production contracting standards used in various agricultural sectors, and set clear labeling standards to give consumers information about the origin and production methods associated with the food they purchase. Congress should reject attempts by agribusinesses to undermine proper market functioning with their arguments against fair, open and transparent markets and labeling.

The full version of the letter may be accessed on the Kansas Cattlemen’s Association website. KCA will continue to work for independent cattle producers during the formation of the 2018 Farm Bill.

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