Meat + Poultry - February 2010 - 16

Washington
BY BERNARD SHIRE
meatpoultry@sosland.com

Is competition
disappearing?
It's a story based on old accusations.
Some agricultural producers say increasing concentration in the meat
and poultry processing industry, resulting in fewer and larger companies,
as well as other changes in the agricultural marketplace, results in less
competition. This hurts the ability
of producers to receive fair prices for
their animals and to stay in business
and succeed, they say.
But does the meat and poultry
industry operate in a way making it
harder for animal producers to get
a fair price for their animals, especially as a result of fewer and bigger
meat packers and poultry processors
slaughtering and processing most of
the animals sold to them by livestock
producers and poultry growers?

The American Meat
Institute says anti-trust
and competition laws
existing right now
work well for industry
as a whole
The U.S. Department of Justice and
the U.S. Department of Agriculture
want to find out. In fact, both federal
agencies want to explore competition
and regulation in the entire American
agriculture industry, not just the meat
and poultry processing side of it. The
agencies are holding a series of hearings in cities around the U.S., beginning in March and extending through
the end of this year.
Federal officials will be looking at issues including concentration in the meat
industry, vertical integration and "buyer
power" by packers and processors putting animal producers at a disadvantage.
The hearings and workshops will take a

look at prices paid to producers, production contracts in the poultry industry,
including the agreements and payments
poultry-processing companies set up
with their growers. An examination of
discrepancies between prices received
by farmers and those paid by consumers will also be on the table.

Seeking input
The DOJ and USDA have asked various parties, including the agriculture
industry, to react to its proposal. The
American Meat Institute, which represents the large players in the industry, says anti-trust and competition
laws existing right now work well for
industry as a whole. Additional or
special laws pertaining only to the
meat industry are not needed, it adds.
Others disagree. R-CALF USA,
made up of independent cattle producers, told DOJ and USDA there is
new evidence of beef-industry action
to reduce competition even further,
with beef packers and concentrated
feedlots eliminating competition in
the American fed-cattle market. It
described an agreement between
Hitch Enterprises and National Beef
Packing Co. to limit access to the fedcattle market for independent cattle
feeders, with Hitch selling cattle from
its three feed yards only to National.
In contrast, larger producer groups
like the National Cattlemen's Beef Association, don't have the same concerns
about increasing concentration. NCBA
wants a free-market system to continue,
with a relatively unregulated domestic
and international marketplace. It does
not want the government to have the
authority to set prices or manipulate
domestic supply and demand. But federal regulators should have the ability
to prevent anti-trust, collusion, price-

16 * Meat&Poultry * February 2010 * www.MeatPoultry.com

fixing and other activities that could
damage cattle markets, it says.
In an interview with Meat&Poultry
magazine, AMI's Mark Dopp, the association's senior vice president for
regulatory affairs and general counsel, cites the meat industry as one of
the most regulated in the American
economy, with regulation and oversight actually increasing over the past
20 years as a response to new safety
issues coming up, including E. coli
O157:H7 in beef and Listeria monocytogenes in ready-to-eat products.
"There is no doubt FSIS foodsafety policies, especially with respect to E. coli O157:H7, have led to
consolidation of the meat industry,"
Dopp says.
Dopp also told DOJ and USDA
the growing scientific knowledge
base leading to evolving food-safety
policies and a much safer food supply has contributed to a more concentrated food industry. In other instances, he says, cattle slaughter and
processing companies have merged
to enhance their chances of surviving in the case of E. coli recalls.
"We're certainly not saying food
safety is a bad idea; we petitioned
the government for HACCP," Dopp
points out. "But efficiencies in how the
industry operates have resulted, and
that's just one of many reasons for consolidation. Look at the consolidations,
with Taylor selling to Cargill, Moyer
selling to Smithfield, to name a few."

Harder time competing
Dopp says a smaller meat and poultry industry, with fewer scientific resources and less scientific expertise,
has a harder time competing with the
industry giants in an increasingly science-based regulatory system, levied
by a federal inspection agency making
more and more demands on plants,
leading to more buyouts and greater
industry concentration.
He also says expectations on the
part of retailers and the consumers
buying from them, including changing
consumer demand and the changing

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Meat + Poultry - February 2010

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