Posted: Thursday, November 18, 2010 12:00 PM
Nati Harnik/Associated Press
A flock of birds flies over cattle at a feedlot southwest of Omaha, Neb., on Oct. 19. Some ranchers say the market for domestic meat has withered to the point where they often receive only a single reasonable bid.
NCBA leader asks federal economists to further study issue
By TIM HEARDEN
Livestock groups have trotted out competing studies as the deadline approaches to comment on proposed new meat marketing restrictions.
One study by Informa Economics Inc. asserts the planned U.S. Grain Inspection, Packers and Stockyards Administration rule would result in more than 22,800 job losses. The researchers say the rule would cause an annual drop in gross domestic product of as much as $1.56 billion and an annual loss in tax revenues of $359 million.
The study was done on behalf of the National Cattlemen's Beef Association, the National Pork Producers Council, the National Meat Association and the National Turkey Federation.
"This study confirms what we have thought since the rule was first issued in late June, and that it's going to be bad for farmers, bad for consumers," said Dave Warner, spokesman for the National Pork Producers Council. "This puts the actual numbers on how bad."
Meanwhile, the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America, or R-CALF USA, is touting a white paper that calls livestock markets "broken" and suggesting a need for the rule.
The paper -- by Auburn University ag economics professor C. Robert Taylor and Omaha, Neb., antitrust lawyer David A. Domina -- argues that "a common sense country doctor of economy" would see that meat packers and retailers are "healthy, bordering on obesity" but cattlemen are "sickly."
While the return on equity over the last six years has been 21 percent for beef retailers and 17 percent for beef packers, it's been negative 5 percent for producers, noted Bill Bullard, R-CALF's chief executive officer.
"The study shows that as a result of the increased leverage the packers have over the cattle industry, the cattle industry has not been profitable," Bullard said. "And that explains why we are shrinking as an industry even in the face of growing beef consumption."
The studies come on the eve of a Nov. 22 deadline for comments on the GIPSA rule, which would set broad new controls over how animals are bought and sold. Thousands of comments have been received and posted online.
The Informa study follows one commissioned by the American Meat Institute, a meatpackers' advocacy group, contending the new federal rules would cost 104,000 Americans jobs.
That study, released last month by John Dunham and Associates, asserted the GIPSA rule would reduce the national gross domestic product by $14 million.
That study looked at the economy as a whole, while the Informa research focused on the livestock industry, Warner said. Also, while Dunham and Associates assumed a total end to marketing agreements between packers and producers, the Informa study did not, he said.
"We can ... debate the differences in these studies but I think the resounding issue is that this is an economically significant rule," said Colin Woodall, the NCBA's vice president of government affairs.
He said the evidence in the two studies should prompt the U.S. Office of the Chief Economist to do an analysis before GIPSA moves forward with the rule.
Informa Economics GIPSA study: http://nppc.org/uploadedfiles/GipsaReport-Final2,2010-11-09.pdf
Broken Markets, Broke Cattlemen white paper: www.r-calfusa.com/marketing/101104-TaylorDominaBrokenMarketsBrokeCattlemen.pdf