R-CALF USA Responds to Sudden Push to Lock-In Captive Supplies at 70% – Beware of false messengers!

R-CALF USA Responds to Sudden Push to Lock-In Captive Supplies at 70%

To: R-CALF USA Members and Affiliates

From: CEO Bill Bullard

Date: April 16, 2020

Background: There has been a sudden push to convince cattle producers that new congressional legislation should be introduced that will lock in the multinational meatpackers ability to maintain captive supplies at levels as high as 70 percent for the next 5 years or longer.

R-CALF USA has been warning the industry about the anticompetitive effects of captive supplies for two decades, and research we have studied has found that when captive supplies exceed 50% or more, then the fed cattle market can be depressed to the monopsony level and maximum market power can be exerted by the packers.

When the recent proposal to require packers to purchase only 30% in the cash market surfaced, which will lock-in captive supplies at the 70% level, we asked for evidence showing how this proposal can possibly be expected to correct our broken market. We have not received any such evidence.

R-CALF USA already convinced Congress to introduce legislation in January that calls for raising the cash market floor to 50%. It is Senate Bill 3221 (S.3221). The bill will require each packing plant to purchase at least 50% of their cattle needs in the cash market beginning January 1, 2024 (it phases in from 2020 to 2024). It also requires the packers to kill those cash cattle within 7 days. We worked with a broad-based coalition to include this provision.

There are some provisions in S.3221 that R-CALF USA does not support – Sections 101-102. But we wrote the provisions on protecting the cash market, banning packer ownership and control of cattle, and prohibiting packers from purchasing cattle through unpriced formula contracts.

Industry groups should be working with us to improve these three sections of S.3221 that make genuine reforms for our industry and they should be helping us find more Senate sponsors for these specific provisions that we strongly support. We are currently working with Several Senate and House offices to take these already introduced provisions out of S.3221 so they can become stand-alone pieces of legislation. Rather than getting help from other groups in this effort, we are witnessing a push for a much weaker proposal, without any evidence that it will benefit our industry.

When we reviewed the actual sign-on letter for this proposal that is being circulated within our industry, we became even more concerned. Based on the USDA data we reviewed, the sign-on letter misrepresents the current percentages of cash market sales versus captive supply sales. The letter then indicates that the sponsors want to include negotiated grid purchases in the cash purchase requirement, which would effectively lower the proposed cash purchase requirement by about 4 percent. This means the 30% requirement is only a 26% requirement and that would lock-in captive supplies at 74%.

This COVID-19 pandemic is waking America up to the fact that our marketplace is fundamentally broken – it’s now causing harm to consumers. Congress is now looking to us for real solutions, not stop-gap measures that merely tweak the edges of the problem. We will soon have an opportunity to make real structural changes to our broken market system. Also, our class-action antitrust lawsuit, which was filed before the August Tyson fire and before this pandemic, provides us a real opportunity to stop the antitrust and anticompetitive conduct in our industry.

We are perplexed why anyone other than representatives of the packers would push for this new proposal in the face of this COVID-19 pandemic – taking advantage of the fear and uncertainty it has created. We suspect it may be an effort to marginalize the cattle producers’ need to restore a truly functioning marketplace and to lock-in the packers’ advantage when this pandemic is over.

We are also concerned that the same people pushing for this watered-down legislation are also pushing for watered-down country-of-origin labeling (COOL), as they are supporting only voluntary COOL that we already know does not work.

These concerns caused us to research the corporations that are sponsoring the messages on the Feeder Flash program run by Corbitt Wall, who has been pushing this sign-on letter through the Internet.

The following list reveals his corporate sponsors are among the most powerful forces pushing globalization upon our cattle industry, they contribute hundreds of thousands of dollars to the NCBA, and they are partners with the NCBA in its aggressive attempt to consolidate our U.S. cattle industry.

We do not live in a world where the powerful multinational corporate sponsors on this list do not strategically manage the message expressed by those they finance.

Corporate Sponsors of Corbitt Wall’s Feeder Flash:

Y-TEX – See Feeder Flash 3/16: Hysteria. Y-TEX is an eartag manufacturer that gives the NCBA thousands of dollars to be an NCBA Allied Industry Partner. See https://www.ncba.org/alliedindustrymembers.aspx. Y-TEX stands to lose RFID eartag sales because of R-CALF USA’s successful lawsuit that blocked the RFID mandate scheduled for Jan. 1, 2023.

ZoetisSee Feeder Flash 4/7: Signs of Hope. Zoetis is a member of the Canadian Roundtable for Sustainable Beef. See https://crsb.ca/membership/current-members/. It is a member of the Global Roundtable for Sustainable Beef. See https://grsbeef.org/page-1861857. It and the World Wildlife Fund are members of the U.S. Roundtable for Sustainable Beef. See https://www.usrsb.org/Media/USRSB/Docs/2018_annual_report.pdf. Zoetis gave the NCBA a minimum of $100,000 to be a NCBA Gold Level Sponsor Allied Industry Member. See https://www.ncba.org/alliedindustrymembers.aspx. R-CALF USA is the leading opposition to the NCBA and the global roundtable’s efforts to control the live cattle supply chain.

Zactran by Boehringer IngelheimSee Feeder Flash 3/18: People Gotta Eat. Boehringer Ingelheim contributes a minimum of $100,000 to the NCBA to be an NCBA Gold Sponsor Allied Member. See https://www.ncba.org/alliedindustrymembers.aspx. Boehringer Ingelheim is also a member of the Canadian Roundtable for Sustainable Beef. See https://crsb.ca/membership/current-members/. R-CALF USA is the leading opposition to the NCBA and sustainable roundtable’s efforts to control the live cattle supply chain and consolidate the U.S. cattle industry.

International Brangus Breeders AssociationSee Feeder Flash 12/19: Packer Margins Tightening. The International Brangus Breeders Association represents Brangus Breeders in the U.S., Mexico, Australia, Central America, South America, and Africa. See https://gobrangus.com/about/. This association is not known to support mandatory country of origin labeling.

BioZyme VitaFermSee Feeder Flash 2/6: Trump Acquitted. BioZyme gives thousands of dollars to the NCBA to be on the NCBA’s Allied Industry Council. See https://www.ncba.org/alliedindustrymembers.aspx. BioZyme VitaFerm is partners with 44 Farms (see https://vitaferm.com/) and 44 Farms is also a thousands of dollar contributor to the NCBA to be an NCBA Allied Industry Partner. See https://www.ncba.org/alliedindustrymembers.aspx. In addition, 44 Farms has partnered with Walmart to help Walmart begin the process of vertically integrating the U.S. cattle industry. See https://www.dtnpf.com/agriculture/web/ag/news/article/2019/07/01/walmart-44-farms-partner-take-beef. R-CALF USA is the leading opposition to the efforts of the NCBA to consolidate the U.S. cattle industry, which includes the vertical integration model now in place between 44 Farms and Walmart.

So, producers beware! We are going to win lasting improvements to our cattle industry and those improvements won’t come fast enough, but they will come because R-CALF USA will continue standing its ground and fighting until we win.

Action: Please continue making regular calls to you members of Congress at 202-224-3121 urging them to:

  1. Pass legislation to require all beef sold in America to be labeled as to where it was born, raised, and harvested. This will reignite competition and allow American consumers to begin supporting American farmers and ranchers.
  2. Pass legislation to require beef packers to purchase a majority of their cattle needs from the competitive cash market. This will restore our industry’s most important price discovery market.

Thank you for your support. We’ll be in touch.

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R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) is the largest producer-only lobbying and trade association representing U.S. cattle producers. It is a national, nonprofit organization dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. Visit www.r-calfusa.com or, call 406-252-2516 for more information.