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Heading toward the last Roundup (Tuesday, Sept. 10, 2002 -- CropChoice news) -- This information comes from the AGRIBUSINESS EXAMINER, http://www.ea1.com/CARP/
COMMENTARY:
HEADING TOWARD THE LAST ROUNDUP
>From time to time a reader will voice their concern that the
AGRIBUSINESS EXAMINER devotes too much space to cattle and meat.
Unfortunately, in voicing such concerns one misses seeing the forest for
the trees.
No sector of our agriculture and food system has become more visible as
the proverbial tip of the corporate agribusiness iceberg than the
nation's cattle and meat packing industry and we ignore the lessons it
provides us at our own peril.
As one can see in the accompanying articles, issues such as:
Therefore, whether one is a grain or produce farmer, whether one eats
meat or not, whether one is an organic devotee or not, serious attention
must be paid to what is taking place in the cattle and meat packing
industry because what we see currently taking place in this vital sector
of our food system is like a cancer that unless immediately addressed,
treated and stopped will soon spread with fatal results --- throughout
our nation and the world --- unchecked.
GFI AMERICAN, INC.:
NINE TIMES COMPANY MIXES FRESH MEAT
SENT TO HOTELS AND RESTAURANTS IN 20 STATES
WITH 18-MONTH OLD CONTAMINATED MEAT
DAVID MIGOYA, DENVER POST: Federal investigators want to know how a
Minnesota company nine times mixed fresh meat with 18-month-old
contaminated beef planned for pet food, then shipped it to hotels and
restaurants in Colorado and 19 other states. And why it took a month to
catch the error.
Colorado health officials learned only last week that some of the meat
made it to the state five days after GFI American in Minneapolis and the
U.S. Department of Agriculture recalled 717,000 pounds of meat products
that might contain potentially lethal E. coli bacteria.
Health officials do not know who in Colorado got the meat because
federal law prevents the USDA from disclosing that information.
The August 22 recall is the 73rd announced by the USDA this year, and
consumer safety groups say it raises additional questions about how the
agency protects the public from contaminated meat.
"Clearly this shows the lack of USDA standards for ensuring contaminated
meat is disposed properly," said Caroline Smith-DeWaal, food safety
director at the Center for Science in the Public Interest in Washington,
D.C. "If tainted meat is hanging around a freezer for a long time, it's
bound to show up in the food supply somehow. The USDA has to develop a
method to ensure mistakes like this one don't happen."
For now, GFI will say only that it was "inadvertent" that tainted meat
stored in a freezer was mixed with fresh beef on nine days in June and
July.
The 18-month-old tainted meat was miscoded on the company's computer
system, GFI vice president Joe Goldberger said. The problem was
discovered in August during a company audit of its inventory several
weeks after the meat had been shipped to customers.
USDA regulations require contaminated meat to be segregated from edible
products. Meat found to have E. coli must be labeled properly, and the
USDA is supposed to ensure that it is destroyed or cooked so that the
pathogen is killed. The recall affects a variety of raw products, such
as Salisbury and veal steaks, and beef patties.
The USDA is partly responsible for monitoring what happens to tainted
meat, so department investigators want to know how its inspectors, and
GFI, lost track of this batch.
Also unclear is why GFI kept the meat so long after tests showed it
contained the pathogen. "I'm sure that is one of the key questions to
answer," USDA spokesman Steven Cohen said.
Goldberger of GFI refused to say how much contaminated meat was used, or
how much had been sitting in a freezer since early 2001. He said the
company regularly tests its products for E. coli and found none on the
days the recalled meat was produced. No illnesses have been reported
from the recalled meat.
Goldberger said the company had been "actively involved" in seeking a
pet food company to buy the tainted meat. "Family members and the
families of our employees are proud of our safety record and safely eat
our products every day," Goldberger said. "In 26 years, we have never
had a confirmed illness attributed to any of our products."
The recalled meat was sold to institutions such as hospitals, prisons,
hotels and restaurants, the USDA's Cohen said, refusing to elaborate.
Federal law allows the USDA to withhold information on where meat was
sent --- it's considered a company trade secret --- even if consumers
demand to know.
State health officials said they don't know which Colorado companies
received the meat, or which consumers might be at risk, because the USDA
won't tell them. And it took the USDA five days to tell the state that
much. That happened last Tuesday.
"All we know is it was shipped to two or three firms in Colorado," said
Patti Klocker, the Colorado Department of Public Health and
Environment's assistant director of consumer protection. A new USDA law
allows states to learn where recalled products are shipped --- but only
if state health officials agree not to disclose it publicly.
Colorado, however, cannot get the list because the state's open-records
law would require it to be made public if anyone asked, The Denver Post
reported last month. "This shows the USDA can't make the transition to
being a public health agency," said Carol Tucker Foreman, director of
the Food Policy Institute at Consumer Federation of America in
Washington, D.C. "They think first of not inconveniencing companies and
not letting product go to waste."
Problems with the nation's recall system were magnified in July during a
massive recall by ConAgra Beef Co. in Greeley. The USDA for two weeks
sat on news that the company's meat was suspect for E. coli
contamination. The resulting recall became the second largest in U.S.
history.
The USDA kept secret the names of companies that sold the tainted meat,
preventing consumers from learning whether they had any of the product
in their freezers. Forty-seven people were sickened and one died after
they were infected with the same E. coli found in the meat. ConAgra
eventually gave the list to state health departments that asked for it.
"It's very troubling that the USDA delays in alerting state public
health officials that they have recalled product," said Smith-DeWaal of
the Center for Science in the Public Interest. "The USDA relies on
companies to voluntarily disclose this information, and we're seeing
over and over how that just isn't working."
FROM VICIOUS CIRCLES:THE MAFIA AND THE MARKETPLACE BY JONATHAN KWITNY
(W.W. Norton & Co,:1979) (Pages 311-312)
"Anyone who was in the Armed Forces in the late 1940s and who thought
the food wasn't very good, or who was bothered by stomach trouble, would
be interested in Sam Goldberger. Goldberger's American Packing Corp, had
a major contract in those years to supply meat to the Army, not only for
its own troops but also for the Navy supply depot in Newport, Rhode
Island, and Pennington and Norfolk, Virginia. In 1952, Goldberger was
sentenced to three years in prison (he served 14 months) for swindling
the government out of a fortune by bribing Army inspectors to approve
millions of pounds of meat far inferior to contract specifications.
There was also meat in `unsanitary and unsound condition,' charges said.
At the trial, one meat inspector testified that Goldberger `told me in
the boning room that it would be worth my while to play ball with them
--- that's just the words he used.' A former employee testified that
`there was some meat there that smelled awful bad' and that two nearly
successful attempts were made to kill him after he had agreed to talk to
the FBI. There was evidence that 280 veal sides the Army had rejected
because of their `defrosted, unsanitary, and unsound condition' were
simply reshipped, passed (or overlooked) by friendlier inspectors, and
wound up on the mess tables at Fort Bragg, North Carolina."
FROM FAST FOOD NATION:THE DARK SIDE OF THE ALL-AMERICAN MEAL BY ERIC
SCHLOSSER (HarperCollins:2002) (Pages 162-163)
"The real costs of this migrant industrial workforce are being borne not
by the large meatpacking firms, but by the nation's meatpacking
communities. Poor workers without health insurance drive up local
medical costs. Drug dealers prey on recent immigrants, and the large
transient population usually brings more crime.
"At times, the meatpacking firms have been especially brazen in assuming
that public funds will cover their routine business costs. In September
of 1994, GFI American, Inc. --- a leading supplier of frozen hamburger
patties to Dairy Queen, Cracker Barrel Old Country Store, and the
federal school lunch program --- needed workers for a plant in
Minneapolis, Minnesota.
"It sent recruiters to Eagle Pass, Texas, near the Mexican border,
promising steady work and housing. The recruiters hired thirty-nine
people, rented a bus, drove the new workers from Texas to Minnesota, and
then dropped them off across the street from People Serving People, a
homeless shelter in downtown Minneapolis.
"Because the workers had no money, the shelter agreed to house them. GFI
American offered to pay the facility $17 for each worker and to donate
some free hamburgers, but the offer was declined. The company's plan to
use a homeless shelter as worker housing soon backfired. Most of the new
recruits refused to stay at the shelter; they had been promised rental
apartments and now felt tricked and misled. The story was soon picked up
by the local media. Advocates for the homeless were especially angry
about GFI American's attempt to misuse the largest homeless shelter in
Minneapolis. `Our job is not to provide subsidies to corporations that
are importing low-cost labor,' said a county official."
ATTORNEY OUTLINES
PICKETT VS. IBP STRATEGY,
TELLS CATTLEMEN "IT'S YOUR MONEY,
IT'S YOUR INJUNCTION WE'RE FIGHTING ABOUT"
DAVID BOWSER, TEXAS LIVESTOCK WEEKLY: A Nebraska lawyer is berating
Texas cattlemen for their timidity.
David Domina, lead attorney in the Pickett-IBP case, was in Amarillo
this summer at what was billed by the Organization for Competitive
Markets and R-CALF, the hosting organizations, as a Price Crisis
Meeting, one of a series of such meetings being conducted across the
nation this summer.
"I have been told by three or four people that the turnout in the heart
of cattle country --- that's a tough concession for a Nebraskan --- is a
little light," Domina says of the 100 or so cattlemen who attended. Each
person apologizing for the light attendance gave him the same
explanation, he says.
They told him that they were sorry the turnout was light, but the
reason, they said, was fear. They said their friends told them that they
didn't want the packers to know they were at the meeting. Still, there
were several managers from reputable feedyards and at least two former
presidents of the Texas Cattle Feeders Association. "It's your
industry," Domina told them. "It's your money. It's your injunction
we're fighting about."
He commended five of the cattlemen in the audience who were among those
who filed the original lawsuit in 1996. "All of them are still alive,"
Domina said. "None of them have curiously died with cars going off
cliffs." He added that they probably haven't suffered financially any
more than anyone else in the cattle business, although they stood up and
they got counted."
Pickett v. IBP hasn't been nor will it be an easy case to win, Domina
indicated, but he said it can be won.
"Pickett against IBP is a lawsuit," Domina said, "originally brought by
ten people, then extended to 12; now there are six plaintiffs. The six
who remain are all cattle feeders or people who fed cattle commercially
in feedyards." They sued only one company, the biggest, not all of the
packers. They alleged that IBP used captive cattle supply and its
position in a concentrated market to depress the cash price.
Domina said they didn't sue the other major packers that with IBP
dominate the market because of the power a united packer front could
muster. "If you've got an army of 10,000 soldiers," Domina explained,
"and you've got three enemies with armies of 8000 apiece, how would you
want to fight them?" Domina said anyone who thinks about the litigation
dynamics involved could understand the strategy.
"Pickett v. IBP is the first lawsuit in history, the history of the
country, that has been certified as a national class action in which the
operative statute is the Packers and Stockyards Act of 1921," Domina
says. "It is the only case in the history of the United States in which
the statute that was passed under Warren Harding as trade protection
legislation for your industry has been invoked for you en masse. The
only one."
The U.S. district judge hearing the case, Judge Lyle Strom, is from
Omaha, even through the case was filed in Alabama.
"He's a senior status judge," Domina noted. "That means that he doesn't
have to be on the bench, and he doesn't have to be on the bench much to
collect pretty much all the benefits of being a senior status federal
judge. He can work where he wants, as hard as he wants, when he wants,
pretty much. Some senior status judges spend their time in the Virgin
Islands, where there is a need for their service, or in the wintertime
in Florida where there is a need for their service."
Strom, Domina said, was born in 1945 and raised in Omaha. He grew up at
a time when the biggest industry in Omaha was the Omaha Stockyards. He
lived through a time when the only train that had ever existed to serve
urban Omaha ran from the Livestock Exchange Building to the front door
of the Omaha National Bank. Domina said Strom saw it go. He also saw the
stockyards go, and the Packers and Stockyards Administration's only
Nebraska office go. Strom, Domina continued, watched the livestock pens
get ripped out and read in the paper this summer that the Livestock
Exchange Building, now renovated for an office building, has been leased
to an office tenant that has nothing to do with agriculture.
"It is his choice that he has volunteered to try a case involving your
industry," Domina continued. "You hear lots of things about federal
employees and federal agencies and the Department of Justice and the
Department of Agriculture and cabinet members. I'm telling you that the
most important federal employee to your industry is the Honorable Lyle
Strom, United States District Judge. I don't know that he's going to
rule for us, but he's going to give you a fair chance to have your case
heard. He's not ducking it, and that's important."
The lawsuit, now a class action, asks whether IBP depressed the price it
pays for cattle in the cash market by using captive supply in the form
of forward contracting, marketing agreements and joint venture
agreements.
"If the answer is yes," Domina said, "we're entitled to the jury's
verdict, and you're entitled to damages as a class member. In addition,
if the answer is yes, we're entitled to an injunction, and you're
entitled to a changed market. The person who will write the injunction,
if we get there, and I believe we will, is the Honorable Lyle Strom,
United State District Judge."
Domina said about 95 to 100 depositions have been taken, ranging from
economists in the 42nd story of a building in downtown Manhattan in New
York City to economists on the campus of MIT in Boston to producers and
packers on the northwest coast of the United States to Texas and up
through the middle of the country. "The travel is hundreds of thousands
of miles," he said. The documents would fill a large ballroom. Five
lawfirms are involved, four from Alabama and one from Nebraska.
The case turns on whether the plaintiffs can prove that captive supplies
depressed the cash market. Domina contended that the expert witnesses
can prove it economically and econometrically. "The equation of the case
is as simple as this," Domina said. "If you're in business and you need
100 of something to conduct your business and you've already got 50 of
them, will you work harder to get the other 50 than you have to work to
get all 100?"
The question, he continued, is whether or not having the captive supply
of 50 when you need 100 gives you more or less compulsion to be in the
market, aggressive and competitive. He insisted they can also prove it
through the testimony of cattlemen who have lived through the markets of
the past decade.
About 70 producers from Nebraska, Kansas, Texas, New Mexico, Wyoming,
Colorado and Iowa have given depositions concerning markets for their
cattle and how that has changed. "One of them, a fellow from Rocky Ford,
Colorado, told it better than I've heard anybody else tell it," Domina
said. "It's a story that will surely turn the jury's head."
The cattle feeder testified that he never really wanted to own a cell
phone, but he bought his first cell phone when a buyer for a packer said
to him that if he didn't get one and missed the buyer's call, he'd be
out of the market for a week.
Domina said the market is different now than in 1996 when the lawsuit
was first filed. "You may not know that the lawsuit goes back to
February of 1994," he added. "We're talking about eight and a half years
of time in this case." During that time, IBP has killed 10 million head
of cattle a year. That's 85 million head of cattle, Domina pointed out.
"Assume that half their cattle came from the cash market," he continued.
"That's 42.5 million head of cattle." Assuming that the captive supplies
adversely impacted the price an average of $50 per head, that's $2.125
billion without interest. That is a hypothetical scenario, Domina
conceded. He added that he can't give the exact figures until the trial
begins.
Domina said IBP's case rests essentially with an economist who knows
nothing about the cattle industry and has not been impressive in his
depositions. The other is a Kansas State University professor who is
critical of the idea that the cattle market is a national market, but he
published several papers in the 1980s saying it was a national market.
His testimony is expected to be weak, Domina claimed. "That's IBP's
case."
When Tyson bought IBP, it bought a lawsuit that was in this condition,
Domina said.
"All the discovery in the case was finished," he explained, "The final
witness and exhibit lists of the parties under the court's scheduling
orders were submitted. The class certification arguments had been made
and were under advisement with the court. The briefs were in. There was
no more arguments remaining to be conducted. The transaction closed. IBP
lost its class certification motion and lost the appeal."
IBP, even with a new owner, cannot add a new witness. "They can change
lawyers," Domina said. "That would be it, and they haven't done that so
far." They are waiting now for cattlemen to be notified that under the
class action, they are entitled to a claim. "This lawsuit is not an idea
that was born yesterday and given life with a $105 recent filing fee,"
Domina insisted. "It's mature. It's ready to go to court, and it is in
very, very good shape."
SOUTH DAKOTA RANCHER TESTIFIES
BEFORE SENATE JUDICIARY COMMITTEE
EXPLAINS HOW PACKERS IMPACT CATTLE PRICES
Belle Fourche, South Dakota, rancher Tom Connelley was one of two
independent cattlemen invited by the United States Senate Judiciary
Committee to be a witness at the Committee's Field Hearing on "Ensuring
Competitive and Open Markets in Agriculture: Are Meatpackers Abusing
Market Power?"
The hearing was held August 23, 2002, in Sioux Falls, South Dakota.
Connelley, also an order buyer, cattle feeder, and member of R-CALF
United Stockgrowers of America, explained how packers are reducing
market competition clear down to the producer level. He described three
cattle marketing techniques used today and how the packer has
unparalleled market power in each of the transactions.
Connelley first described how cattle are marketed in the cash market
explaining that in the 70's he bought cattle for the American Beef
Packers while competing with 23 other packing companies to fill his
packer's orders. "If the owner [cattle owner] didn't think my bid was
high enough, he would turn me down and for sure, within a few hours,
another buyer from a different plant would be there to estimate the
cattle's value and would offer the owner a new bid."
But Connelley said the marketplace changed radically over the past eight
to ten years. Speaking of today's market, "I do not receive any bids on
my cattle at the beginning of the week because the packers are either
killing their own cattle or the cattle they control through contracts,"
he said. Connelley added that either on a Thursday or Friday, he may
get a single bid from one of the packers usually on a take-it-or-leave
it basis or he may be given an hour to consider the offer.
But Connelley said if he doesn't accept the first bid, he usually has to
wait until the following week before another offer is made. "And, the
following week's bid is typically lower than the initial bid because the
packers know my cattle will depreciate in value if I don't sell them
when they reach their optimum weight," he added.
Connelley then described how forward contracting works in today's
marketplace. "Forward contracts became popular because the lack of
competition for live cattle ready for slaughter caused cash prices to be
depressed and producers were looking for a means of beating the
depressed cash market."
He explained that a "basis the board forward contract" was a common form
of forward contracting. With a "basis the board forward contract," the
producer agrees to deliver cattle to the packer in the month stipulated
in the contract. Between the time the producer enters the contract and
before the month the cattle must be delivered, the producer selects a
live-price based on the Chicago Mercantile Exchange (CME) futures
market.
This price the producer selects is not negotiated and depends on the
reported futures price on the CME. "This means a producer is at the whim
of the CME Board for a price determination, and the producer is
completely excluded from any negotiation or input into price," said
Connelley. But the packer has the upper hand in forward contracts
because they know that in an uptrending market, many producers will
price their cattle too early, "fearful that the market might weaken."
In a downtrending market, however, the packers know producers will wait
until the very last day to set a price and packers use this knowledge to
drive down prices. Conelley provided the Committee with historical
charts showing how the cash market miraculously rallies after the last
day producers can price their cattle under their respective contracts.
Connelley said all cattle committed under "basis the board futures
contracts" are "inherently taken off the cash market and become a part
of the packer's captive supplies."
Connelley said over the past two years he has sold most of his cattle on
a grid basis, where the base price is determined either on the average
Nebraska beef price for the week or the average live price in Kansas for
the week. Once Connelley selects either the Nebraska or Kansas market
base, his base price is then subject to discounts and premiums depending
on yield, grade, and cutability.
"I do not advocate this way of selling but it's the only way I have to
get some form of premium for higher grading cattle," Conelley
testified. He said this pricing method is flawed because he has to
commit his cattle to the packer before he knows what the basis price is.
"If I didn't like the price they established after I committed my cattle
and refused to deliver, I guarantee they would not let me commit cattle
ever again," he said, adding, "No, I don't like to commit my cattle
before I have a base price, but I have no alternative given today's
market structure."
Connelley explained this type of pricing method encourages packers to
strategically use captive supply cattle to keep the cash market low.
"It is the combination of the packers' control of a large portion of
their needed inventories (captive supplies), the packers' dominant
position in the futures market, and an established deadline that gives
packer's the tools they need to gain a tremendous economic advantage
over producers in the marketplace," Connelley testified.
Connelley urged the Committee to act immediately to begin enforcing the
Packers and Stockyards Act and the Sherman Antitrust Act, which he said
were written to prevent the present monopolistic practices of the
packers. He urged Congress to pass the ban on packer ownership of
livestock, to prohibit packers from contracting cattle without a firm
base price at the time the contract is executed, to investigate the
futures trading activities of the packers 15 days prior to each contract
delivery month, and to take any additional steps necessary to prevent
the packers from interfering with the competitiveness of our live cattle
markets. All of these actions are being called for by R-CALF United
Stockgrowers of America.
MIKE CALLICRATE:
REPLIES TO BEEF MAGAZINE'S
SLANDEROUS ATTACK
"STATEMENTS ARE MY OPINION.
THEY ARE ALSO THE FACTS"
Dear R-CALF and Kansas Cattleman's Association
My comments were correctly stated in the Denver Post article, "Just cook
the crud out of it," by Diane Carman. Make no mistake --- those
statements are my opinion. They are also the facts.
The attack by Beef Magazine and it's editor, Joe Roybal [see below],
mouthpiece for the beef industry (not to be confused with the cattle
industry), in last weeks Cow-Calf Weekly ["R-CALF Shafts Beef
Producers"], is expected considering our progress in addressing
concentration and consolidation, which if remedied, would significantly
reduce the beef industry's unfair profits.
At the1996 South Dakota Governors Beef Conference, Kathleen Kelley and I
presented our view of the cattle industry: many independent cattlemen
producing a high quality product for consumers, selling into a widely
diverse, efficient, and innovative packing, processing and distribution
system via open competitive markets, sensitive to supply and demand.
An economic system in which economic predators and law-breakers, like
IBP, are regulated and restrained by a corrupted USDA. IBP president and
CEO, Bob Peterson, explained that IBP's highly concentrated system
wouldn't deliver the best beef but it would all be the same. After
contentious debate on what the beef industry should look like, Peterson
asked the 1000 plus in attendance, "Who do you want to follow, Mike
Callicrate and Kathleen Kelley or IBP?"
Now, six years later, we have a much clearer perspective for making that
decision. Poultry, pork and beef giant, Tyson/IBP and their cartel
partners, NCBA, Cargill, ConAgra, Farmland/National, and mega-retail are
nearing completion of their plan to "chickenize" (enslave) the cattle
industry. They have eliminated our markets and are stealing our
production, bankrupting us and turning our communities into ghettos.
They continue to promote the false benefits of their destructive,
centrally planned, highly concentrated, vertically integrated business
model. They refuse to pay full cost of production for cattle, living
wages for production, packing, and processing labor, plus many other
high costs that they externalize onto society.
Predictably, Peterson's packer/retailer cartel is now delivering us the
lowest producer share of the consumer beef dollar in history, consumers
are getting the lowest beef quality in history at the highest prices,
kill chains are moving the fastest (IBP president and CEO, Bob
Peterson's bonus was calculated based on the number of cattle
processed), the worker turnover and injury rates are the highest, meat
recalls have never been bigger or more frequent, and we are importing
more low quality foreign beef than ever before.
Not since the great depression has the U.S. cattle industry and the
rural communities supported by cattle production been under more stress,
both economic and social. The poorest counties in America are rural
Midwest cattle producing counties.
I've always said, the more pressure we apply to make packers compete,
the more resistance we will face. The packers, retailers, NCBA, and the
establishment press (Beef, Drovers, Beef Today, Feed Stuffs, etc.),
dependent on the checkoff for ad dollars and support, are now pulling
out the stops on their misinformation and propaganda campaign (as
evidenced by the NCBA, Walt Barnhart emails and the Beef editorial) by
smearing Colorado rancher, Kathleen Kelley, R-CALF and myself. They have
little truth to stand on, so they resort to lies and deception.
Think how they look now, having caused the current state of decline and
despair we are in. Today, packers are bigger, more powerful, and more
concentrated than in the early 1900's when Wyoming Senator John B.
Kendrick fought to restore competition. In support of the new Packers
and Stockyards Act, he said, "The big packers, so called, stand between
hundreds of thousands of producers on one hand and millions of consumers
on the other. They have their fingers on the pulse of both the producing
and consuming markets and are in such a position of strategic advantage
they have unrestrained power to 99% of the people of the country." Soon
after the passage of the P&S Act, an estimated 2000 packing houses were
operating throughout the U.S.
About six years ago, I presented a program to the Kansas Livestock
Association cow-calf council showing how today's packer concentration
and abusive control of our markets resembled the monopolistic "Beef
Trust" of 1921. KLA has worked relentlessly, misusing producer dues
dollars along with NCBA, with the big packers, and retailers to
implement
their no-choices-no-freedom "Vision."
Responding to my presentation, past KLA president, Jon Ferguson said,
"That was 1921, today is today." I answered, "Unfair market power is
unfair market power. Stealing is stealing. It doesn't matter if it's
1921 or today." This is the same Jon Ferguson, as newly elected 2000
chairman of the Beef Checkoff division of NCBA said publicly,
"Grassroots cattlemen aren't smart enough to protect their own
livelihood."
Dr. John W. Helmuth, chief economist for the U.S. House of
Representatives Committee on Small Business from 1979 through 1987,
(also a person who drew slanderous attacks from the packers and their
minions) succinctly explained the essence of the problem:
"When a few large firms buy, slaughter and sell the meat products from
most of the livestock produced by farmers, those few firms are in a
position to control the price they pay for livestock, control the
quality of the meat produced, and control the price of the meat products
they sell.
"Such firms are motivated to pay the lowest possible price for farmers'
livestock, produce the minimum quality meat product that consumers will
accept, and charge the highest possible price for the meat products they
sell. All such activities harm livestock producers.
"In such an environment livestock producers receive less than a
competitive price for their animals, consumers receive a less than
competitive quality product, and pay a more than competitive price for
it. In such an environment consumers eat less meat, further harming
producers because of shrinking demand.." Unfortunately for us and
consumers, Congress ignored Iowa Congressman Neal Smith's Committee on
Small Business and Dr. John Helmuth.
President John F. Kennedy said, "To ignore what we know is true, but are
too afraid to admit --- therein lies unatonable sin."
Think how ridiculous and ignorant these members of the beef cartel
establishment look now having promoted their scandalous corporate
dictated "Vision" for the beef industry. . . .their so-called "long
range plan" that has deceived producers into destructive alliances and
vertical supply chains that transfer their assets to the packer and
retailer via deeply
discounted and manipulated markets for their cattle.
The "long range plan" is based on the outrageous lie that beef demand,
rather than packer price fixing, was the reason for low cattle prices.
The long-range plan has resulted in low quality and inconsistency being
the standard, requiring our beef to be "manufactured" to make it edible.
It's now a plan complete with the very same name branded products
(monopolists from 1921), that didn't taste very good in the early
1900's, and still don't, but still serve the same purpose of the
industrial model, that of increasing packer and retailer profits at the
expense of the producer, while circumventing the grading system and
distorting and confusing the value discovery system.
R-CALF and KCA must continue to be that bold and powerful force standing
strong for open, fair, and competitive markets...the reason your
membership is growing so rapidly. We want and need strong leadership,
especially at critical and contentious times such as these. We don't
want to stand on the neck of our neighbor, leveraged and divided, one
against another, to make a dollar.
We want safe, friendly, prosperous communities in which to live and
raise our families . . . just some of the benefits that a fair market
place provides. R-CALF, KCA, and many other grassroots producer and
consumer organizations are making a real difference, pulling together,
leading correctly, aggressively, with courageous and extraordinary
leadership.
This is a well-orchestrated smear campaign launched against us, financed
with our own NCBA dues and checkoff dollars. The NCBA crafted attack
letters that are being signed by Colorado Cattlemen's Assoc.
President-Elect Roger Evans and their other blind followers calling us
"radical, renegade, beef-bashing, industry-destroying, ranting,
garbage-spewing demigods, vegetarian, members of PETA," are being
distributed in the "beef" press.
At the very least, I would expect the leader of a state cattlemen's
association to be capable of writing his own letters to the editor. This
is an attack against what we stand for; the principles this country was
founded on: equal opportunity, economic fairness, and social justice.
Beef Magazine's editor, Joe Roybal, in suggesting that we espouse
communism, in addition to printing other NCBA slander, is surrendering
his and the integrity of his publication to big money and power. He is
caving under the pressure imposed by fewer advertisers and a declining
readership.
Even though farm publishing is playing the same musical chairs game as
cattle feeders trying to survive the shrinking market, he should still
stand for the truth at all costs. Personal attacks and smear campaigns
only mean they are out of bullets. We have plenty left. God's supply
line never runs short.
Congratulations and thanks to two great organizations that represent my
interests, other cattlemen, rural communities, and the well being of
consumers!
Mike Callicrate
R-CALF Shafts Beef Producers
Why bother with a surgical strike when you can use a thermonuclear
device and leave a wasteland as big as the U.S.? That's essentially what
a pair of R-CALF principals accomplished when they talked with a Denver
Post columnist following ConAgra's recall in early July of 19 million
lbs. of ground beef due to potential contamination with E. coli 0157:H7.
In the process of banging their well-worn drum about packer
concentration, the pair --- R-CALF vice-president Kathleen Kelley and
St. Francis, Kansas, cattle feeder Mike Callicrate --- managed to lay to
dust 15 years of beef industry efforts to rebuild positive consumer
perceptions of U.S. beef in domestic and foreign markets.
The article by Denver Post columnist Diane Carman was entitled "Just
cook the crud out of it." . . . .
The piece revolved around ConAgra's July recall but its hyperbolic
message was that packer greed and slack government oversight had
conditioned consumers to almost ignore recalls. Instead of producing
wholesome ground beef, government and packers have shifted to consumers
the responsibility for product safety by cooking "the crud out of it,"
as she put it.
Among the statements that Carman offers to support her thesis were these
gems from Kelley and Callicrate:
Kelley, she reports, "is exasperated with `lazy' American consumers who
don't have a clue about the source of their food, much less the
shameless exploitation of humans, animals and the environment involved
in its production. There is no reason for people in this country to have
E. coli poisoning," she quotes Kelley as saying. "It's entirely a
by-product of industrial meat processing."
This, of course, runs counter to the message delivered recently by
world-renowned epidemiologist Mike Osterholm, who said that it isn't
possible, even with billions of dollars and using surgical suite
technology and personnel, to guarantee that meat is free of food-borne
pathogens. Irradiation, he says, is the only real solution at this time.
Meanwhile, Callicrate is quoted as saying: consumers are "paying the
highest prices in history for the dirtiest product since 1906 when Upton
Sinclair wrote The Jungle."
This novel written by Sinclair, a prominent Socialist of the time, is
considered an expose of the turn-of-the-century packing industry, and
its details did lead to government investigation and greater regulation
of meatpacking, including child labor laws. But it's really a novel
aimed at denouncing capitalism while promoting socialism and communism.
Are these folks off their rockers? What would leaders of a producer
organization promising to bring its constituency back to profitability
and prosperity possibly hope to accomplish with such statements in such
a consumer venue? Few people outside the Denver metro area probably read
the column by Carman. Within the beef industry, however, the story
received wide dissemination via a letter from Colorado producer Roger
Evans.
Besides questioning how R-CALF officials could possibly envision such
pronouncements in a major consumer newspaper as helpful to the
grassroots producer, Evans also pointed out some questionable R-CALF
ties to anti-meat groups. His basic question essentially was: "Why would
a grassroots producer want to be affiliated with an organization whose
leadership goes in front of its consuming market and tells them the
product they eat is crap?" That's the same question every producer
should be asking as well.
Evans' letter must have put a serious tweak to R-CALF's nose because its
executive director John Lockie later dashed off an e-mail to BEEF
magazine and other industry media. Included was a response by Leo
McDonnell, Jr., R-CALF president, trying to distance the organization
from Kelley and Callicrate's remarks.
McDonnell points out that the duo's comments were "personal opinions"
and not official R-CALF positions. Hmmm. Interesting defense. I wonder
if the anti-meat and animal rights groups, as well as our foreign
competitors and those foreign markets trying to prevent U.S. beef
imports into their countries, will take that into consideration when
they use the statements to undermine U.S. beef producers?
That lame excuse aside, it's another example of R-CALF "scorched earth"
campaign. And the anti-meat, animal rights and environmental zealots
must be howling with delight over this one. One would think that an
organization so hell-bent on becoming a dominant spokes group for U.S.
producers would at least have enough foresight to try to preserve the
industry it wants to represent.
Joe Roybal
SMALL CATTLE RANCHERS:
"THE STATE OF THE INDUSTRY
IS PRETTY MUCH A DISASTER"
JUDD SLIVKA & ROCKY BARKER, THE ARIZONA REPUBLIC & THE (BOISE) IDAHO
STATESMAN: The small cattle rancher in the United States is on a long,
slow trip to the slaughterhouse. Since 1970, the number of ranches
nationwide has declined by more than half, and the continuing trend is a
downward spiral.
"The state of the industry is pretty much a disaster," said Randy
Kieser, a longtime rancher. Three years ago, he turned his land near
Guernsey, Wyoming into a guest ranch.
Although more beef is being eaten today than ever, that's a function of
having more Americans around to eat it. Most Americans eat less beef
than they did in 1970. Per-capita consumption has fallen 11%, while
chicken consumption has gone up 68% and the demand for turkey has gone
up 74% Americans are also spending less on beef. Adjusted for inflation,
Americans spent $355 per capita on beef in 1980. In 2001, they spent
$200.
There's a herd of other problems, too.
The feedlot industry can bulk up a calf to slaughter weight much faster
and more efficiently than a rancher can. The court system is enforcing
long-standing but often-ignored environmental laws. People who want
ranchers off public lands are more willing to offer money to keep them
off. All of that leads to this: There's no middle in Western ranching
anymore. You can ranch 1,000 head and make a living or you can ranch
less than 100 and make it a hobby.
At the fourth-generation WY Bar Ranch on the Arizona-New Mexico border,
the Marks family raises cows that it sells to a feed-lot, where the cows
will eat and eat at a fantastic pace, growing bigger at a rate that
makes it commercially feasible to sell beef.
Arizona had seven feedlots in operation last year, with 335,000 head of
cattle. The feedlots' economies of scale make it easier to make money.
And that makes life hard for small ranchers like the Markses.
In the early part of the 20th century, it could take a calf five years
to reach its slaughter weight. In the 1950s, advances in feed science
made it possible to bring a calf to slaughter in two or three years.
Today, the combination of 100 years of research into bovine growth and a
better-living-through-chemistry attitude makes it possible to get a calf
to
slaughter at 16 months.
Once a calf enters a feedlot, it's subjected to massive feedings of
corn, protein supplements and growth hormones. The result is business
that, like your local discount superstore, makes its money on the
volume. The faster a calf hits the market, the faster a profit can be
turned and the fewer costs are incurred. It's the present and the future
of the cattle business. But the factory-style method of raising cows has
hurt the small rancher.
J.R. Simplot of Boise, Idaho, is a good example. The Simplot family runs
its cattle on nearly 2 million acres of state and federal grazing land.
Each year, between 20,000 and 25,000 head of cattle from those lands are
sent to the company's three feedlots in Idaho, Oregon and Washington.
There, they join nearly 500,000 other head of cattle consuming the waste
of Simplot's French-fry processing plants.
Add in other factors, such as Canadian and Mexican ranchers who gain an
advantage with a favorable exchange rate, or Midwestern beef growers who
can feed their cattle heavily subsidized corn that's cheaper than hay,
and the small rancher in the West has his back against a barn wall.
Three decades ago, Jim Salmond had 20 neighbors ranching near his place
close to Chouteau, Montana where his great-grandparents staked a claim
in 1886. Now he has two, and one of them is David Letterman. "It's for
the rich and famous now on the Rocky Mountain front," Salmond said. His
brother sold 2,600 acres to Letterman a few years ago. Salmond wants to
hold on, but he's not sure how long he can.
Although environmental laws have been on the books since the 1960s, only
in the past two decades have the nation's court systems really begun
enforcing them with regularity. The Clean Water Act, passed in 1972,
affected where ranchers could graze their cattle, depriving many
ranchers of their lushest forage areas: creek bottoms.
The Endangered Species Act has also affected ranchers. Each part of the
West has its own endangered species. In South Dakota, it's the
black-tailed prairie dog. In Idaho, it's the sage grouse. For Salmond,
it's the wolves and the grizzlies. A new wolf pack has moved into the
mountains west of him. He figures he's losing five percent to eight
percent of his 800-head herd each year. Defenders of Wildlife, a
Washington, D.C.-based environmental group, will pay for any damage
caused by the animals, but his losses are sometimes difficult to prove.
"The species are just a tool, a surrogate," said Jim Chilton, owner of
the Flying X ranch near Arivaca, Ariz., about 20 miles north of the
Mexican border. "(Environmental groups') sole objective is eliminate
grazing from Western states and land use that's been, in our area, in
existence for over 300 years. It is outrageous that a surrogate would be
used to destroy our customs, our traditions."
"A surrogate?" asked John Horning, a watershed-protection specialist
with Albuquerque-based Forest Guardians, an environmental group. It has
sued the Forest Service multiple times over Endangered Species Act
violations and has five pending lawsuits that could change the face of
public-lands ranching in the Southwest.
"Sure. We're using the species as a way to represent the entire
ecosystem that we're looking to restore. If we can make that ecosystem
healthy for that species, than we've made that ecosystem healthier in
general," Horning said.
The Grand Canyon Trust, a Flagstaff, Ariz.-based environmental
organization, has been quietly trying to retire grazing allotments on
the Colorado River plateau for the past three years. The trust has been
moderately successful at it, retiring more than 325,000 acres of public
land from grazing.
On April 10, a coalition of environmental groups proposed that Congress
allot money to retire any grazing allotments ranchers want. The groups
that proposed it want to offer $175 per animal-unit-month to ranchers,
the amount of forage required per month to feed a cow and her calf. The
average market value for a grazing allotment in the West usually runs
between $50 and $75 per animal-unit-month.
The proposal took the ranching world by storm. Western members of
Congress responded by vowing to kill the proposal. Many ranchers in the
West are looking at it with suspicion. Environmentalists see the
proposal's lack of acceptance as more evidence that ranchers are their
adversaries.
Bill Marks saw the environmental changes coming back in 1975. But his
efforts to help the land didn't help. "I've mortgaged my entire property
to buy another allotment and didn't put more cattle on it, just absorbed
it into my operation. So I took a place that had 144 cattle on it all
year and replaced it with 65 cattle there for half the year, with
nothing on it the other half. And I still got hammered."
SAFEWAY STORES REFUSAL TO PAY
SEVEN CENT INCREASE PER POUND
FOR FUTURE BEEF FORCES COMPANY
INTO BANKRUPTCY, NO MORE BANK LOANS
JAMIE LANE: Seven cents. Seven cents per pound increase in certain
products from Future Beef could have saved them from liquidation. But
Safeway grocery stores refused and therefore lenders pulled the plug on
any future loans that perhaps could have afforded Future Beef the time
needed to reorganize and restructure.
Future Beef filed Chapter 11 bankruptcy in early March and since that
time has received several operating loans to continue operations. In
Federal Bankruptcy Court, the last week of July, Future Beef was told
they would receive no more loans, in part because Safeway refused to
agree to spend an extra seven cents per pound. That seven cents could
have equated to an extra $3.5 million per year increase in revenue. The
court gave Future Beef until August 15 to find new financing. Shortly
after that ruling, operations ceased at the Future Beef packing plant.
The late July ruling was based on a comprehensive report compiled by a
bankruptcy consultation firm. According to the Winfield Courier (local
newspaper of the Future Beef processing plant) the report concluded, in
a nutshell, "continued operation is not recommended." The report
elaborated on several areas where the company failed and without the
price increase from Safeway, "there is little prospect for Future Beef
to break even over the short term.."
The ideology behind Future Beef was exciting and aggressive. While not
all cattle producers may have agreed with all the standards and methods
used to achieve those standards, it is hard to argue with what Future
Beef was trying to accomplish, and that was to regain a higher
percentage of the actual value of the animal for the producer. Future
Beef was an integrated company that controlled the product from the
genetics to the retail counter.
Future Beef had the steak on the plate in mind and worked backwards to
the genetics that could produce that steak the most consistently and
efficiently. Future Beef defined the type of genetics that would work
the best for their program, including seedstock producers who could
provide those animals. After an animal was born with the acceptable
"Future Beef genetics" it would be sent to a Future Beef approved feed
yard to be fed.
At finishing, the Future Beef cattle were sent to the Future Beef
packing plant in Arkansas City, Kansas to be processed. Also at the
plant were value added divisions including a pet food processing
division, pre-cooking division as well as case-ready capabilities that
were used to provide a final product to Future Beef's 15% equity holder
Safeway.
However, the connection with Safeway could have ultimately been the
demise of Future Beef. Most seemed to think a relationship with the
number three grocery retailer was a good idea as it provided a
guaranteed retail market for the product. But, Safeway actually
eliminated some competition by removing any other retailers from Future
Beef's possible
"sell to" list because of a contract that was signed with Future Beef.
The contract essentially said that Future Beef could not sell certain
meat products to any other retailer who is in an area with Safeway
stores. This included Safeway's two other stores, Dominick's and Tom
Thumb. During the short duration of Future Beef, approximately 51% of
their sales went to Safeway.
The contract with Safeway was not the only concern cited in consulting
firm's report. One easily observable and understandable contribution to
the debt is the cattle feeding situation this spring in the U.S. Very
few feeders have enjoyed a profitable 2002 thus far and couple that with
the premium paid by Future Beef last fall for feeder cattle it is easy
to understand how a considerable amount of money has been lost.
The report showed that Future Beef, at times, paid a $150 per head
premium for feeder cattle over the market and since their Chapter 11
filing in March have lost more than $12 million on these cattle. Another
concern noted in the report was the transportation costs to get the
cattle to the packing plant. They estimated the average cost for Future
Beef to be $17-$18 per head compared to an industry average of $8-$10
per head. This added cost equated to an extra $3.3 million to $3.7
million per year.
There is still a chance Future Beef can withstand the bankruptcy
situation it faces, although time is quickly running out. However, even
for those who never thought Future Beef would make it, the financial
struggling of Future Beef and their almost certain liquidation, does not
provide a lot of hope or options for producers to try to regain more
value for the cattle.
CARGILL'S EXCEL AND HORMEL FOODS
IN JOINT VENTURE TO MARKET BEEF\ PORK
PRODUCTS TO SUPERMARKETS AND CLUB STORES
DOW JONES NEWSWIRES: Hormel Foods Corp. agreed to form a venture with
Cargill Inc.'s Excel Corp. to market and distribute beef and pork
products to U.S. supermarkets and club stores. Financial terms weren't
provided, and Company representatives weren't immediately available to
provide further details.
In a press release Thursday, Hormel said Excel will supply fresh,
case-ready pork and beef for the joint venture, Precept Foods LLC, to
distribute under Hormel's Always Tender national brand name. Currently,
the Always Tender brand features primarily pork.
Reached later, a Hormel spokeswoman said her company will own 51% of the
Precept Foods LLC joint venture, and Excel Corp. will own the remainder.
Financial projections aren't being made available yet, she said.
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