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Just as the beef and pork industries have snatched back some of the market share lost to innovative poultry processors over the last 25 years, proposals have surfaced that could impede that progress, two Kansas State University agricultural economists saidJust as the beef and pork industries have snatched back some of the market share lost to innovative poultry processors over the last 25 years, proposals have surfaced that could impede that progress, two Kansas State University agricultural economists saidfor more than 14 days prior to slaughter. The amendment and its implications (if enacted) quickly prompted studies by a veritable "who's who" list of agricultural economists across the United States, including James Mintert, Kansas State; Steve Meyer and James Robb, Livestock Marketing Information Center; and Derrell Peel, Oklahoma State University; as well as Wayne Purcell, Virginia Tech University; and Clem Ward, Oklahoma State University, to name a few. With the proliferation of marketing agreements struck in recent years between hog and cattle producers and packers has also come a concern on the part of some producers that prices paid to producers have been lower than if all animals were sold the way they were a number of years ago, on a daily cash market basis. Many animals are still sold that way. "Packers own a small percentage of cattle slaughtered in the U.S. - 3.5 percent in 1998 which is the most recent USDA data available. And the percentage has actually declined slightly over the last decade," Mintert said. "Moreover, we are not aware of any published empirical research indicating that packer ownership of cattle has a negative impact on cattle prices." Consumer demand for beef fell from 1979 through 1998, which exacted a high toll on the U.S. cattle and beef industry. "Negative trends in beef demand were not reversed until beef packers changed from being low-cost commodity operators to producers of quality-controlled and convenient new meat products," said K-State economist Ted Schroder. "Packers, including farmer cooperatives, have invested billions of dollars in product and market development in recent years. The proposed legislation would limit packers' ability to accomplish the coordination and quality control they need for new branded products and would put those important investments at risk." "Eliminating packer ownership of cattle could make it difficult for firms in deficit production areas to acquire enough cattle to operate their plants efficiently at times," Mintert said. "That can raise slaughter and processing costs, as documented by previous studies, and in the long run, those higher costs are likely to be borne primarily by cattle producers." For more detailed information manuscripts can be downloaded at http://www.agecon.ksu.edu /livestock. © |
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