Should The Government Ensure Meat Companies Play Fair With Farmers?

Cattle ranchers have spent years battling big meat companies, saying the companies have too much market power. Now, those ranchers worry that a Trump Administration move to delay federal rules that would make it easier for them lodge complaints about unfair treatment may spell the end of the new rules altogether. But the industry is divided by the government’s move to make sure meat companies play fair with farmers.

Nebraska calls itself 'The Beef State and that is thanks to places like Cuming County in the northeast part of the state. Around a quarter-million cattle live on feedlots in Cuming County alone, many of them on family-owned operations scattered among the corn and soybean fields.
At one point, almost all cattle were sold on the open market, like Krajicek’s. Today only about 25 percent of the nation’s cattle are sold at a livestock auction or through price negotiations with meat packers. Ranchers today often work on contract for a big meat packer to produce cattle, or sell on a pre-determined formula that pays a range of prices for higher or lower quality meat. Crucially, that means the vast majority of cattle are sold in a way where the price is usually not reported publicly.

Krajicek says without knowing what those cattle are worth, he’s not sure when he’s getting a good deal. It is like shopping for groceries if the store had no price tags.

“One guy could be getting $10 (per hundred pounds) more than the other guy for the same cattle and same genetics,” Krajicek says. “And that is totally unfair. It looks like that’s the direction we’re headed.”

Steve Krajicek buys and sells cattle as an investor-feeder.
CREDIT GRANT GERLOCK / HARVEST PUBLIC MEDIA
Producers like Krajicek are protected from unfair discrimination by meat packers by the Packers & Stockyards Act, passed in 1921. Recent court rulings, however, have raised the legal standard. To succeed in a suit against a meat packer in court today, it is likely that Krajicek would have to prove a meatpacking company is not just being unfair to him, but creating an unfair playing field for independent cattle feeders.
Dudley Butler, the ex-regulator, says it is good for producers to find security by developing a niche. But he says the beef industry is the last segment of the livestock business to have an open market for producers on the ground. For independent producers to stay in business, Butler says, they need stronger regulations to keep their influence in the market, even if it is a fraction of the size it once was.

“You just pick away at the marketplace,” Butler says. “And once you pick away at it enough it’s as we say down south, it’s “death by duck bite” where the marketplace just fades away.”

The Trump Administration has until October 19 to repeal the rule, change it or let it take effect.