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Livestock Industry Status and RMFU Initiatives

Overview:

U.S. cattle producers over the past 18 months have suffered from market prices that are below their cost-of-production. The cattle market is and always has been cyclical, but the highs aren’t as high and the lows are lower than in the past. Producers from drought-ridden states, including Colorado, Wyoming and New Mexico, are particularly hard hit due to higher feed costs or the unavailability of feed, which has prompted many of them to sell their herds.

Industry Trends:

• In 1975, cattle producers received 65 percent of the retail food dollar, packers 9 percent and retailers 26 percent. In 2001, the producer’s share had dropped to 40 percent, packers got 11 percent and retailers received a whopping 49 percent.

• A recent study showed that cow-calf producers had a negative return on their investment seven of nine years. In the two profitable years, the return rarely exceeded 2 percent. By comparison, most packing companies and retail outlets routinely return 20 percent annually on their investment.

• Low cattle prices are blamed on an oversupply of cattle, yet the U.S. cattle herd dropped by 2 million cattle between 1987 and 1997.

• Many believe that speeding up the processing lines has decreased the quality of beef and increased the pathogenic risks. The recent recall of massive amounts of ConAgra beef is a tragic example of this carelessness, which hurts producers who have no control over meat quality once it leaves their operations.

• As corporations buy out their competitors and form alliances, there is very little competition among companies wishing to buy the independent producer’s livestock. Over the last 20 years, packing companies have gained even more control over their supply of cattle by importing cattle and/or boxed beef, operating their own feedlots, and offering secret contracts. As a result, the prices paid in the open market—when adjusted for inflation—are down significantly.

Rocky Mountain Farmers Union Initiatives:

• Through National Farmers Union, called on Congress, the Secretary of Agriculture and the Commodity Futures Trading Commission to investigate the trading on the Chicago Mercantile Exchange’s Live Cattle Futures contracts for alleged price manipulation, collusion and other illegal practices

• Campaigned for a ban on packer ownership of livestock within two weeks of slaughter and mandatory country-of-origin labeling for meat and fresh produce as part of the 2002 farm bill; continues to push for packer ban, which was not included in the farm bill and monitoring implementation of country-of-origin labeling, which becomes mandatory in 2004

• Responded with a strongly-worded letter to the McDonald’s Hamburger Corporation, which announced it would explore use of imported beef in its hamburgers

• Supported changes to the mandatory beef checkoff program, which was ruled unconstitutional by a Federal District Court in June 2002

• Recently certified to nominate members to the newly-formed lamb checkoff program; one member has been nominated; outcome pending

For more information contact Rocky Mountain Farmers Union at 303-752-5800 or www.rmfu.org