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Senate Ag Committee Examines Livestock Industry

Senator Debbie Stabenow, D-Mich., chairwoman of the Senate Agriculture Committee, says bolstering conservation and other critical Farm Bill programs will help to strengthen the $250 billion livestock industry, a major area for job and economic growth as the Committee moves forward in crafting a new Farm Bill. During an Agriculture Committee hearing Tuesday, Stabenow said livestock producers are on the cutting edge of developing responsible and innovative solutions to address environmental and management challenges, while creating new economic opportunities that are boosting growth.

A large number of speakers addressed the gathering including livestock producer Rick Sietsema of Allendale, Mich. Sietsema testified that after a major turkey processor closed shop in his home state and cancelled contracts, USDA Rural Development loan guarantees made it possible for a group of growers to get access to the needed credit to facilitate the construction of both a turkey processing facility and a further processing and cooking plant. The group of growers developed a co-op that currently raises a quarter of the 4.6 million turkeys produced in Michigan and employs over 800 associates with a total payroll exceeding $18 million.

Kansas Livestock Association President-Elect Frank Harper also testified before the Agriculture Committee and explained that free trade, even with its imperfections, is relatively more equitable than regulated and subsidized markets. Harper, a member of the National Cattlemen's Beef Association Board of Directors, also addressed concerns with the proposed GIPSA rule on livestock and poultry marketing. He stated that NCBA members oppose attempts to narrow the business options or limit the individual freedom of livestock producers to innovate in the management and marketing of their production.

Harper told Committee members that he has invested in genetics that have helped improve the quality and consistency of the calves produced on his operation. To capitalize on that investment he retains ownership of his calves and feeds them in a commercial feedyard. He then can market those calves through U.S. Premium Beef, Certified Angus Beef and other programs that allow him to earn a premium for his cattle. Harper fears the GIPSA rule would force him to sell cattle for the same average price as everyone else, causing him to lose his investment in superior genetics.

Another witness before the Senate Ag Committee Tuesday had a different take on the proposed GIPSA rule. National Farmers Union member Dennis Jones testified that concentration has left the livestock markets uncompetitive and many producers at a severe disadvantage, basically having to accept whatever price the packers give for livestock. Jones had several possible policy options to help livestock producers during difficult times, including implementation of the proposed GIPSA rule. He said it would go a long ways towards ensuring that producers like him can negotiate on a level playing field with large processors.

Beyond that, Jones suggested that funding for conservation programs such as the Environmental Quality Incentives Program would help livestock producers install and maintain beneficial conservation practices. He said the Senate should also consider the implementation of a system of grain buffer stocks, similar to the petroleum reserve, which would help flatten the large price spikes and would make livestock production more conducive to long-term investment.