Amendment may affect farms
By Tony Mance
Staff Writer
A proposed amendment to a farm legislation passed
by Congress will make it illegal for meatpacking companies to own their
own livestock, and according to several Purdue faculty members this
could have negative effects in the beef and pork industry.
This includes the price of the meat.
The proposed amendment, which would be attached
to a farm bill passed by the U.S. Senate, is designed to help family
farms by taking the livestock production away from the large meatpacking
companies and giving it to the small, independent "family farms."
However, Allan Grey, a Purdue agricultural economist who has helped
write an analysis of the amendment, has his doubts about the amendment's
outcome.
"The amendment will have little, if any, effect
on the independent family farms," said Grey.
Most large meatpacking companies in the U.S. are
vertically integrated, which means that they own every aspect of the
meat production — the raising of the animal, its slaughter and
its packing and distribution. The new amendment would make vertical
integration illegal by outlawing the ownership of livestock used for
processing by packing companies.
According to Grey, taking the ability to raise
the livestock away could have negative repercussions on the packing
companies' produce, affecting not only the companies but the consumer
as well.
"If the packing plants lose the ability to
monitor the animals they produce, many aspects of meat quality could
be compromised. For instance, it would be much more difficult to trace
diseases in meat if the packers do not have direct access to the meat
they produce," said Grey.
Grey went on to say, "If we get rid of the
links between the livestock and the meatpacking companies, it will be
much more difficult to meet consumer demands. However, the meat people
buy will still be safe."
If the meatpacking companies can no longer own
their own livestock, they will be forced to buy their livestock on the
open market, costing them more money. The loss will then be placed on
the consumers in the form of higher prices.
According to Purdue agricultural economist Michael
Boehlje, meatpacking plants will find another way to do business should
the amendment make it illegal for them to own livestock.
"The typical industry response would be to
alter their business models," said Boehlje.
The most probable action for the meatpackers would
be to contract large livestock producers, allowing the packing companies
to stay close to the raising of the animals.
"Tight marketing agreements and contracting
would be the next closest thing to vertical integration," said
Boehlje.
A meatpacking plant would make a contract with
a single large livestock producer. The livestock producer would supply
its animals primarily to the meatpacking company and, in turn, the meatpacking
company would be allowed to monitor the raising of the livestock. The
small, independent family farm would still not be selling any more livestock
to the packers.
The amendment could also affect the origins of
the meat sold in the United States.
"Because the U.S. industry would no longer
be able to use vertical integration, places like Canada, which have
no law against vertical integration, would have an easier time selling
their meat in the U.S," said Grey.
It is still a topic of debate that the amendment
will become part of the bill, according to Grey.
"The amendment could be reduced to a study
by the U.S.D.A to see what a law like this one would do to the industry
but that is pure speculation. The outcome has not yet been determined."
Both Grey and Boehlje think that even though the
amendment could have a negative effect on the meat production industry,
it will not mean the end of meat production in the United States.
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