Agricultural News
R Calf Spotlights Hitch Deal with National Beef- Calls It Bad for Competition
Tue, 19 Jan 2010 13:35:22 CSTIn a memorandum to the U.S. Department of Justice (Justice) and the U.S. Department of Agriculture (USDA), R-CALF USA informed the agencies that the agreement disclosed Jan. 12, 2010, by Thomson Reuters between National Beef Packing Co. (National Beef) and Hitch Enterprises (Hitch) "demonstrates the rapidity with which beef packers and concentrated feedlots are eliminating competition in the U.S. fed cattle market." Click here to see the memorandum R Cald is referring to.
Thomson Reuters reported that Hitch entered into an agreement in January to sell National Beef 100 percent of the cattle fed in Hitch's feedlots. Hitch reportedly ranks among the 15 largest U.S. cattle feedlot operations with a 160,000 head one-time capacity.
"The effect of this agreement is that the hundreds of thousands of cattle fed each year by Hitch will give National Beef the same anticompetitive market leverage that National Beef would have if all these cattle were owned and fed outright by National Beef," said R-CALF USA Marketing Committee Chair Dennis Thornsberry. "Because National Beef knows that all of Hitch's cattle are solely committed to it, National Beef will be able to further restrict the timely access to the marketplace by the remaining independent cattle feeders whose marketing options already are severely limited.
"It also will mean there will be even fewer cattle in the ever-shrinking competitive fed cattle cash market, where the base price for the entire nation's cattle is determined," he pointed out.
R-CALF USA's memorandum succinctly states that "this fed cattle market is the final cattle market and is the portal through which reduced competition permeates the entire U.S. live cattle industry."
"If the Packers and Stockyards Act and our antitrust laws are to mean anything, they must prohibit this type of market capture that directly eliminates competition in our cattle industry," said Thornsberry.
The memorandum calls on Justice and USDA to "take immediate action to halt the swift, wholesale capture of our industry by the highly concentrated beef packers working in concert with the highly concentrated feedlot owners." The document also states that "time is of the essence if the new Administration is to reverse the wholesale contraction of the U.S. livestock industry before our industry loses the critical mass of participants necessary to maintain economic viability."
"Our industry is fast mimicking the U.S. hog industry that, just since 1980, lost 90 percent of its participants as a direct result of the corporate capture of their markets," Thornsberry concluded. "The United States' rural economy will continue its rapid decline if Justice and USDA don't immediately intercede to preserve for U.S. cattle farmers and ranchers an open and competitive market for domestic cattle."
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