TEXAS (April 16, 2002)-Texas Farmers Union has asked Congress, the administration and the Commodity Futures Trading Commissioner to investigate the forces behind falling cattle futures.
A letter from the National Farmers Union Board of Directors suggests the current downward trend in cattle futures markets may be due to collusion and price manipulation following the recent Foot and Mouth Disease (FMD) rumor and the proposed legislation to ban packer ownership of livestock.
"TFU believes these issues are signs of broader threats to open markets by monopolistic practices of large packers and processors," said Wes Sims, president of TFU. "The growing trend of market concentration continues to threaten the viability of independent farmers and ranchers, and the NFU Board of Directors has challenged Congress, the administration and the industry to take action."
Analysts estimate the FMD rumor cost the industry as much as $50 million after prices dropped $1.50 per hundredweight for market cattle.
Meanwhile, NFU has heard from producers who testified to a fall in livestock prices last month as possible retaliation for legislation in the Senate farm bill banning meatpackers from owning livestock for more than 14 days prior to slaughter.
February 13 the Senate passed S.1731 which included the provision that bans packer ownership of livestock. An Oklahoma Farmers Union producer said he received active bids for his cattle through February 18, with bidders promising an excess of 84 cents per pound for approximately 625-pound cattle. When markets reopened on February 19, the market opened down and has proceeded to drop by 10 cents per pound.
According to producers who have inquired about the lack of interest from cattle bidders, the reply was that they were staying out of the market for a few weeks because of the packer ban amendment pending in the Farm Bill Conference Committee.
"It is imperative that the livestock future markets, as well as all commodity future markets, are competitive and transparent," the NFU Board members wrote, "Future markets that are free of manipulation and other anti-competitive forces can most effectively perform the vital economic function of price discovery and risk transfer. Likewise, independent producers need properly functioning markets to compete."
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