Canada’s independent ranchers and farmers – the backbone of our cattle and beef sectors – are receiving some of the lowest prices they’ve seen since the Great Depression. Adjusted for inflation, prices today are half of price averages from the 1970s, and ’80s. Today’s Depressionechoing prices are bankrupting long-standing cattle producers and forcing farm families from the land.
U. S. senators have introduced a bill that promises to raise the market price of cattle in the U. S. and, if we act in concert, in Canada too. The Livestock Marketing Fairness Act would restore balance in cattle markets, ensure that all buyers and sellers have equal information and equal access to purchasing and selling opportunities, and terminate the use of captive supply contracts.
Captive supply is a technique wherein beef-packing companies use cattle herds they own, or cattle they control through contracts that do not contain fixed prices, to suppress prices to independent sellers. Captive supplies allow large buyers to stop bidding in cash markets whenever prices rise above levels they wish to pay. Nearly every study on the issue has concluded that captive supply leads to lower prices for ranchers and farmers. University researchers studying Canadian markets have found that one-half to two-thirds of the cattle entering our biggest packing plants are packers’ own captive supplies.
Republican and Democratic senators from major cattle-producing states are determined to restore the proper functioning of cattle markets. U. S. President Obama has made a ban on captive supply a priority.
The NFU strongly urges the Canadian federal government to pass legislation in this country outlawing captive supply. On behalf of our thousands of family farm members, we call on you to act in the coming months to introduce into the Canadian House of Commons legislation banning captive supply in this country.
Ranchers and farmers are often told that we have an integrated North American market. For that reason, U. S. moves to increase farmers’ prices must be matched by similar moves here. To fail to do so will be to undermine U. S. efforts to restore market fairness, reduce the price-increasing effects that a U. S. move could have, and put Canadian farmers at a disadvantage as Canadian packers retain the capacity to use price-lowering captive supplies and U. S. packers do not.
Solutions to the grinding farm income crisis are often difficult, unaffordable, and seemingly out of reach. You have before you an opportunity to embrace a solution that is low-cost and effective. You have an opportunity to restore proper market function and fairness. And you have an opportunity to move forward in concert with similar initiatives at the highest levels of the U. S. government. There is no reason for inaction on this issue.
Stewart Wells, NFU President Board members: Neil Peacock,
Fred Tait, and Grant Robertson.