990514 Momentum Builds for Meatpackers to Reveal Prices

Washington - U.S. cattle and pork farmers could see exactly how much American meatpackers pay each day for livestock under draft legislation with broad bipartisan support, farm groups and lawmakers said.

The proposed bill comes at a time when Iowa, Nebraska, Missouri, Minnesota and other states have threatened to move ahead with their own versions of mandatory price reporting legislation to help small farmers compete.

Momentum has been building for some form of mandatory price reporting since last December, when farmers saw pig prices briefly plunge to Depression-Era levels of $8 per hundredweight. At the same time, grocers' retail prices didn't budge, giving packers some of their best profits in years.

This year, prices paid to farmers for pigs are expected to climb back to about $35 per hundredweight, a level still below breakeven for some farmers.

Four packing companies -- IBP Inc, ConAgra Inc, privately-held Cargill Inc unit Excel, and Farmland National Beef -- control an estimated 80 percent of the U.S. beef market. The same firms plus Smithfield Foods Inc control more than half of the U.S. pork market.

“While the beef industry continues to debate concentration... there is widespread agreement that efficient markets require greater transparency that is achieved by the availability of accurate and timely information,” George Swan, president of the National Cattlemen's Beef Assocation said.

The cattlemen held more than a dozen meetings with packers in recent weeks to hammer out the draft legislation.

Draft language of the bill, submitted to a House Agriculture subcommittee, would require packers to report prices, volumes and terms of cattle purchases twice daily to the U.S. Agriculture Department. They would also submit data to the USDA once a week about beef exports.

To monitor the link between retail and wholesale prices, the USDA would also collect grocery store scanner data about beef sales volume and prices, under the plan.

All the data would be available to farmers via the Internet, newspapers and broadcast stations.

“We understand there will be some necessity for latitude for the agriculture secretary in some areas but we're trying to set the parameters,” Swan told the House panel at a hearing.

Meatpackers, who turned back an attempt by Congress last year to require price reporting, said they were prepared to provide the data.

“The industry has moved quickly on this venture to head off some very misguided legislation in a number of states,” said Ken Bull, vice president of cattle procurement at Excel Corp. “A single uniform national policy is needed.”

Republican and Democratic lawmakers on the panel expressed support for legislation.

“The state legislatures have sent a message to us about the importance of this issue,” said Rep. Leonard Boswell, an Iowa Democrat. “We need to act.”

The Clinton Administration has stepped up its scrutiny of the packing industry in recent weeks. Earlier this month, the USDA accused accused Cargill of underpaying U.S. hog farmers by $1.8 million and a top Justice Department antitrust official met with Minnesota farmers about industry concentration.

Rep. Larry Combest, a Texas Republican who heads the full House Agriculture Committee, said he was pleased the meat packers had worked out a draft plan with the cattlemen.

“We don't want to lose control of this,” he said, referring to state legislative action. “We want to make sure this thing is done right.”

Pork producers are drafting similar legislative language for mandatory pig price reporting, which is likely to be combined in the same legislation, according to John McNutt, president of the National Pork Producers Council. The group found “very large price variations” for farmers across the country, he said.

The American Farm Bureau, the largest U.S. grower group, and the National Farmers Union also support price reporting.

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