Kelsey Gee reported last week at The Wall Street Journal Online that, “A new Nebraska law ends one of the last state bans in the U.S. on meatpacking companies owning hogs, a move that some critics say will extend the power processing companies hold over farmers and livestock markets.”
The Journal article explained that, “Big companies already own most of the broiler chickens raised in the U.S., which they then contract with farmers to raise on their behalf for a fee. By contrast, most cattle are raised by independent ranchers and feedlot owners who sell them to meatpackers for slaughter and processing. The pork sector has been more of a mixture of the two systems, but company ownership has been increasing in recent years.
“Nebraska, the sixth-largest hog producer, has had a sharp decline in recent years in the number of farms that sell hogs.
“Supporters of the new law, which include the Nebraska Farm Bureau and big meat companies like Smithfield Foods Inc., the largest hog producer and pork processor in the U.S., say Nebraska lagged behind the rest of the country. They say that contracts between packers and hog producers used in Iowa and other states reduce farmers’ exposure to volatile swings in the price of feed and livestock.”
On the other hand, Ms. Gee pointed out that, “Critics argue that the law will make it harder for independent farmers to sell hogs without a contract, thereby weakening the negotiated cash markets that they say encourage greater competition and prop up prices.”
