CHEYENNE (AP) — U.S. Sen. Mike Enzi, R-Wyo., has introduced a bill he said would bring fairer prices to livestock producers.
The Captive Supply Reform Act amends the Packers and Stockyards Act of 1921, Enzi said.
Captive supply refers to livestock that meat packers directly own or control through contracts they issue to purchase the livestock before slaughter.
"Captive supply may be a business practice not well known to those outside of the industry, but it is a practice that has had a tremendous impact on the ranchers of the West," Enzi said. "The original goal of captive supply makes good business sense. All businesses want to maintain a steady supply of animals to ensure a constant stream of production and control costs. However, captive supply allows packers to go beyond good organization and business performance to market manipulation, and this is where the problem lies."
Enzi said his bill aims to end the potential for price discrimination, price manipulation and undue preferences.
Enzi's bill also would encourage electronic trading and would limit the size of contracts to the rough equivalent of a load of livestock, meaning 40 cattle or 30 swine.
Enzi said a few packing companies currently dominate 80 percent of the beef market. The companies act as a near monopoly, Enzi said, by buying cattle from themselves when the price of cattle is high, then buying cattle from independent producers such as Wyoming ranchers when the price of cattle is low. The net result is low costs for the packers and low prices for ranchers.
Sen. Craig Thomas, R-Wyo., also signed onto the bill, along with several other Midwest senators.
The bill has been referred to the Senate Agriculture Committee.
The Billings-based Western Organization of Resource Councils lent its support to the bill.
"We estimate the cost to family farmers and ranchers from the increased use of captive supplies amounts to more than $1 billion per year for cattle alone," said Mabel Dobbs, an Idaho rancher who chairs WORC's livestock committee.
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