| While Alberta ranchers and feedlot operators struggle to avert bankruptcy due to the ongoing mad cow crisis, two American-owned meat packing plants that have a near monopoly in the province are profiting by paying rock-bottom prices to cattle producers, say some Alberta farmers and feedlot operators.
Alberta’s two biggest meatpacking plants, Lakeside Packers in Brooks (owned by Tyson Foods) and High River-based Cargill Foods control 70 per cent of the meat processing industry in the province.
Usually ranchers and feedlot operators have the option of selling their cattle directly to American buyers, but with the border closed their only option is to sell to Canadian-based packing plants, which gives the plants an unfair market advantage, says Jan Slomp, regional co-ordinator for the National Farmers Union.
A recent report put out by the Alberta Beef Industry Council, an organization that represents various stakeholders in the cattle industry, stated that average packer gross margins are 200 per cent higher than they were a year ago and more than 100 per cent higher than in the U.S. Packer gross margins are the difference between what meat packing plants pay for cattle they slaughter and what price they receive for the end product. Production costs are not factored into the statistic.
"(The report) is a clear illustration of markets not working for farmers anymore," says Slomp. "We farmers can no longer be gouged like this… It needs to be looked into under Canadian competition laws."
Tony Saretsky, interim chairman for the Alberta Beef Industry Council Committee, says he doesn’t want to point fingers at meat packers, but he says unless feedlot operators start getting paid a better price for cattle, the industry will be decimated. Feedlot operators can’t pay fair prices to ranchers for their cattle if they’re not receiving fair prices from the meat packers, he says.
"We’re fighting for our survival. We’re in a desperate moment in agriculture," says Saretsky. "I think most of the industry has sat on its hands and been idle. Now it’s time to fight."
Gary Mickelson, spokesperson for Lakeside Packers, says claims that meatpacking plants such as Lakeside are unfairly profiting are "misleading." Mickelson says meatpacking plants have increased production costs due to stricter new regulations on slaughtering cattle. He adds that they’ve also lost important markets for their product.
Meanwhile the federal Standing Committee on Agriculture has been investigating the pricing of beef at the slaughter, wholesale and retail levels since the mad cow crisis started and has recommended that the Competition Bureau launch an investigation.
However, the Competition Bureau’s commissioner, Sheridan Scott, said in mid-February that he has seen no evidence that the Competition Act "has or is about to be contravened," so no investigation will be launched at this time.
Alberta Agriculture has also announced it will look into how the BSE crisis has affected the prices consumers pay for beef, says Terry Willock, spokesperson for Alberta Agriculture.
Willock says the department will look at pricing at all levels of the industry, including processors, wholesalers and retailers. The business practices of meat-packing plants will not be singled out, she says. Willock says making a profit is not a crime in a free market economy.
The government’s price review won’t do anything for cattle producers, says Slomp
"They don’t want to stand up to these huge American transnationals," says Slomp.
Saretsky says Canadian legislation to ensure fair competition is weak compared to the U.S. and that’s part of the problem.
"(In the U.S.) the packer would be a little more severely dealt with in how he’s conducting his business. He’d be monitored and regulated," says Saretsky.
In February a federal court in Alabama ordered Tyson Foods to pay $ 1.28 billion after the company lost a class action suit fought by American farmers who successfully argued the company engaged in unfair market manipulation of cattle prices.
There’s no evidence that anything similar is happening in Canada and the U.S. case is currently being appealed by Tyson Foods. |
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