Column submittal of 10/22/08 by David Kruse, President, CommStock Investments
Copyright 2008 @ CommStock Investments, Inc., David Kruse
Theodore Roosevelt said it was the obligation of those in business to support their industry by being members of their trade associations. He believed that it was wrong to sit on the sidelines and take advantage of the work done by others. I've long practiced Roosevelt's advice. I'm a proud member of the Corn Grower's Association, R-Calf and am a founding member of the Organization of Competitive Markets.
It is R-Calf that I'm focused on today after the U.S. Justice Department and a group of state attorney generals filed suit to block the JBS/Swift purchase of National Beef, the country's 3rd largest packer after finding anti-trust and anti-competition problems with merging the nation's 3rd, 4th and 5th largest packers into the country's largest packer.
The Justice Department approved the purchase of Smithfield Beef by JBS-Swift, so it was a split ruling. R-Calf had been spending 80% of it's time fighting the merger and I and virtually everyone else gave virtually no chance to the Justice Department stopping the deal based on previous history of Justice Department action. OCM legal counsel gave me the heads up a few weeks ago that this time was different and that Justice Department lawyers were taking scrutiny of this merger to a higher level. R-Calf, who led the opposition to this merger said of the Justice Department announcement, “We are grateful that the Justice Department and State Attorney's general have considered our concerns and are taking meaningful action to protect U.S. cattle producers and consumers against the abusive market power that can result from industry concentration. R-Calf will now review any options the industry may have to address the Smithfield Beef Group component of this merger.”
National Beef says that they will contest the Justice Department action. Smithfield Foods is breathing a huge sigh of relief as it desperately needs the $565 million it will get from the sale to bulk up to lift the heavy weight of further concentrating the hog industry. That industry has become the hog producer's contest of losing money until the last producers with a dollar left wins. It now has $565 million dollars more to lose, raising hogs before the lights go out.
Kudos to R-Calf. The organization has done what most thought could not be accomplished more than once because they focused on doing what's right and let the chips fall where they may.
R-Calf fought for COOL, NCBA fought against it. R-Calf fought to limit Canadian cattle imports, NCBA would let them all in. R-Calf fought USDA to allow private testing of cattle for BSE, NCBA opposed it, destroying our beef trade prospects as a result. R-Calf fought captive supply. NCBA encouraged uncompetitive market arrangements between packers and large feeders. R-Calf fought to block the JBS-Swift acquisition of National/Smithfield Foods merger while NCBA feigned interest but no real concern over the deal. NCBA stopped representing cattle producers some time ago on issue after issue.
Theodore Roosevelt advised membership in your trade organization. . . as far as I'm concerned, there is only one trade organization for cattle producers - R-Calf.
David Kruse is president of CommStock Investments,Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet. CommStock Investments is a registered CTA, as well as an introducing brokerage. (Futures Trading involves risk. Past performance is not indicative of future performance.)
CommStock Investments, Inc., 207 Main St., Royal, IA, 712-933-9400 www.commstock.com. E-mail to: email@example.com
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