STATEMENT OF

THE AMERICAN FARM BUREAU FEDERATION

TO THE

SENATE AGRICULTURE, NUTRITION AND FORESTRY COMMITTEE

REGARDING

LIVESTOCK ISSUES

Presented by

Richard Kjerstad, President

South Dakota Farm Bureau Federation

June 10, 1998

Mr. Chairman, my name is Richard Kjerstad. I am the President of the South Dakota Farm

Bureau. My four sons and I have a grain, livestock and cattle feeding operation in western South

Dakota about 50 miles east of Rapid City. We are involved in all phases of beef cattle ranching

from cow-calf to finishing in the feedlot and selling for slaughter.

I am here today on behalf of the American Farm Bureau Federation. The American Farm Bureau

is the nation's largest general farm organization with member state Farm Bureaus in all 50 states

and Puerto Rico, representing 4.7 million member families. We appreciate this opportunity to

testify before the Committee on livestock issues today.

Farm Bureau is deeply concerned about low livestock prices and the impact that they are having

throughout rural America. All sectors of livestock production -- pork, poultry, lamb and beef

cattle -- are being affected. There are many factors that are contributing to this situation such as

the weak export market and the strong dollar coupled with an increased supply of all meats in the

U.S. All sectors of the livestock industry are challenged with how to improve market competition

and restore prices for the producers.

There are opportunities to improve the situation for producers and that is why we are here today.

Comprehensive collection and reporting of marketing information is critical. It is important to

improve the collection, timeliness and reporting of all transactions. Farm Bureau policy states

that livestock packers who process more than five percent of the national daily slaughter should

be required to report all cash and contract prices and terms of sale to the Federal Market News

Service. We urge the industry to provide such requested information voluntarily, but will support

mandatory price reporting if the voluntary efforts are inadequate.

Farm Bureau, along with numerous other agricultural organizations, sent a letter to the Senate

Agriculture Appropriations Committee urging language to be included in the Appropriations bill

for the Economic Research Service (ERS) to reallocate its resources towards short-term

commodity situation and outlook forecasting. The number of commodity reports has been

drastically reduced and commodity analysts are being told to minimize their situation and outlook

work.

The need for affordable, dependable information on commodity production, consumption, trade

and pricing is very important, especially in light of the Freedom to Farm Bill. Congress has stated

in this legislation that American agriculture must be more market oriented. This is not the time

for ERS to de-emphasize its role in providing basic information and analysis of market conditions.

Continued monitoring and evaluation of competitive versus noncompetitive marketing practices in

the livestock and beef markets continues to be a high priority among producers. A high level of

concentration in the packing industry continues to persist. Once again, ensuring that the proper

data is collected and disseminated to the industry so that producers can have the necessary data to

make business decisions is critical.

Ensuring a competitive value-based marketing system for the cattle industry is important to Farm

Bureau. This would include information and definitions about captive supply, formula pricing,

grid pricing and other marketing arrangements and contract relationships. This information

should be made available to the producers and packers as well. We firmly support the rights of

producers and packers to enter into these types of marketing arrangements. However, such

contracts should not be used to manipulate the market to the detriment of the producers.

There are existing authorities under the Packers and Stockyards Act making it unlawful to engage

in any unfair, unjustly discriminatory or deceptive marketing practice. With numerous

consolidations and mergers in agribusiness, we urge Congress and the Administration to closely

monitor these mergers and acquisitions so that the producers' interest is kept in the forefront. It

appears that the consumers' interest is the focal point of many of these investigations by the

Justice Department.

The Grain Inspection Packers and Stockyards Administration (GIPSA) and the Justice

Department have initiated several enforcement actions against those allegedly involved in illegal

pricing, purchasing or procurement practices. We urge the Administration to utilize existing

authority to the fullest extent possible to maintain the integrity of the livestock markets.

Likewise, we urge Congress to adequately fund GIPSA so that they have the resources necessary

to do their job.

There are several legislative initiatives to assist the livestock industry that we support. One is

Country-of-Origin labeling. This legislation in the Senate, S. 617, would require that imported

meat and meat products be labeled so that the United States consumers would be able to identify

the country of origin at the retail sales point. Not only would this legislation provide consumers

with information that they want, but it would also help bring U.S. labeling laws into uniformity

with requirements of most of our trading partners around the world.

We also support S. 1291, the Interstate Distribution of State Inspected Meat Act. Farm Bureau

believes allowing meat that has been processed and inspected by a state inspection facility, which

by law must already provide for a food safety level at least equal to a federally inspected facility,

to move in interstate commerce makes good sense. I want to emphasize the fact that by

coordinating the efforts between the state and federal inspection facilities, the small and mid-size

processing plants could expand their operations due to their increased market opportunities.

Farm Bureau strongly supports the incorporation of livestock dealer trust provisions into the

Packers and Stockyards Act. We support the establishment of a trust fund for the benefit of the

seller of livestock until the seller receives payment in full for the livestock. The American Farm

Bureau has been working with other industry organizations to formulate language that would be

beneficial to the industry. We look forward to continuing to pursue a dealer trust and working

with this Committee on passage of the language in the Senate this year.

The livestock industry is constantly changing to keep up with the times. With these changes it is

vitally important that the proper data is collected by USDA so that all segments of the industry

can make appropriate and informed business decisions. Market information is vital if independent

U.S. producers are to be competitive in the world market place.

Mr. Chairman, the future of agriculture depends on expanding trade opportunities and foreign

market development. Our goal as livestock producers is to expand and grow with the industry.

We cannot curtail domestic growth at these times of low prices. We must look to future export

markets in order to sell and develop our products to maintain strong demand and prices that are

reflective of the market value. Competing in foreign markets is difficult when we must compete

with new rounds of subsidies of other countries. Congress can provide the resources and tools

necessary such as enhanced GSM credits and funding for Foreign Market Development and the

Market Access Program. These are integral resources for agriculture during these times of low

prices and we urge Congress to utilize and fund these marketing tools.

Thank you for this opportunity to testify today. I will be happy to respond to any questions.