Former Packer Exec Monfort
Joins Move To End Captives

GRAND ISLAND, Neb. —(AP)— Dick Monfort may carry the name of a meatpacking giant, but he too is a struggling cattle feeder faced with bottomed-out prices.

The former president of Monfort Inc. of Greeley, Colo., spoke out last Friday in support of cattle feeders who are boycotting a common practice by packers of buying cattle from feedlots and then setting prices later by formula, also called non-negotiated or "captive" sales.

"That kind of pricing obviously gives more leverage to the packer, which isn't good for the feeders when it comes to getting the best prices," Monfort told 250 cattlemen at an informational meeting about the boycott effort.

The boycott — started in September by about 150 feeders in Nebraska and now claiming around 400 participants — is aimed at resurrecting the practice of aggressive cash bidding for animals headed for slaughter at packing firms like IBP, Monfort and Excel.

The boycott was first expected to last two weeks but has been extended indefinitely because of growing support. Participating cattlemen in Nebraska and Kansas hope the effort will help push cattle prices back up to affordable levels.

"We need to make the market more competitive," said Monfort, who has operated a feedlot in Greeley, Colo., since he retired from his family's packing company in 1995 after 14 years as an executive.

Monfort said he has always negotiated his own cattle prices. He said he stays away from formula pricing because it puts the packer at a competitive advantage over the feeder.

"We do not need to alienate the packer because they need us, but we cannot just give him our cattle and throw up our hands," Monfort said.

Monfort and others stressed that packers should not be seen as the enemy in the boycott effort, but rather as a business partner.

"We must be careful not to blame the packers," agreed Les Messinger, a commodity broker with the Chicago Mercantile Exchange. "He's just doing a whole lot better job of getting the prices he wants than we are doing."

One by one, cattlemen from across the state took the podium at Friday's meeting to promote negotiating their own pricing rather than agreeing to formula pricing. The common theme was that while it may be a major risk for feeders to end formula-pricing agreements with packers, they would have the backing of at least 150 other feeders in the same situation.

"To those of you who might be somewhat fearful of changing your marketing techniques, I would like to offer you this — you are not alone," said John Roberts, a Lexington feedlot owner who is helping spearhead the boycott.

Just how much difference formula pricing makes in the price of cattle has been disputed by meatpacking companies and economists who insist it makes up about 25 percent of the market and does not greatly impact prices. Many feedlots insist the percentage is much greater and price is driven down by the practice.

"The only way to force cattle prices higher, to get our prices back to respectable levels, is to have everybody work together" to stop making non-negotiated sales deals, Monfort said.