States Moving To Force Price
Disclosure And Limit Packers

PIERRE, S.D. —(AP)— Despite pleas that it may hurt prices paid for livestock in South Dakota, the state Senate passed a bill Monday that would require meatpackers to post the prices they pay each day for livestock.

Firms failing to do so could be fined $1000 a day.

Supporters of the bill said private contracts meatpackers have with large feedlots reflect the true prices for livestock.

Sen. Frank Kloucek, D-Scotland, who is the prime sponsor of the legislation, said the state's farmers and ranchers are at a marketing disadvantage because they do not know the range of prices being paid by meatpacking plants.

"Only the packer knows the true price of a commodity," he said. "A market is only free if all the players have equal access to the price discovery system."

Opponents of the bill said it could cause out-of-state packers to stay out of South Dakota so they don't have to report their prices, backfiring by reducing competition for South Dakota livestock.

"If it applies to them, then why do they want to be here?" asked Sen. Mike Rounds, R-Pierre, who voted against the bill. "It has to do with whether or not we actually harm producers out there right now that might not have an opportunity to sell to a packer who's coming across the border."

The bill, which also allows farmers and ranchers to sue packers for triple damages if they discriminate in prices they pay for livestock, also may deter any firms thinking of building packing plants in South Dakota, said Rounds, who is Senate Republican leader.

The legislation, SB95, was approved 21-12 by the Senate, sending it to the state House for further consideration. It would affect meatpackers at Sioux Falls, Yankton and Rapid City.

Sen. Barb Everist, R-Sioux Falls, who voted against the bill, was unsuccessful in tacking on an amendment that said it only would become law if similar laws are passed in Minnesota, Iowa and Nebraska.

"It puts the pressure on the other legislatures to act," she said, adding that the bill may be unconstitutional because it may violate the Interstate Commerce Clause.

If meatpackers are engaged in unfair practices, the federal government should step in, she said.

"This is a federal issue, and by golly you have representatives in the federal government who should be doing more for you," said Everist, who is a lawyer.

But opponents of the Everist amendment, which failed 16-17, said South Dakota should be the first state to enact a law to require price reporting by meatpackers.

"Our job is to take care of the people in South Dakota," said Sen. Jim Hutmacher of Chamberlain, leader of Senate Democrats.

If South Dakota requires meatpacker reporting, other states will follow suit, added Sen. Eric Bogue, R-Dupree, which is in the heart of cattle country.

"They're going to follow us because it's the right thing to do," he said. "We don't want to be second to anybody."

Also a lawyer, Bogue said he does not agree that the bill would violate the Commerce Clause of the U.S. Constitution.

And he said Gov. Bill Janklow slapped a blockade on Canadian livestock and grain last fall, even though he admitted the action probably was not legal. Other states quickly did the same, Bogue said.

Dozens of farmers and ranchers watched the debate from the fourth-floor gallery above the Senate, occasionally cheering those who spoke in favor of the bill.

Kloucek said at least 13 other states may consider similar legislation.

"Whose side are we on?" he asked during the lengthy debate. "Set the stage for free and open markets."

South Dakota legislators may have to hustle to be the first to pass such legislation; Nebraska's lawmakers have also filed bills to regulate packer activities.

State Sen. Cap Dierks of Ewing, Neb., and 10 co-sponsors, including all members of the Agriculture Committee, presented a package of bills early this month that Dierks said he hopes could be the impetus for national reforms:

— LB832 requires packing companies to disclose prices paid for livestock under contracts and prohibits contracts that allow packers to determine when deliveries will be made. Under the current system, about 10 percent of all livestock sales are reported on the open market.

— LB833 prohibits packing companies from feeding livestock for slaughter.

— LB834 requires that meat from other countries be labeled.

— LB835 requires that livestock producers of all sizes be offered the same price for their animals, except for variances by quality or cost of acquisition, including transportation.

"The current system is a horrible way to do business. It's a wreck," Dierks said. "There is no question that this is what the livestock producers want."

Representatives of meatpacking firms are opposed the package.

"They require a lot from us but don't solve the real problem here, which is a severe oversupply in meats," said Dick Gady, vice president of public affairs for Omaha-based ConAgra Inc., parent company of Monfort.

The proposed labeling and contract requirements would make it more costly and difficult for packers to do business in Nebraska, Gady said. He said several of the bills are unnecessary because some packers including Monfort and Farmland already report all contract prices and none in the state feed their own livestock for slaughter.

"We're more than sympathetic for the plight of the producer," he said, "but this will not help producers."

Officials with Dakota City-based IBP Inc. refused to comment on the bills prior to the hearing.

Dierks and legislators the neighboring states organized a rally in Sioux City, Iowa, recently, where speakers demanded that the federal government enforce antitrust regulations against concentrated corporate agribusiness and meatpackers.

"We've got to save the independent producer who doesn't want to be an employee of Cargill," Kerrey said at the rally over a speaker phone while meeting with farmers in Columbus. "I think we've got a fighting chance to get it done."