Do We Want Competition in the Packing Industry – or Concentration?
By John Queen
American Chianina Joural
It is rather ironic that those most committed to keeping the Canadian border closed to live cattle trade also tend to make the most noise about packer concentration. Concentration in the packing industry is often blamed in times of low cattle prices.
Today’s strong cattle prices tend to dispel any notion that cattlemen are currently victims of unfair or inadequate competition, and I am not one to blame packer concentration for every ill that affects the cattle industry. But I do feel that robust competition in the packing industry is ultimately very good for cattlemen, and helps ensure that we are selling our cattle in a fair and open market-place. Competition is especially critical for those raising cattle in regions that do not have an established history of supporting packing capacity. If cattlemen in the West and Northwest, for example, have to rely on a single packer as the destination for their cattle, they may very well face a price squeeze. An even more difficult scenario presents itself when these cattlemen have no packers in their regions whatsoever. In this case, they will most likely face a market price squeeze and will be forced to absorb significant freight costs.