Attached is the letter Sen. Dierks (retired) has asked me to circulate to you on LB176. It is useful to understand that scope and size the price “meltdown” in the hog sector. From 1997 to 2000, 2,500 hog producers were forced out of business. It was a time of deeply and widely felt financial and emotional crisis in our state. Out of the expectation that “somebody ought to do something”, the Legislature responded with the Competitive Livestock Markets Act. Sen. Dierks was the Chair of the Agriculture Committee during that period of time. LB835, the Competitive Livestock Markets Act was his Priority Bill. It enjoyed overwhelming support before it was signed by Governor Johanns. It has served our state well. In my book, it was our Legislature responding to a crisis in a measured, timely, and appropriate way. I was proud of our state.
Cap Dierks’s letter also reminds us there is a price problem in the beef sector today causing a massive loss of equity in both the finished beef sector as well as for cow calf producers. As you can tell when you read Cap’s letter, he still remembers, and he still cares.
Thank you for your consideration,
John K. Hansen, President
Nebraska Farmers Union
1305 Plum Street, Lincoln, NE 68502
402-476-8815 Office 402-476-8859 Fax
402-476-8608 Home 402-580-8815 Cell
P.O. Box 206
Ewing, NE 68735
February 1, 2016
I served as the Chair of the Nebraska Legislature’s Agriculture Committee during the economic crisis of 1998 and 1999 caused by depressed hog prices that put thousands of hog producers out of business. It is important to remember that the crisis was caused by the pork processors who drove the market down to 7 cents per pound.
When I say crisis, it was not just hog producers who were being squeezed out of business. The whole rural community was hurting. Our agricultural lenders were in trouble, feed suppliers, and everyone that provided services to hog producers, including veterinarians were getting squeezed.
The phone calls were many, heartfelt, desperate, and painful. Many millions of dollars of equity were lost within a very short period of time. People wanted and needed help. Everyone was wondering what we could do to help the people who were being squeezed out.
The Legislature’s Agriculture Committee introduced four bills. LB832, LB833, LB8345, and LB835. Three of these four bills were combined and became the Competitive Livestock Markets Act. It was obvious that the Packers and Stockyards division of USDA were not doing their job to oversee and police agricultural markets to keep them competitive.
The Legislature did the right thing. Governor Johanns signed the bill. When the pork packers saw what happened and that Congress was getting pressure to also act, the cash price of hogs jumped up over night. While it took some of the financial pressure off, it also proved they were manipulating the price.
There is a meat packer caused crisis in the country today. Our feedlots are losing $300 to $600 per head on their cattle, the price of calves continues to sink, and the price of beef in the store has hardly moved. LB176 will weaken the legal leg that the remaining beef ban stands on. LB176 turns the pork processors loose so they can get more captive supply to further depress and control pork prices, both cash and pork. That will not help pork producers in the long run, and it will also set the stage for the destruction of the beef industry that my family depend on for our livelihood.
It looks like to me that instead of weakening the Competitive Livestock Markets Act with the passage of LB176, the Legislature ought to be looking for ways to put more competition into our livestock markets. It is never a good idea to get rid of competition, which is just what LB176 does. I respectfully ask you to vote against LB176. This bill solves no problems, but it will make the market problems we already have worse.
M.L. Dierks, Legislative District 40, Retired