Department of Agriculture - Research Paper Example

This rule proposes changing the marketing agreements that are established between packers and suppliers through the changing of judicial precedent. Ultimately this would make it easier for suppliers to sue in the Packers & Stockyards Act Lawsuit. Furthermore, this act would make it less likely that a packers union to utilize such an agreement. In the end, it was postulated that most, Cattle, Pig & Poultry producers as well as meat & poultry processors oppose this regulatory change. In the past, these marketing agreements help livestock producers manage volatile changes in prices through the establishment of long term contracts.

In many respects it has been argued that these long term agreements only benefit large packing concerns and by banning these agreements it becomes easier for smaller packers to compete and ultimately create more bidding pressure on cattle, pig & poultry producers. Although this sounds great on paper the experience in reality may not be the same. Many producers favor long term agreements owing to a great deal of uncertainty in the price of livestock. The paper demonstrated that the price of livestock is 500% more volatile than the price of meat. . This (Theoretically) would lead to a decreased demand for meat.

The cascading effect may not only lead to overall drop in demand for meat and meat byproducts but could also lead to a decline in the quantity of jobs in the industry. If producers would not be allowed to enter into long term marketing agreements, ultimately there would be a 500% more volatile would translate to higher uncertainty in the market and make it difficult to guarantee long-term stable employment. Currently there are more than 14 million people looking for employment in the United States and this regulatory change would theoretically remove approximately 21,000 stable jobs from the worker pool.

The implications from this would be a strongly negative effect on the American economy. Moreover one could postulate that these changes would also have a negative effect on the long term prospects of stable employment for retailers as well. With increased prices of meat products this may reduce the overall profitability of meat products at the retail level. Lastly this uncertainty would lead to a difficulty in the production of quality production products such as raising U.S. Prime or top end U.S. Choice.

Without a guarantee that top quality livestock will receive a profitable price, than it may be the case that many ranchers will focus their efforts away from breeding higher quality cattle and move towards more generic cattle. In terms of trickle down effect one can expect some negative consequences for suppliers to the cattle, pork and poultry industries. As there is less incentive to produce high quality livestock one can expect a negative consequence for growers of