In Herman Melville's classic novel, “Moby Dick,” Queequeg, a key shipmate and tatooed-native from the South Sea Islands, would attempt to see into the future by tossing chicken bones across the deck of the ship. How those chicken bones fell in relation to each other foretold the harpoon man of the impending fate of their doomed vessel, the Pequod.
In a capitalist system, one needn't throw chicken bones across the floor to understand what's in customers' minds, or to gain insight into what trends or preferences lay in the near or distant future. Today's consumers spend nearly half of every food dollar outside the home and, on average, have much less experience in food preparation than previous generations.
A recent survey noted 85% of adults delay decisions on what they're having for dinner until 4:30 p.m. that day. So, the food industry, and the meat sector in particular, has had to develop products to meet the needs of time-starved, hungry American families. Consumers have been sending strong and undeniable signals they want a quality product that's consistent from purchase to purchase.
This key point highlighted in a Grain Inspection, Packers and Stockyards Administration (GIPSA) report prepared for Congress this summer. It found the driving force behind the use of marketing agreements by meat packers and livestock producers is “increased demand by consumers for higher and consistent quality beef.”
The use of these agreements by meat packers to secure livestock, and ensure quality and consistency control, is vital to producing a product that will attract new consumers, meet changing consumer demands, and help ensure profitability and longevity for everyone in the chain.
Marketing agreements are also quite popular among a growing number of producers. The agreements allow producers to lower costs and reduce risk, helping to cushion volatile market forces.
From the producer's perspective, such agreements certainly remove much of the nail-biting that takes place prior to market day. In short, it's a win-win scenario for everyone involved.
Legality recently upheld
The legality of marketing agreements was recently upheld by the U.S. Court of Appeals for the 11th Circuit in a case involving Tyson Fresh Meats, the nation's largest beef packer. The 11th Circuit opinion cleared Tyson of violating the Packers and Stockyards Act (PSA) and reaffirmed Tyson didn't break the law through its use of marketing agreements with independent cattle producers. The Court noted Tyson had legitimate business interests for entering into such agreements.
The judges unanimously disagreed with the plaintiffs, who claimed Tyson used cattle marketing agreements to manipulate the cattle price and who sought to have the use of such agreements banned. In finding for Tyson, the Court said: “The evidence is undisputed that marketing agreements provide a more reliable and stable supply of cattle for meat packers, reduce their transaction costs for purchasing cattle, and allow them to better match price to actual quality and yield.”
The appellate court judges also wrote: “While talk about the independence of cattle farmers has emotional appeal, the PSA was not enacted to protect the independence of producers from market forces.”
Significantly, the Court, in discussing the plaintiffs' preference for a cash market, concluded the plaintiffs “are entitled to their preferences, but they are not entitled to force those preferences on other producers and the packers.”
When the meat industry succeeds at providing high-quality, consistent products that meet consumers' needs, everyone benefits. The industry and its 500,000 employees benefit globally from maximizing the ability to compete, and hundreds of millions of consumers benefit from being availed a wider variety of quality, wholesome foods.
Perhaps Captain Ahab should have paid more attention to the fortunes foretold by the chicken bones on the deck of his ship about the white whale hunting him. Luckily for U.S. consumers, and thanks to the recent 11th Circuit decision, producers and processors needn't invoke black magic to decipher their fortune.
By working together and offering a product consumers are itching to buy, the likelihood of fairer seas and calmer skies ahead exists for everyone.
J. Patrick Boyle is president and CEO of the American Meat Institute, a national trade association of U.S. meat and poultry companies and their suppliers.