Wednesday, May 12, 2004

A free market - but not for the small The free market is free until big companies help change the regulations to make it harder for smaller competitors to stay alive. That's the story reported on a website called wampum.com and based on reports from several national newspapers including the Washington Post ("Company's Mad Cow Tests Blocked", 4/15/2004) and the Miami Herald. These stories tell of a small Kansas slaughterhouse called Creekstone. The company is dedicated to packing and selling high-quality Black Angus beef. The company tries to avoid accepting cattle that have been fed antibiotic and hormones and tracks the origin and history of every animal it slaughters. Creekstone, in contrast to its biggest rivals, is highly conscious of animal welfare, worker safety and hygiene, and slaughters only about 1,000 head a day. After the mad cow scare, Creekstone, which exports a good percentage of its beef to Japan, was hurt by world fear of US beef. The US Department of Agriculture (USDA) currently only tests a small, random sampling of older cows, not enough to reassure many overseas consumers. As the wampum.com site summarizes: Creekstone decided to do something about that problem. It proposed to privately test each of their cows for mad cow disease so as to open the Japanese market. The testing would be done at an academic lab approved by the USDA but Creekstone would pay the entire cost. That testing would cost $18 a head, but it made sense for the company, which was facing bankruptcy. But as the Washington Post reported: But there is a big obstacle in the way of Creekstone's mad cow initiative: The U.S. Department of Agriculture will not allow it. The company has all the equipment it needs, but it does not have the kit of chemical reagents needed to run the tests. In the United States, the USDA controls the sale of those kits, and the agency ruled last week that only labs in the U.S. government's testing program can buy them. It's hard to understand the USDA's reasoning, and its public statement indicates that if it allows more than random testing, then people will become afraid that the whole beef supply is potentially tainted. Wouldn't it be good to find out, one way or another how extensive the problem is? And it will cost the government nothing. The Washington Post story has a theory about the refusal to sell the kits. While all American beef exporters have been hurt by the ban on sales abroad, Creekstone is especially vulnerable because it is small -- with less than 1 percent of the market -- and it only packs beef. The big players in the business -- companies such as Tyson Foods, Swift &  Co. and Smithfield Foods -- also sell pork and chicken and can weather the beef ban much better. If Japan will not buy their beef, the more diversified companies can sell pork, which they are doing now at a tidy profit. As a result… the beef export ban works to the advantage of the big firms and could end up squeezing many small operations such as [Creekstone's] out of business. The National Cattlemen's Beef Association is also opposed, fearing that testing for every animal will become the standard, raising the price of all beef somewhat, In this case, as in so many others, the USDA is working in favor of the beef oligopolies to screw the little guys. And you can bet that those companies have lots of lobbyists and campaign contributions to persuade the government with. 7:40:17 PM

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