The fools game of livestock production …

Farmers and ranchers invest big, work hard, and take risks while believing the market will take care of them. It hasn’t, and it won’t until the concentrated monopoly power is broken up and competition is restored.

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Catholic Rancher Mike Callicrate: ‘Eating Truly is a Moral Act’

Blogs |  Oct. 21, 2019

“My stance on agriculture is an expression of my Catholic faith and the values I was raised with.”

By Alexandra Greeley

Catholic Mike Callicrate is an outspoken champion of independent farmers and ranchers, and who dedicates himself to preserving their shrinking numbers. After all, as he has stated, they are “the backbone of America.”

Now a resident of both Colorado Springs and St. Francis, Kansas, Callicrate has an obvious passion for rural life, which started as a child growing up with seven siblings south of Evergreen, Colorado. “I became really interested in raising livestock when spending time with my cousins in Fort Collins on their diversified farm,” he said. “My parents supported all the agriculture you could fit onto our 5 acres, including a garden, chickens, horses, my brother’s turkeys, and my 4H sheep project.”

While still in high school, he also developed an interest in the sport of bull riding. “I became a professional bull rider and braided bull ropes for myself and other bull riders,” he said. “I had a rodeo scholarship. So that was my profession for 10 years. It got me through college and into agriculture.”

After graduation, Callicrate eventually moved to St. Francis to start his own farming and ranching operation. “I really made the connection between food and faith after meeting Brother David Andrews, then executive director of the National Catholic Rural Life Conference,” he said. “He reinforced my view that eating is a moral act because our food choices have an impact on farmers, workers, animals, and the environment.”

Callicrate wrote a stirring article for the June 2019 issue of the Catholic Rural Life magazine. He said, “My stance on agriculture is an expression of my Catholic faith and the values I was raised with. As a cradle Catholic, I was taught that life and work have a moral dimension and that we are expected to do good things for others and fulfill a role of responsibility in our home and community. Eating truly is a moral act.”

Callicrate has worked hard over the years to explain to diverse audiences how food choices are connected to economic and social justice issues. He served as an adviser for several documentary films, including Food Inc., and popular books such as The Omnivore’s Dilemma, and Fast Food Nation.

On his farm, he’s worked to develop a regenerative production model, which consists of raising Wagyu-Angus cattle, Berkshire pigs and laying hens. He also markets directly to consumers. “Our meat is the best there is,” he said. “The animals are not stressed when slaughtered. They are processed right on the farm, instead of being hauled long distances. The carcasses are shipped to Colorado Springs, where they are cut up into wholesale and retail portions.” Several restaurants partner with Callicrate, along with small specialty markets.

Customers can buy the meat at the two retail stores he operates in Colorado Springs and online. He also has a food hub and processing plant that serves as a distribution point for other small regional food producers.

Callicrate feels that local parishes have not done enough to explain the connection between food and faith. “The priests give representatives of big chain supermarkets time at the pulpit to encourage parishioners to shop their markets as a fundraiser,” he said. “But big chain retailers are intent on driving down prices to farmers and ranchers and importing food from wherever they can find it the cheapest, despite worker and animal abuse and environmental degradation. We will lose our family farms and local food processors unless we are willing to support them.”

Note: For more information about Callicrate and his various business ventures, visit

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“It’s Our Last Chance!” See you in Omaha!

When the Omaha based Federal judge, Lyle E. Strom, reversed the jury’s verdict and the $1.28 billion dollar jury award in the Tyson/IBP case, we lost our last chance to fix what little was left of the cattle market. Like with the repeal of Country of Origin Labeling (COOL), the Strom decision, and the eventual refusal of the Supreme Court to hear the case, were green lights to the big meatpackers and retailers to continue and step up their plunder and pillage of the cattle industry.

Today, the cattle producer is short $1,000 per head of the consumer beef dollar compared to what a supposedly less efficient industry was delivering to the cattle owner in 1970 when there were many buyers for finished cattle. Today, nearly all the small to medium-sized slaughter plants are out of business, over 40% of our ranchers are gone, and over 80,000 cattle feeders have quit.

Yes, the big meatpackers are stealing our cattle! There is NO market. Like the game of “Fantasy Football”, we have Fantasy Market, complete with a complicit USDA, bought and paid for university economists, meatpacker owned market analysts like Cattle Fax, and meat packer owned organizations like NCBA providing false cover for what is now the biggest cattle theft in history. The big packers really are “Gangsters, thugs, and thieves”!

See you in Omaha! Bring your pitchforks!

April 15, 1999

It’s our last chance!

“The IBP lawsuit is all that is standing between the cattle producer and bankruptcy.”

– Randy Beard, attorney, Pickett vs IBP

The market power of the big four packers is forcing cattle producers out of business and is clearly on a path, if left unchecked, that will lead to the total elimination of a sustainable cattle industry.

“It is clear proof of greed and monopoly control when consumers are buying record pounds of beef at record high prices and producers are going broke. Market prices are fixed below producer cost. U.S. cattle producers have not produced enough beef to meet U.S. consumer demand since 1951. This year will be the smallest U.S. calf crop since the early 1950’s. There is something wrong when packers are allowed to operate in blatant violation of federal laws, the P&S and RICO Acts,” Callicrate charges. “I am calling for immediate Department of Justice action.”

– The Agribusiness Examiner

IBP is the biggest packer controlling nearly 40% of the cattle slaughter market. We believe IBP leads the way in setting prices and the other packers follow. In the early to mid 1970’s IBP and the other big packers found it more advantageous to cooperate rather than compete (A Boston consulting group analysis). They continue with that same philosophy today. The biggest four-firm concentration has increased from 36% of the U.S. cattle slaughter to today’s current level of 87%. IBP continues to set record profits at the same time cattle producers continue to go out of business.

Former Arizona Governor Bruce Babbit, now Secretary of the Interior, during the 1988 Iowa Democratic presidential caucuses branded IBP a “corporate outlaw.” He singled it out as “a monument to everything shabby and backwards and wrong in the American economy – not only because the company lies and cheats, but because it believes its employees are the problem and not the solution.”

Today’s problems are not new:

 “It has been brought to such a high degree of concentration that it is dominated by few men. The big packers, so called, stand between hundreds of thousands of producers on one hand and millions of consumers on the other. They have their fingers on the pulse of both the producing and consuming markets and are in such a position of strategic advantage they have unrestrained power to manipulate both markets to their own advantage and to the disadvantage of over 99 percent of the people of the country.  Such power is too great, Mr. President to repose in the hands of any men.”

 -These words were spoken on the floor of the U.S. Senate by Wyoming Senator John Kendrick in 1921

Following the intense pressure of producer litigation, the Packers and Stockyards Act of 1921 (P&S Act) was successfully legislated to prevent a packer monopoly from occurring again. Unfortunately, concentration of the big packers is far worse today than in 1921.

The government has failed in its duties to enforce the P&S Act while ignoring clear violations, resulting in what researchers today agree is another powerful packer monopoly.

Recent USDA studies have failed to show a problem with concentration of captive supplies. Why, when every feedyard manager with a Monday morning showlist knows there is essentially no market?

The Russell Parker-John Connor study, SMALL BUSINESS PROBLEMS IN THE MARKETING OF MEAT AND OTHER COMMODITIES (Part 7–Monopoly Effects on Producers and Consumers), related the following:

“In about 1950, economists and econometricians started doing statistical studies relating the level of concentration to the level of profits.  Some of

the studies related concentration to the level of prices, and others to price-cost margins computed by the Bureau of the Census.  All these variables roughly measure the same thing: the costs of high concentration.  Nearly all the studies showed a positive relationship: as concentration increases, profits, consumer prices, and price-cost margins increased.

“The studies were also interested in looking for critical levels of concentration.  If they could be identified they would be very useful to public policy considerations. Is there some range of concentration where industries are workably competitive?  Is there a concentration value below which antitrust authorities and other public policy organizations shouldn’t be concerned?  Beyond this critical point does concentration rapidly become a problem?

“Models which were specified to determine if there was a critical level have shown that up to about the 40-percent level of four-firm concentration, there is no evidence that concentration is related to the levels of prices, profits or price-cost margins.  In other words, industries with that level of concentration or lower are effectively competitive.

“Starting at about the 40-percent level of concentration, prices and profits start increasing and go up rapidly to about the 60-percent level of concentration where they level off.  There is no significant further increase in prices or profits beyond about the 60-percent level of four-firm concentration.  The conclusion is (pointing at the figure) that the effect of monopoly starts appearing when concentration goes above 40 percent and by the time concentration reaches 60 percent an industry is quite monopolistic.”

At the same time as four firm packer concentration has increased from 36% twenty years ago to today’s current high levels, consumers have continued to pay increasingly higher prices while producers have continued to receive less of the consumers’ meat dollar. Today the cattle producer has lost approximately 20% of the consumer dollar or about $300 per head. This has occurred at the same time the cattle producer has done more to produce a better product and the packer and retailer have done less. We believe this is clear evidence of abusive market power.

Anti-competitive practices, evidenced by what IBP termed the “Death March,” (Wall Street Journal) have eliminated competitors as well as producers. Independent packers have been regulated and predatory priced out of business. We are now left with a packing monopoly that is stealing from both producers and consumers as well as threatening not only our food supply but a safe food supply.

The P&S Act; the law currently in place to prevent this tragedy, has been ignored. The Secretary of Agriculture, Dan Glickman is responsible for the enforcement of this law but apparently lacks the political will to enforce it.

The P&S Act basically says that if what a packer is doing has the effect of reducing competition, they must stop. The Secretary has injunctive power to stop packers from violating the Act.

It has been proven that IBP uses captive supplies, those inventories of cattle available to IBP outside of the competitive market, to lower prices paid to producers. Recently IBP’s highly secretive captive supply arrangements have provided them with captive supplies as high as 122%. The cash market determines the value of these captive cattle. What is the cash market if the price leader IBP, doesn’t need any cattle?

The big packers do business with each other. Corporate Roundup – “In a move that made cattle feeders livid and has drawn attention from government regulators, ConAgra sold cattle to IBP for slaughter in late January 1998. ConAgra (and IBP) pushed cattle prices down with the deal, and left cattle feeders wondering if a competitive market — or laws against market manipulation — were still in force.”

USDA market reporters confirmed ConAgra sold 7250 head of cattle to IBP, breaking the cash market approximately $60 per head from cattle feeder asking prices. In today’s market a sale of this volume causes the entire industry to flush their inventories of cattle at the going low price. Feeders have only minutes to decide on the take it or leave it offers by the big packers.

The P&S Act prohibits packers from engaging in any unfair, unjustly discriminatory, or deceptive practice or device; or showing undue preference to any particular person of locality.

  • Feedyards on the IBP formula receive preferential treatment, both with higher prices and the ability to market finished cattle on a more timely basis realizing improved performance and feed efficiencies.
  • IBP bids “not to buy” at some feedyards, thereby discriminating against certain feeders. These are the cash feedyards that set the formula price for IBP’s formula feedyards.

The Act prohibits packers from apportioning territory.

  • The exclusive “Formula” arrangement shuts other packers out of IBP formula feedyards.
  • Simplot, the largest cattle feeder in the Northwest has a full joint venture partnership with IBP, sharing in packing plant profits. IBP controls the Northwest finished cattle market with essentially no competition in the area.

It’s now up to us; our government, the USDA, charged with protecting our freedom, maintaining economic fairness and equal opportunity has failed in its responsibility. The Packers and Stockyards Act gives individuals private right of action in the courts to address the damaging anti-competitive practices of the big packers.

In Pickett vs IBP, we are first asking the court for injunctive relief to make the packers stop interfering with the market, causing low cattle prices. For every $1.00/cwt. IBP is able to lower the yearly price paid for live cattle they make $115 million.  Secondly, we are asking the court for compensatory and punitive damages.

Regardless of whether a cattle producer is a plaintiff or a member of a potential class depending on the extent of class certification, all cattle producers will win if a fair market is restored.

This is the beginning of a national effort to restore market fairness and profits back to the farm gate. Independent agriculture is looking at the IBP lawsuit for an indication of where we are headed. A win in this lawsuit will be a win for the consumer, all independent agricultural producers and their communities. It will mark the end to the relentless pursuit of corporate profits at the expense of producers and consumers.

Mike Callicrate

Callicrate Cattle Co.

St. Francis, Kansas

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How to Fix the Cattle Market?

Captive Supply Reform

September 23, 2019

Feeders and ranchers alike have every reason to be upset at the hit cattle prices took following a fire in a Tyson slaughter plant back in August. We can’t call this downturn a collapse because the collapse came in 2015 when Congress rescinded Country of Origin Labeling (COOL). However, we were all hopeful that the market for feeder calves would be modestly increased over the previous years depressed prices. The fire dashed that hope.

Various articles in the Ag papers have advanced different ideas for fixing the market. The most comprehensive has been proposed by the Organization for Competitive Markets (OCM) which calls for: “Six Actions Sonny Perdue Can Take to Save the U.S. Cattle Market.” All six actions proposed by OCM are important and need implementation, however, their list omits the seventh – the only action that would actually restore competition to this non-competitive dysfunctional cattle market.

This solution was first advanced in 1997 by the Western Organization of Resource Councils (WORC) and was published in the Federal Register (Vol. 62. No. 9. Tuesday 14, 1997). The concepts proposed by WORC were subsequently picked up in The Captive Supply Reform Act (110th Congress, 1st Session S -1017) sponsored by Senators Tester, Enzi, and Johnson. A comprehensive solution, therefore, exists; what does not exist is a coordinated campaign to make the solution a reality. The solution as advanced by WORC is short in words but by no means simple in its implications:

No packer shall procure cattle for slaughter through the use of a formula or basis price forward contract. All forward contracts used by packers for purchase of cattle slaughter supplies shall contain a firm base price that can be equated to a specified dollar amount at the time the contract is entered into and be offered or bid in an open, public manner.

No packer shall own and feed cattle unless those cattle are sold for slaughter in an open, public market.

One does not have to be an economist to understand that the fundamental deficiency in the cattle market is lack of competition. In fact, it might help to not be an economist because most economists have been un-helpful in defining the problem or proposing solutions. The mechanism that the three dominate packing firms use to manipulate the cattle market are captive supplies – cattle that the packers either own outright or have committed for future delivery without ever having put a base price on them. Captive supply cattle are eventually priced on the average of the “spot market” at the time of delivery.

The problem is that the “spot market” upon which these captive supply cattle are priced is so small as to not represent the real value of the cattle. This miniscule “spot market” is easily manipulated and subject to shocks such as the fire in the Tyson plant. The solution as proposed by WORC is simple – the market for fat cattle should be open, transparent, and competitive. This is easily and inexpensively accomplished through electronic/video markets similar to those that cow-calf producers commonly use to market feeder calves. Rather than have a market based on a miniscule manipulated “spot market” all fat cattle would be subject to competitive market forces. The market information would by definition be transparent which means that anomalies in prices would be instantly apparent.

The legal basis for this solution is the Packers and Stockyards Act. Section 202 which reads in part:

It shall be unlawful with respect to livestock … for any packer… to:
(a) Engage in or use any unfair, unjustly discriminatory, or deceptive practice or device;
(b) Make or give any undue or unreasonable preference or advantage to any particular
person or locality in any respect whatsoever, or subject any particular person or locality to any
undue or unreasonable prejudice or disadvantage in any respect whatsoever; or …
(e) Engage in any course of business or do any act for purpose or with the effect of
manipulating or controlling prices, or of creating a monopoly in the acquisition of, buying,
selling, or dealing in, any article, or of restraining commerce.

The language is plain. If a packer feeds and slaughters cattle they own they are giving themselves “undue preference.” If a packer has a secret arrangement with a feedlot to give them a premium not available to other feedlots, they are giving that feedlot “undue preference” and competing feedlots “unreasonable disadvantage.” If packers engage in activities with “… the effect of manipulating or controlling prices” they are in violation of the Packers and Stockyards Act. Intent does not matter if the “effect” is to manipulate the market.

Predictably, opposition to captive supply reform came from the National Cattlemen’s Beef Association (NCBA) which disingenuously claimed that reform would eliminate value based marketing. That of course is not the least bit true. It is understood that each packing plant needs to know in advance the numbers and timing of cattle available to them in order to plan operations. The best way to accomplish this is through forward contracts. Captive supply reform only requires that a base price be set at the time of forward contracting. Premiums for high yielding quality cattle can be easily written into the contract, compensating producers for the value they offer through breeding and nutrition.

Some might legitimately wonder that because there would still be only three packers there will still not be adequate competition to improve prices. That is initially true. However, introducing captive supply reform allows for startup packers to compete on an equal basis with the big guys. It has been determined by those who study these things, that one modern packing plant meets all economies of scale. This means that instead of three packing firms monopolizing the market there can be 25 to 30 separate packing concerns with no decrease in production efficiency.

Introducing captive supply reform allows for the cattle industry to evolve to a structure that is truly efficient. This was the approach taken by the Justice Department in 1921. Instead of breaking up the packing cartel of that era they required that packers buy their cattle supplies in a transparent competitive manner. The packing segment of the cattle industry was actually at its least concentrated in 1975. The problem of monopolization is a modern phenomenon that has resulted because the Justice and Agriculture Departments no longer enforce the Packer and Stockyards Act.

Obviously, the packers Achilles heel is the Packers and Stockyards Act. That the Act continues to be ignored points to how corrupt this nation’s political system has become. None of the reforms currently proposed will be easily enacted because the packers will fight tooth and nail to stop all of them. Just look at how they were able to nullify Country of Origin Labeling (COOL), a commonsense measure that both consumers and livestock producers overwhelmingly support.

Organizations representing cattle producers fought for COOL for twenty years. We had it and then we lost it. The trap that the packers set forced organizations representing livestock producers to put all of their resources in defending COOL because COOL seemed to be the easiest to enact. But because our organizations often do not work in a coordinated fashion, they (we) lost on all counts. Meanwhile the dysfunctional market continues to put independent feedlots and cow/calf producers out of business.

Each one of the currently proposed reforms are needed to fix the cattle market. However, none actually restores competition except the proposal originally advanced by WORC in 1997. We all know it will be a tough fight, and we all know that our resources are limited. It is not a matter of doing a triage and saying we shall work for only this reform and not those. We need to fight for all of them as a block and we need that all likeminded organizations support each other in a unified approach. Benjamin Franklin said it: “We must, indeed, all hang together or, most assuredly, we shall all hang separately.”

Gilles Stockton
Stockton Ranch
Grass Range, Montana
406 428-2183

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UCCS September 2019 Acres

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