Packer ownership of hogs debated

Senators debated a select file bill Jan. 21 that would lift the current restriction on meatpackers owning hogs.

Under LB176, introduced by Ogallala Sen. Ken Schilz last session, a person who owns, leases or holds a legal interest in a swine production operation could enter into a contract to produce swine for a packer. The producer, or contract grower, would own the land and facilities used to raise the livestock and the packer would own the swine. Schilz made the bill his priority bill this session.

Schilz said Nebraska is the only state that prohibits packers from directly or indirectly owning hogs. Because packers in other states are not subject to that restriction, packers who process Nebraska hogs could simply move to a neighboring state, Schilz said, shuttering their Nebraska plants and eliminating thousands of jobs.

Between 1997 and 2007, the number of hog farms in the state fell by more than 60 percent, Schilz said, a trend he predicted will continue. He said lifting the restriction would allow Nebraska’s pork production industry to grow and compete with those in other states.

“The packer ban is not saving small farms,” Schilz said, “and Nebraska is losing to neighboring states that don’t have the ban.”

Schilz introduced an amendment that would allow a producer to discuss the terms of the contract with anyone, including a lawyer, banker or spouse.

Sen. John Stinner of Gering spoke in support of the bill. He said the measure would grow the state’s pork production industry, adding to the state’s property tax revenue and boosting the economies of rural communities that face population loss.

“I think it’s an economic development tool,” Stinner said. “I think it’s a way of reversing some of the adverse trends we’re seeing in rural Nebraska.”

Sen. Dan Hughes of Venango also supported the bill. He said lifting the restriction would benefit rural communities by creating more opportunities for young farmers. He said Nebraska already exports most of its agricultural products, many of them produced under contract.

“There are contracts on virtually everything we raise, and it’s good business,” he said. “If we want to grow our state, this is one way we can do it.”

Sen. Al Davis of Hyannis spoke against the bill. He said it would eliminate the open market that currently exists in Nebraska. If the bill passes, he said, producers would have little choice but to contract with large packers if they want to sell their hogs.

“That is really chaining those farmers to a corporation,” Davis said.

Davis filed an amendment that outlines a contract grower’s rights and, among other protections, would prohibit packers from discriminating against producers if they decline to join grower associations.

Sen. David Schnoor of Scribner also opposed the bill, saying that it would create one-sided business relationships that favor large corporations like Smithfield Foods at the expense of small independent farmers.

“This is brought by a big industry so they can integrate their market from birth to slaughter and beyond,” he said. “The packers would then own everything in this process that makes money. The producer would own everything that costs money, and they would stand all of the risk.”

The Legislature adjourned for the day without voting on the bill.