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A bill that has generated many emails and telephone calls to my office is LB 176.
LB 176 narrows a restriction under the Competitive Livestock Markets Act that prohibits livestock packers from directly or indirectly owning or feeding livestock. The bill, in effect, would remove the restriction on packers owning hogs during the production stages.
The bill was prioritized last year by Sen. Schilz, but a filibuster leading up to a cloture motion failed to get the needed 33 votes to succeed. So, LB 176 was taken off the agenda for the rest of the legislative session. I supported LB176 last year and continue to do so this year.
During the interim, Sen. Schilz sought an Attorney General’s Opinion on the aspects of LB 176. When the opinion was received in October it stated three main points:
1) Packers that currently have no processing facilities within the borders of Nebraska can engage in production contracts under current law, even without the passage of LB 176;
2) Packers that currently have facilities in Nebraska can take advantage of current law by shuttering their Nebraska processing plants, and moving that production across the border to neighboring states allowing them to access Nebraska producers for vertical integration. It should be noted that if all three of the current packers in the state were to close down their facilities, Nebraska would stand to lose approximately 10,000 jobs. Beyond the job loss, the shuttering of processing facilities will result in hundreds of thousands of dollars in lost property tax revenue and would raise shipping costs for producers thus driving even more producers out of business.
3) Passage of LB 176 would serve to not only help keep these packers and their facilities in Nebraska, it would allow the state to put certain contract protections into place for producers, and would allow both Nebraska producers and Nebraska packers to grow their businesses, creating new valuation and stimulating job creation.
Sen. Schilz feels that, essentially, under current law we are preventing business from coming into the state and contributing to the growth and prosperity of our state. And by passing LB 176, we are fixing this unleveled playing field and encouraging these packers to remain and invest in upgrades in their ageing facilities in Nebraska.
Thus, Sen. Schilz elected to make LB 176 his priority bill for 2016 also.
As someone who was raised on a farm where we milked cows, raised hogs and chickens and grew corn I can’t say that I especially like this bill, but we had seen declining pork production in this state long before this bill was introduced and we will continue to lose producers in the future if we do nothing. LB 176 gives someone the option of contracting with a packer that is located in this state. Currently, packers that are located outside this state, can contract production in this state. Packers located in the state cannot directly own hogs in this state. No packers are allowed to own the land or facilities used to raise hogs. We currently have the capacity to slaughter more hogs than are raised in Nebraska so we currently send feeder pigs out-of-state to be fed and then ship them back into the state to be slaughtered. We have large privately-held companies located in other states that already operate in this state that contract with local producers to feed hogs. In return, they could be under contract with packers to supply hogs thus skirting our current laws on packer ownership and sending profits out-of-state. What packers want is a hog that is exactly the same weight, length and shape as the next. They are supplying a consumer that wants each piece of pork they buy to be exactly the same as the last one they purchased, so some of this vertical integration is consumer driven.
On another note, as of the beginning of 2016, Nebraska is the only state in the United States to prohibit this type of vertical integration. Processors are looking at the cost of major upgrades to their aging facilities in Nebraska or building new facilities where pork production is expanding. Not passing LB 176, effectively keeps Nebraska at a competitive disadvantage in pork production.