Agricultural News
Obama Administration Advocating Rule to Improve Fairness in Livestock Marketing
Mon, 21 Jun 2010 5:44:08 CDT
Ag Secretary Tom Vilsack says USDA's Grain Inspection, Packers and Stockyards Administration will publish a proposed rule that will provide significant new protections for producers against unfair, fraudulent or retaliatory practices. The proposed rules address concerns that have been discussed for many years and were developed at the direction of the 2008 Farm Bill - which requires USDA to carry out specific rulemaking to improve fairness in the marketing of livestock and poultry. We have an audio overview of this rule and some of the initial reaction to it- click on the Listen Bar at the bottom of this page to hear our comments.
The new rules will provide further definition to practices that are unfair, unjustly discriminatory or deceptive - including outlining actions that are retaliatory in nature, efforts that would limit a producer's legal rights or representations that would be fraudulent or misleading. Additionally - the proposed rules reiterate USDA's position that a producer need not overcome unnecessary obstacles and have to prove harm to competition when they have suffered a violation under the Packers and Stockyards Act.
The rules will also define undue or unreasonable preferences or advantages; establish new protections for producers required to provide expensive capital upgrades to their growing facilities - including protections to ensure producers have the opportunity to recoup 80-percent of the cost of a required capital investment; prohibit packers from purchasing, acquiring or receiving livestock from other packers and communicate prices to competitors; and enable a fair and equitable process for producers that choose to use arbitration to remedy a dispute.
Further - the rules will require that companies paying growers under a tournament system provide the same base pay to growers that raise the same type and kind of poultry - including ensuring that the growers pay cannot go below the base pay amount; provide poultry growers with a written notice of a company's intent to suspend the delivery of birds under a poultry growing arrangement at least 90 days prior to the date it intends to suspend the delivery; improve market transparency; outline protections so that producers can remedy a breach of contract; and improve competition in markets by limiting exclusive arrangements between packers and dealers.
The rule will be published on Tuesday in the Federal Register. GIPSA will consider comments received by August 23, 2010.
Here's a few of the groups who like what they see in the proposed rule:
There was a good deal of positive response to the proposed rule outlined by Ag Secretary Tom Vilsack Friday. R-CALF USA President Max Thornsberry calls the proposed Livestock and Poultry Marketing Rules a bold and absolutely essential step in ridding the U.S. cattle market of anticompetitive practices. He says the proposed rules not only establish standards for identifying when meatpackers have unlawfully engaged in granting unreasonable preference or advantage to a select group of cattle sellers - but also - it clarifies that a violation of the Packers and Stockyards Act can be proven without the need to also provide proof of predatory intent, competitive injury or likelihood of competitive injury.
Iowa Senator Chuck Grassley says there is more work to be done. Still - he says the Department of Agriculture has made a concerted effort to address some of the unprecedented levels of concentration in the agriculture industry. The Senator called the proposed rules a step in the right direction.
The American Farm Bureau Federation is also pleased with the proposed rule dealing with competition in the livestock and poultry industries. Farm Bureau President Bob Stallman says producers have had to bear the financial hardship of being at the whim of production contractors for too long - resulting in inequality in production practices, increasing losses and decreasing profitability. He says the proposed rule would level the playing field.
John Crabtree of The Center for Rural Affairs says the rule isn't perfect - but is the most aggressive, significant livestock market reform to come out of Washington - perhaps since the passage of the Packers and Stockyards Act itself. Crabtree predicts the rule will breathe some life, some competition back into our livestock markets. He promised the Center will fight tooth and nail to ensure the packers cannot weaken the rule.
Not every response to USDA's proposed rule was positive.
The American Meat Institute and National Cattlemen's Beef Association both issued statements Friday about their concerns with the proposed rule regarding livestock and poultry marketing practices. AMI says the rule could dismantle business models for livestock marketing and procurement if finalized. According to AMI Senior Vice President of Regulatory Affairs and General Counsel Mark Dopp - USDA is attempting to turn the clock back on livestock and meat marketing practices that have made the U.S. meat production system the envy of the world. Dopp called it a regulatory end-run around judicial rulings that would have a severe and detrimental impact on livestock producers and the meat industry.
NCBA President Steve Foglesong says NCBA has serious concerns with any efforts to increase government intrusion in the marketplace. Foglesong says meat producers rely on federal regulators to ensure the marketplace is free from anti-trust, collusion, price fixing and other illegal activities that could damage the viability of the market and interfere with market signals. He notes multiple studies have shown the current regulations in place have been successful in achieving those goals in the cattle market.
Foglesong says NCBA encourages USDA to closely involve producer input in every step of the rule-making process to make sure the final rule supports fair, open and transparent commerce without undue government intrusion that would hinder the ability of producers to market cattle as they please. NCBA plans to submit detailed comments during the 60-day comment period on the rule once it's published.
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