The latest proposed rule change to the Packers and Stockyards Act by the Biden Administration is attempting to set meat production back decades by encouraging litigation and limiting how livestock producers can market their animals to packers.
In the proposed rule, USDA attempts to circumvent Congress and the courts to reverse the longstanding legal standard that parties must demonstrate harm to competition to sue and win under the Packers and Stockyards Act Section 202(a) or (b).
Removing the need to show harm to competition will encourage frivolous lawsuits. To protect themselves, meat packers may be forced to curtail the use of Alternative Marketing Agreements (AMAs) to minimize these costly litigation risks.
“Unfortunately for the Biden Administration, Secretary Vilsack has tried these changes before,” said Julie Anna Potts, President and CEO of the Meat Institute. “They have failed before the courts, conflict with Congressional intent and are a blatant attempt to pick winners and losers in the marketplace. Under these proposed rules, everyone loses, the livestock producer, the packer and ultimately the consumer.”
Portrayed as an effort to increase competition, this government interference comes when fed cattle prices were at record levels for most of 2023, surpassing the 2014-2015 previous record highs, and now, well into 2024, cattle prices remain at record levels.
“What is the Biden Administration trying to fix?” said Potts.
And the cattle price outlook for 2024 continues to be bullish, with USDA projecting the annual average price of cattle to increase over the 2023 record based on a smaller cattle supply.
Contrary to USDA’s assertion, these changes would introduce uncertainty into the market and de-couple the demand signals producers receive from beef consumers, including consumers’ willingness to pay for value-added attributes. At low points in the cattle cycle, like this year’s historically small cattle herd, it puts at risk the value producers earn from sustained beef demand, and as the expansion phase of the cattle cycle begins it would undermine the benefits earned from growing beef demand.
“In response to consumer demands for value-added meat products like ‘no antibiotics ever,’ ‘grass-fed,’ or even someday ‘carbon neutral,’” said Potts, “AMAs have rewarded livestock producers for investing in these attributes while ensuring meat packers can make the high-quality products consumers want to feed their families.”
In addition, the Meat Institute believes the proposed change violates the “major questions doctrine,” as articulated in the Supreme Court’s ruling in West Virginia vs. Environmental Protection Agency, because the U.S. Department of Agriculture is acting without the permission of Congress and proposing administrative rules that will have a dramatic effect on all stakeholders in the meat and poultry markets.
“The President and his Administration continue to pursue policies that will increase costs for consumers. From Secretary Vilsack’s proposed changes to the Packers and Stockyards Act’s rules to USDA’s delayed modernization of pork inspection to EPA’s proposed wastewater guidelines, these policies will prove costly to the 98 percent of American households who purchase meat to feed their families,” said Potts.
Share of the Consumer Dollar
U.S. Secretary of Agriculture Tom Vilsack today said the share of the consumer dollar received by farmers and ranchers was dropping. In the beef market, the share of the consumer dollar is steady with the meat packer and processor receiving the smallest share.
