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CattleNetwork.com – Wednesday – June 21, 2010
– 3:31 p.m. CDT
(quotes R-CALF USA CEO Bill
Bullard)
Jolley: New
GIPSA Proposal Ignites Civil War In The Cattle Industry
Every meat industry organization seems to agree on NCBA Vice President of
Government Affairs Colin Woodall’s statement about GIPSA’s proposal about
marketing contracts: “We’re glad to see Congress bringing attention to this
serious issue.”
From that point on, though, there is some serious disagreement. Woodall’s
comments as reported in a press release issued by the NCBA this afternoon
concluded with “As evidenced in the bipartisan comments made in yesterday’s
hearing, USDA has defied the intent of Congress and moved forward on the most
sweeping changes to the Packers and Stockyards Act in nearly 100 years — all
while making little initial effort to seek feedback from the livestock and
poultry industry.”
R-CALF’s CEO Bill Bullard says the proposal “clarifies what the nearly
90-year-old P&S Act meant by its prohibition against packers engaging in unfair,
unjustly discriminatory or deceptive practices, including making it clear that
if a producer is harmed by a packers actions, the producer does not have to show
that the packer’s actions also harmed the entire industry - known as “harm to
competition.”.
Without this clarification, the P&S Act would be rendered incapable of
accomplishing its objectives of regulating both fair competition and fair trade
practices which are the key components of the P&S Act. It helps put an end to
the packers’ practices of granting their preferred feedlots undue preferences,
such as more timely access to the slaughtering plant and higher premiums for
their cattle.
On the issue of transparency, Bullard said the proposal “Improves market
transparency by making sample livestock contracts available to all cattle
sellers, which will enable cattle sellers to better evaluate whether a contract
from one packer contains legitimate or arbitrary standards for which premiums
and discounts may apply.”
South Dakota Stockgrowers’ Association President Kenny Fox – who’s also a major
player in R-CALF – did a one-eighty on Woodall and said “The proposed rule would
enable enforcement of the Packers and Stockyards Act which was implemented in
1921 and has not yet been fully enforced.”
Responding to an inquiry by Meatingplace.com about a proposed radio debate on
the issue, AMI President J. Patrick Boyle said, “This rule would turn back the
clock on today’s modern livestock marketing system and ‘recommoditize’ the meat
industry. It would make illegal through the stroke of a bureaucrat’s pen many of
the practices that have been mutually beneficial to producers, their financial
lenders and packers alike, thereby jeopardizing the value-added, branded
products which our customers demand and placing U.S. meat exports at a
competitive disadvantage."
Woodall wants USDA officials to give the industry a longer comment period. He’s
concerned that such a sweeping change needs more than a cursory 60 day comment
period to fully discover its impact and an extra 120 days is necessary.
“They have yet to answer our requests to extend the comment period” he said. “No
matter where you stand on the issue, everyone would benefit from additional time
to analyze and provide feedback on this extremely complex rule.”
The South Dakota Stockgrowers Association was part of a group of 56 closely
related organizations that sent a letter to J. Dudley Butler, the suddenly
embattled Administrator of the USDA’s Grain Inspection, Packers and Stockyards
Administration (GIPSA) that urged him to refuse any extension, saying two months
is “ample time to fully assess and evaluate the succinct provisions contained
therein.”
Woodall firmly stated, “Even though the proposed regulation targets packers,
it’s the producer that will ultimately be hurt. The requirement to report and
justify contractual purchases from producers, while being measured on
‘fairness,’ could result in packers responding to the regulation through ‘risk
avoidance’ by stopping marketing agreements with producers.
In fact, the general consensus of opinion was the proposed ruling was a
‘spillover’ from the debate on the 2008 farm bill where language similar to that
used in the proposal was discussed and rejected.
Any proposal that would eliminate confidential market agreements and force
transparency by mandating all contracts be made public is a step that staggers
an incredulous Dave Nichols.
“I’m up here raising bulls in Southwestern Iowa,” he said, “and I don’t know of
any cattle rancher or pig farmer that would be willing to post his contracts for
everyone to see.”
“Butler’s claim that this would help repopulate rural American is ridiculous,”
he said. If you take the profit incentive out of cattle ranching by charging an
average price for everything, young people will not come back.”
“We’ve all worked hard for at least the last 20 years to develop and deliver a
higher quality product to the consumer and we’re getting ready to take another
step up.
This proposal shows no respect for the public and congress.”
Getting back to Woodall for a moment, his NCBA press release said, “Marketing
agreements have been the foundation for producer financing and producer
profitability for more than 60 percent of beef marketed. Without these
agreements, all cattle could be valued on the average, regardless of quality,
resulting in a generic market and generic product. History has proven that
generic products do not meet consumer demand. Without consumer demand, prices to
producers fall.
“The rule poses serious privacy concerns and provides no guarantee that
producer’s private information would not be exposed to the general public,
including competitors. The rule also places all producers in jeopardy of
litigation by their competitors or the government. Opening the cattle markets to
trial lawyers is not in the best interest of the marketplace, and we do not
support litigation as a means of securing producer profitability.”
Fox remains unmoved. “Any extension beyond the present August 23, 2010 date
would pose one more hardship for cow/calf producers in that it would virtually
guarantee a decision well past this year’s calf delivery dates and next year’s
yearling delivery dates. One more year could be the deciding factor for the
survival of some operations” he said.
Bottom Line - The House Agriculture Subcommittee on Livestock, Dairy, and
Poultry held a hearing yesterday to review USDA’s implementation of the
livestock provisions contained in the 2008 Farm Bill. Attending for the USDA
were Ed Avalos, Under Secretary of Agriculture for Marketing and Regulatory
Programs; Dudley Butler, GIPSA Administrator; Rayne Pegg, AMS Administrator, and
Cindy Smith, APHIS Administrator. Reportedly, Democrats and Republicans, in a
rare show of unity, questioned GIPSA’s efforts and expressed concerns that they
had gone beyond the intent of Congress.
An extension will probably be offered. To express your concerns about the
proposal, send an email to one or more of these USDA officials:
ed.avalos@osec.usda.gov;
john.ferrell@osec.usda.gov;
john.d.butler@usda.gov;
alan.r.christian@gipsa.usda.gov;
gary.mcbryde@usda.gov;
s.brett.offutt@usda.gov
Chuck Jolley is a free lance writer, based in Kansas City, who covers a wide
range of ag industry topics for Cattlenetwork.com and Agnetwork.com.
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Vance Publishing All Rights Reserved.Vance
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