The U.S. Department of Agriculture proposed regulations in June that the agency thought would restore competition and fairness to the livestock markets. This week House members from both political parties lambasted the proposal.
Republicans and Democrats showed an uncommon ability to set aside partisanship as members of both parties pummeled and piled on rules proposed by the U.S. Department of Agriculture to govern the livestock market.
The scene at the House Agriculture Subcommittee on Livestock, Dairy and Poultry hearing Tuesday was brutal, as one member of Congress after another labeled the regulations as “silly,” a “serious mistake,” “offensive” and a “clear violation” of what legislators intended.
“I’m watching this (hearing) through the Internet feed,” wrote DTN agriculture policy editor Chris Clayton, “and all I can think is ‘Talk about breaking out a can of Whoop *&%.’” (To listen to the full hearing, click here, thanks to FarmPolicy.org.)
The USDA proposed the regulations June 18. The aim of the rules was to restore competition to a livestock market that is increasingly dominated by a few larger producers.
The regulations would give contract poultry growers new protections in their dealings with large chicken processors. The USDA said the proposed regulations would also level the playing field in the hog and cattle markets. In particular, the regulations would give livestock raisers new rights to sue if they have been harmed by producers.
The regulations were issued under the Packers and Stockyards Act of 1921 by the Grain, Inspection, Packers and Stockyard Administration (GIPSA). GIPSA administrator J. Dudley Butler was one of the USDA officials on the receiving end of the House subcommittee’s wrath.
The regulations are part of a more widespread effort by the Obama administration to investigate whether portions of the agriculture business violate antitrust laws. The USDA and the Department of Agriculture are holding a series of hearings across the country on competition (or lack thereof) in various ag sectors, including poultry, hogs, cattle, dairy, retailing and seeds.
(To read an analysis of the regulations, see columns written by Daryll E. Ray of the Agriculture Policy Analysis Center at the University of Tennessee. See this column on poultry contracting; this column on the original intent of the Packers and Stockyards Act; and this column on how the proposed regulations address contracting arrangements in the poultry industry.)
Under Secretary for Marketing and Regulatory Programs Edward Avalos said the new rules were aimed at revitalizing rural communities that have seen a consistent decline in the numbers of independent producers.
“This is a way to revitalize rural communities,” agreed Dave Wright, president of the Independent Cattlemen of Nebraska. “Smaller producers will support their hometown businesses and this rule to increase fair competition will definitely be an advantage to small rural communities who right now are dying.”
The hearing Tuesday amounted to a full-bore, non-stop assault on USDA’s proposed regulations. The comments reflected the unified opposition to the proposed rules by large producer groups, such as the American Meat Institute, the National Cattlemen’s Beef Association, the National Pork Producers Council and the National Meat Association. All of these groups have asked for additional time to comment on the proposed regulations, and Republicans and Democrats alike demanded that the agency grant these groups up to an additional 120 days to file their objections and analysis. The USDA had wanted all comments in by August 23rd.
After this week’s lambasting, it seems likely that USDA will grant additional time for comments.
Only one member of the House subcommittee expressed any support for the new regulations. Rep. Leonard Boswell, an Iowa Democrat and farmer, told USDA officials, “You operated within your authority…I think I should say that. I’m the producer guy and I’m going to be that way.”
The objections of the other House members concerned more than just the length of the comment period. Almost every committee member said the USDA had gone beyond the intent of Congress — that, in fact, several of the regulations were specifically rejected during a series of votes leading up to the passage of the last Farm Bill. The regulations go “far beyond” any discussions in Congress, said subcommittee chair Rep. David Scott, a Georgia Democrat, and contain “a number of provisions that were discussed and voted down…(USDA) has very, very seriously overstepped its boundaries.”
Some members implied that adopting the regulations would bring a stiff reaction from Congress. “You aren’t going to like either the comments or what this committee is going to do…if you go ahead with this silly rule,” said Rep. Walter Minnick, an Idaho Democrat.
Members also objected specifically to a provision that would bar packers from selling livestock to other packers. The regulations would create a “field day” for lawyers, several House members said.
The vivid opposition to the new rules — some described it as an “ambush” — has set livestock and farm groups in motion. Late Thursday, more than 65 rural, ranch, farm and livestock producer groups — from the Alabama Contract Poultry Growers to R-CALF USA to Farm Aid — had signed a letter in support of the regulations.
The groups say they “are concerned by the negative reaction expressed by some lawmakers” at the hearing. And the letter states that the regulations proposed by USDA were required by the 2008 Farm Bill and were necessary to define the “unfair, unjustly discriminatory, or deceptive practice or device” prohibited by the Packer and Stockyards Act.
The letter lays out the larger rationale for the regulations from the point of view of livestock raisers:
“Over past decades, very little attention was focused on the effects of ongoing industry concentration and supply chain integration on the competitiveness of U.S. livestock and poultry markets. Now we find that competition in the market where producers sell their livestock and poultry to the packers has all but disappeared. Unfortunately, the ongoing livestock procurement practices of packers, which evolved with radical industry restructuring, has institutionalized unfair trade practices and manipulative marketing schemes that are now viewed by many as being normal and natural. We adamantly disagree with that view.”
The groups asks for “aggressive and decisive” enforcement of the Packers and Stockyards Act.
Agriculture writer Alan Guebert wrote that the call to extend the comment period on the regulations was “because the American Meat Institute, the packers’ powerful lobby, wants time to strangle ’em (the regulations) in their crib, undermine GIPSA’s new administrator, J. Dudley Butler, and, hopefully, elect a more packer-friendly Congress.”
“USDA should disregard these toads’ croaking and enact the new rules — and more to tackle packer captive supplies — to protect what’s left of independent markets and independent producers,” Guebert wrote. “It’s not only the right thing to do for producers and consumers alike, it’s what Congress ordered.”
Omaha, Nebraska, attorney David Domina, who has represented livestock raisers, and Robert Taylor, an Auburn University economist, made similar comments in a paper prepared for the Organization for Competitive Markets.
“Critics want to a delay in implementation of the Rules to study their economic impact,” Domina and Taylor wrote. “History discloses this is coded communication for a political rally for support against the Rules. The economics are well known and apparent where livestock is produced. The current market does not work for cattle, hogs or poultry. These new Regulations are a major first step toward establishment of a functioning market place.”
Meanwhile, the producer groups continue to shellac the USDA regulations. Steve Foglesong, NCBA president, said: “American cattle producers are innovators who have worked hard over the past several years to develop alternative marketing arrangements and marketing alliances to get paid for the value they add to their cattle. Whether intended or not, we believe that this rule jeopardizes these long-standing marketing arrangements that compensate producers for providing higher quality cattle.”
Jim Hamilton, writing for Buffalo Reflex in Buffalo, Missouri, said this story demonstrates that there is no such thing as “American Agriculture.”
“No, ‘Agriculture’ is more like a collision of tectonic plates constantly pushing and shoving against one another, periodically resulting in massive economic and cultural tremors, earthquakes and uplifts that reshape the entire landscape,” Hamilton continued.
The fight over these regulations is an earthquake in agriculture and in much of rural America. The fight is over who will have the power to shape the relationship between farmers and ranchers and meat producers — and this will shape the economic and social future of many communities in rural America.
This past week wasn’t an earthquake. It was a tremor. A larger eruption may follow.