The U.S. Department of Agriculture has written new rules to govern the sale of hogs, chickens and cattle. Those new regulations have divided legislators representing rural America.
The Department of Agriculture’s proposed rules that would govern livestock markets have split rural America.
The rules are either the most important action government can take for rural communities, or they will cost the nation more than $14 billion and 104,000 jobs.
More than 5,000 ranchers and meatpacker workers came to Fort Collins, Colorado, this summer to give testimony on the rules in what the head of one cattle raisers’ group called “the most important day in the history of the U.S. cattle industry and in rural America.”
The National Farmers Union considers the rule to be a “Farmer and Rancher Bill of Rights.”
Meanwhile, the American Meat Institute (the trade organization for the packers) has issued an economic study finding that the rules would cost over 100,000 jobs and billions of dollars. (The study was conducted by John Dunham, the former senior U.S. economist with Philip Morris.) And the president of a mainline cattle raisers group said the rules would “turn the clock back 50 years.”
The goal of the rules, according to USDA, is, in fact, to turn the clock back by stemming the decline of independent livestock producers. In 1980, there were over 1.3 million cattle operations in the country. Today there are 950,000.
The number of hog farms has declined from 666,000 in 1980 to 67,000 now.
The USDA and others contend these independent producers are being squeezed out of business by packers and retail groceries that have grown so large they now have undue control over the market.
The rules are aimed at giving chicken, hog and beef producers more power in dealing with large packers.
The rules have not yet been adopted. The Agriculture Department is accepting comments on the proposal until November 22. And as the time for the USDA to make a final decision on the proposals grows closer, the arguments have become more heated.
Early this month, 115 members of Congress — 46 Democrats and 69 Republicans, largely from rural districts — wrote a letter to Agriculture Secretary Tom Vilsack opposing the rule. Vilsack wrote back saying the rules were needed.
Farm groups are divided. The National Farmers Union and R-CALF, a cattle raisers organization, support the rules. The National Beef Cattlemen’s Beef Association and the Texas Cattle Feeders Association are bitterly opposed to the rules.
Even Temple Grandin, the autistic animal science professor (played by Claire Danes in an HBO movie), has filed her objections to the rules in an article written for the left-leaning Huffington Post.
The map above shows all the congressional districts that have a higher than average percentage of rural voters. (The national average is 21%.)
Representatives from the districts in orange signed the letter to Vilsack, which asks for an economic analysis of the rules and states that the regulations “greatly exceed the mandate of the Farm Bill.” There are 84 representatives in this group.
Representatives from the green districts also have a high percentage of rural voters, but they did not sign the letter to Vilsack. Rural members from 106 districts did not sign the letter.
Members from 31 districts from urban districts also signed the letters. In those districts, fewer than 21% of voters live in rural communities. They are the pink districts in the map above. (Okay, maybe taupe.)
Of the 190 representatives from congressional districts with more than 21% of voters living in rural communities, 44% signed the letter to Vilsack expressing concern with the GIPSA rules.
The map shows some geographic splits among rural office holders. Representatives in the upper Great Plains didn’t sign the letter. Those in cattle areas in the lower Plains did. Alabama lawmakers didn’t sign. Missouri and Arkansas legislators did.
Though a majority of rural representatives didn’t sign the anti-GIPSA letter, some very powerful members did. The current chair of the House Agriculture Committee, Rep. Collin Peterson of Minnesota, signed the letter. So did the ranking opposition member, Rep. Frank Lucas of Oklahoma.
Concentration among meat packers led to the passage of the Packers and Stockyards Act in 1921. The act was intended to protect livestock producers from this growing concentration among buyers.
The interpretation of that act has been debated over the years. Finally, in 2008, Congress asked the USDA to address long-standing question about how the act should be interpreted.
The USDA responded with a set of regulations this past June. The rules address a number of issues. For instance, the new rules would require poultry processors to post standard contracts, so farmers can see what terms are generally being offered.
The rules also give livestock producers greater ability to sue if they find that packers have manipulated prices.
This is a constant concern of many livestock producers. The Associated Press investigated these claims in an article published in mid-October. The news agency “interviewed cattle producers in the nation’s big ranching states who reported having no choice but to sell the vast majority of their cattle to one buyer.”
“There’s actually no market. You either give them to these guys, or you have no market,” Bob Sears told the AP. Sears ran one of Nebraska’s largest feedlots until March, when he declared bankruptcy.
Industry spokesmen told the AP there was no collusion in how prices were set. But AP reporters found that “the kind of competitive bidding for livestock that once defined the industry has all but ended in many places.”
Moreover, according to the AP, “American beef production has remained almost stagnant between 1985 and 2009, growing just 6.4 percent, while the amount of beef from imported cattle has nearly tripled in that time.…”
The packers contend that the cash market is simply being replaced by contracts — and that contracts can take into account the quality of beef, paying more to ranchers who produce better cattle. The packers and some beef producers say that the proposed GIPSA rules would force meat buyers to pay all producers the same amount, a result that would penalize cattle raisers who raise high quality cattle.
The debate has grown increasingly bitter as the November 22 closing date on comments approaches. R-CALF counted the donations from agribusiness to the 115 signers of the anti-GIPSA letter sent to Secretary Vilsack. These legislators had received over $48 million in contributions from businesses or individuals connected with agriculture. (To download R-CALF’s list, click here.)
The president of the NCBA, Steve Foglesong, has issued press releases criticizing Vilsack’s response to the letter from the 115 legislators.
“Secretary Vilsack’s response may work for bureaucrats in Washington, D.C., but for those of us out in the countryside, he has done nothing more than ignore the pleas of thousands of cattle producers. His refusal leaves my fellow cattle producers and me asking, ‘What are they trying to hide?,’” said Foglesong. “The GIPSA rule will further inject the federal government into the market and could very likely result in financial devastation to a critical part of our country’s economy and in thousands of lost jobs at the time when economic growth and job creation are what we need the most.”
Vilsack is holding firm, even as others (such as Grandin and former Georgia Congressman Bob Barr) pile on.
Although many of the new GIPSA rules would govern the relationship between chicken contractors and poultry processors, there has been little public debate about those proposals.