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Officials from the U.S. Department of Agriculture and Department of Justice will begin hearing testimony Friday in Colorado from the nation’s livestock producers, but many producers met Thursday night in advance of the scheduled workshop to discuss their concerns about competition and government intervention in their industry.
The Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF) set a goal of bringing 25,000 rural residents to Fort Collins, Colo., for participation in public testimony sections at the workshop. On Thursday, many of those who had gathered crowded into a local hotel ballroom to further highlight their concerns about a lack of competition in the industry.
“This is the opportunity of a lifetime to genuinely make a positive impact on the future direction of your U.S. cattle industry and the future of Rural America,” wrote Max Thornsberry, president of the R-CALF board, while inviting members to attend the workshop and pre-workshop activities. “…[T]he very reason the Attorney General and the Secretary of Agriculture have scheduled this unprecedented meeting in Fort Collins is because they do understand there is a serious problem in the U.S. cattle industry and it is affecting all of Rural America. The purpose of this meeting is to determine if it is the will of U.S. cattle producers and Rural Americans that immediate, aggressive action be taken to restore competition to the U.S. cattle industry.”
The scene, based on ground reports from agriculture reporters Chuck Zimmerman and Chris Clayton, is reminiscent of the pre-workshop town hall meeting held in Iowa prior to the first DOJ/USDA joint workshop on competition in the seed industry. Many of those gathered hope to push federal regulators to crack down on issues of competition within the cattle and other livestock industries.
At nearly the same time, however, advocates of a different flavor also gathered their forces in an effort to better organize their message for federal officials.
Members of the National Cattlemen’s Beef Association and National Pork Producers Council donned “pull the rule” stickers and gathered to voice their opposition to proposed changes in the Grain Inspection, Packers and Stockyards Administration (GIPSA) rules, as required by the Food, Conservation and Energy Act of 2008. Because the rule, which seeks to increase fairness in the marketing of livestock, has become so controversial, the USDA has extended the public comment period until Nov. 22.
Those who support the rule change believe that the livestock industry has become increasingly consolidated and vertically integrated, which has resulted in fewer farms and ranches nationwide. For instance, there were more than 660,000 hog farms in 1980, but only 71,000 exist today. In the cattle industry, there were 1.6 million farms in 1980, but only about 950,000 exist today. In addition, hog producers received 50 percent of the retail value of a hog in 1980, but only received 24.5 percent in 2009. Cattlemen, who received 62 percent of retail steer value in 1980, received slightly more than 42 percent of value in 2009.
Those who oppose the rule change argue that the proposed changes go far beyond what was required by Congress and, in some cases, are contrary to court decisions and previous congressional votes. The end result of the change, according to information distributed by the National Pork Producers Council, will be “a chilling effect on innovation and flexibility.” They believe that since the rules do not define a justification for offering different prices for livestock, packers might opt to pay one price to all producers — “almost certainly the lowest!” The very rules aimed and diminishing vertical integration within the industry, they argue, will be the very things that drive the industry toward higher vertical integration.
The very fact that federal officials are discussing possible antitrust violations within the sector while the USDA considers GIPSA changes had drawn the ire of several Republican senators.
On Wednesday, U.S. Secretary of Agriculture Tom Vilsack received a letter from Sens. Pat Roberts of Kansas, Saxby Chambliss of Georgia, Mike Johanns of Nebraska, Sam Brownback of Kansas and Tom Coburn of Oklahoma that expressed concerns about the nature of the workshops and “press accounts” that a USDA employee was encouraging individuals in favor of the GIPSA changes to attend.
“We continue to have concerns about the objectivity of your Department’s actions with regard to the [GIPSA] proposed rule of June 22, 2010 and the ongoing Department of Agriculture (USDA) / Department of Justice (DOJ) competition workshops,” wrote the senators. “Even though you assured us that the workshops would ‘be organized and conducted as open and balanced forums to provide an opportunity for diverse viewpoints to be heard,’ recent press accounts of an email sent by a USDA official concerning the upcoming agriculture competition workshop in Fort Collins, CO, would suggest otherwise. A USDA employee in a Colorado field office used his official government email account to pass along a message from an interest group soliciting attendance at the workshop.”
The senators have requested Vilsack provide them the number of USDA and non-USDA recipients who received the referenced email; the content of all follow-up or received messages in relation to that email; department memos or directives sent to USDA employees asking for assistance in soliciting attendance at the workshop; and a description of the department will ensure that the workshop is conducted fairly.
“Furthermore, USDA is currently in a public comment period for GIPSA’s proposed rule,” the letter continues. “However, GIPSA’s proposed rule fails to mention the August 27, 2010 workshop as a part of the public comment process. GIPSA repeatedly cited comments from the May 21, 2010 poultry workshop in the “examples of market behavior” document released in conjunction with the proposed rule. Given this linkage of the workshops and the rule making process, we request USDA clarify whether comments from the workshops will be incorporated into its evaluation of GIPSA’s proposed rule.”
Readers who want to learn more about competition in the U.S. beef packing industry are encouraged to read a report filed by Clement Ward, agricultural economist at Oklahoma State University.
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