Introducing the Free Market to Animal Ag

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In June the USDA released a proposed rule to bolster  the ability of the federal government  to protect farmers against abuses by corporate meatpackers—in other words, inject a little free-market mentality into an industry that’s been just the opposite for far too long. The public has until Nov. 22 to comment on the proposal. But August is turning out to be the month when people in Minnesota and across the nation have a genuine chance to make their voice heard on this critical issue.

On Aug. 17, LSP farmer-members and staff will meet with Minnesota Attorney General Lori Swanson in Redwood Falls to discuss how to rein in corporate control in the livestock industries. Also participating in the meeting will be Lynn Hayes of Farmers’ Legal Action Group, Bill Bullard, head of R-CALF USA, and Rhonda Perry, livestock producer and director of the Missouri Rural Crisis Center.

The Aug. 17 meeting will feature  a discussion on how to provide input
on the USDA’s proposed rule before the Nov. 22 comment deadline.

LSP members and staff are also attending a Department of Justice/USDA workshop
Aug. 27 in Fort Collins, Colo., on livestock concentration issues. This is one of several such workshops being held across the country, and it represents the first time two cabinet members—U.S. Secretary of Agriculture Tom Vilsack and U.S. Attorney General Eric Holder—have taken input directly from farmers on livestock concentration issues. This is a big deal.

Providing better enforcement criteria through the existing Packers and Stockyards
has long been sought after by LSP and allied farm groups who advocated for the inclusion of a rule-making directive in the 2008 Farm Bill.

LSP is encouraged to see a proposed rule being released for comments by farmers and other members of the public. Consolidation and vertical integration within the livestock industry has created a playing field ripe for abuse in which corporate meatpackers and large integrators manipulate markets, stifle competition and limit the options of a broad range of both independent and contract livestock producers.

One thing is clear — farmers are increasingly working harder for less than their fair
share, while corporate packers continue to consolidate both profits and control.

One telling fact: according to the USDA’s Economic Research Service, the share of
the consumer dollar received by America’s cattle and hog producers has dropped consistently and substantially over the past 25 years as corporate control over our food and agriculture system has accelerated.

For the average livestock producer, the proposed rule heads in the right direction, but should be seen as a start, not a finish. While not a cure-all for the ills of anticompetitive behavior and undue corporate influence in livestock markets, the new rule, when implemented, can address some of the egregious practices of meatpackers that farmers face.

Not surprisingly, the American Meat Institute (AMI) — the lobbying consortium for the nation’s biggest meatpackers — has come out blasting the rule. AMI members such as Cargill, Tyson, JBS and others are causing harm to America’s farmers and rural communities by providing undue preference and unfair advantages to preferred operators, which oftentimes include their own production operations.

Clearly, AMI and corporate meatpackers will fight the proposed rule and indeed any federal action that might hamper their ability to squeeze farmers and manipulate livestock procurement and pricing.

Just as predictably, the leadership of commodity groups such as the National Cattlemen’s Beef Association and the National Pork Producers Council are
following the corporate meatpackers’ lead, voicing worn-out arguments as they prioritize their allegiance with packers rather than everyday working farmers.

While a fuller analysis is being conducted, LSP believes that the rule is a good
step forward
but much more is needed. Our livestock-producing members are hopeful the series of USDA/Department of Justice workshops taking place across the country to solicit input on competition issues in agriculture will embolden Congress and the Obama Administration to take additional measures to create fair and competitive markets for farmers and consumers.

In terms of the new rule, of particular significance is USDA’s firm assertion that
farmers do not have to show competitive injury to the entire marketplace for an action to constitute a violation of the Packers and Stockyards Act. This is contrary to some recent court decisions, which have ruled that a farmer must essentially show harm to competition in general as well as injury to himself or herself in order to prove a violation of the Act.

In addition to our ongoing analysis of the proposed rule, LSP is reaching out to thousands of livestock farmers during the comment period. We will be gathering input, encouraging involvement, and not only discussing the new rule but also what other actions should be taken in farm country to ensure fair and competitive markets.

For details on how to make a comment on the proposed rule before Nov. 22  via e-mail or regular mail, click here, or contact LSP’s Adam Warthesen at 612-722-6377.

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