As you read this, meat industry lobbyists are roaming the corridors of power in D.C. wearing buttons that say, “Kill GIPSA Rule.” For those of you who aren’t up on your acronyms, here’s a rough translation: “We Hate the Free Market.” Family farmers and others who think a free and open market is a good idea have until Nov. 22 to get a different message to Washington.
As we’ve reported in this blog before, in June the USDA released a proposed rule to bolster the ability of the USDA to protect farmers against abuses by corporate meat packers—in other words, inject a little “free-market” into an industry that’s been just the opposite for far too long. Specifically, the USDA’s Grain Inspection Packers and Stockyards Administration (GIPSA) is seeking public comment on a proposed rule that clarifies how the agency will enforce the Packers and Stockyards Act, passed in 1921.
That’s right—all of this is about enforcing a law that’s been on the books for almost 90 years. But that doesn’t diminish its potential for fixing some major problems in a modern livestock industry that resembles something out of a muckraking novel from the early 20th Century. The Packers and Stockyards Act is squarely aimed at ensuring farmers receive a fair opportunity to market livestock, and prohibits meat packers from using unfair, discriminatory or deceptive practices in the procurement of slaughter-ready animals.
Proposals that use “fair” and “market” in the same sentence scare groups like the American Meat Institute, which represents the nation’s meat packers. It’s no surprise AMI’s members would like to see the Packers and Stockyards Act remain ancient history—if this rule goes through, they stand to lose the sweetheart deals and unfair price advantages that have given them an unprecedented stranglehold on the industry.
But it may be a surprise to the general public that two groups which claim to represent the best interests of livestock producers—the National Cattlemen’s Beef Association and National Pork Producers Council—are also doing their best to undermine the proposed rule. Actually, it’s not such a surprise when one considers the history of NCBA and NPPC. In reality, these two organizations haven’t spoken for the average farmer or rancher for quite some time. Both groups have giant packers as close advisers, making them in reality not “producer groups,” but “packer-producer groups”—with the emphasis on “packer.”
On everything from Country of Origin Labeling of food to sensible pollution standards for factory farms, these packer-producer groups have repeatedly ignored the views of the average livestock farmer and chosen to side with the giants in the meat industry.
Now, when it comes to GIPSA, the NPPC and NCBA are at it again: taking a position that not only goes against the interests of the people they claim to speak for, but is actually helping put them out of business.
It’s pretty hard to ignore the reality of today’s livestock industry, but somehow these two powerful groups have done just that. Increased consolidation, greater horizontal and vertical integration, and the manipulation or suppression of the open market by giant meat packers is leaving farmers working harder for less, with fewer options to market livestock. This has caused the erosion of truly competitive markets.
In the beef sector, the top four packers slaughter well over 80 percent of the nation’s cattle. Today, over 65 percent of the nation’s hogs are slaughtered by just four firms. Consider this: according to conventional economic wisdom, when four businesses control more than 40 percent of a market, it’s no longer a competitive one. We passed the danger zone long ago. In fact, even the USDA admits meat packing is now one of he most monopolistic industries in existence.
Top officials from the Pork Producers Council and Beef Association say GIPSA will threaten “relationships” between livestock producers and packers. Such a statement implies the Tysons of the world see farmers and ranchers as partners in some sort of give-and-take “relationship.” Not in your wildest dreams. As packer consolidation has compounded for the past 20 years, we’ve seen a persistent drop in farmers’ share of the retail dollar in both hogs and cattle. It’s a “take-it-or- leave-it” market, and guess who is forced to take whatever the packers are offering?
The proposed GIPSA rule won’t fix all the major issues facing the livestock industry, but it is a step in the right direction and will potentially end some of the most abusive buying tactics of big packers.
Rank-and-file family farmers, as well as anyone else concerned about a fair and open livestock market, need to counter the meat packer and commodity group messaging. Check LSP’s latest action alert to learn how to submit a comment before the Nov. 22 deadline (a sample letter is available here).
Submitting comments on the need to enforce a 90-year-old law may not be as easy as wearing a button with a snappy saying on it, but then honest acts of people power seldom are.