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USDA Signals A Do-Over On GIPSA

Proponents of the GIPSA livestock-marketing rule were incensed by USDA's announcement last week that it intends to basically start over. The rule forwarded to the Office of Management and Budget last Friday didn't include many of the original provisions so hotly contested over the past 18 months. Still, those who opposed the rule as originally written aren't really celebrating either, because it just means the uncertainty will continue to stretch on and on.

Predictably, there were renewed cries by proponents of the GIPSA rule about manipulation of the market, and calls for investigations. Perhaps no claim was more ridiculous than the contention by one group that the market was manipulated on the day USDA made its announcement.

It may make for good media coverage, but even if you are of the mindset to believe that the packers control and manipulate the cash and futures markets, it makes no sense that they would exert more pressure at that given moment. If we're going to give packers credit as evil geniuses who could manipulate the feeding, retail and futures markets under the radar of economists, the U.S. Justice Department and GIPSA for all this time, why would they suddenly shed the disguise in celebration of the demise of the GIPSA rule?

The complaints aren't expected to result in anything, nor is there anything to suggest that anything occurred; it was simply an attempt by some to salvage political capital at a time when it appears to be slipping away.

It would be refreshing to actually have some evidence that stands up to scrutiny that the marketplace has been manipulated. The reality is that the packer share of the dollar has been falling at a faster rate than the feeding and cow-calf industry, but the production side as a whole is losing ground. Why? Because the transportation, marketing, distributing, packing and retailing industries aren't tied to our industry. As such, they can insist on maintaining their margins, and largely they have.

The problem is that we haven't been able to maintain or grow demand. Though we should always maintain vigilance to ensure that the marketing system is fair and competitive, we need to quit focusing on blaming the marketing system itself. Instead, we need to focus on what the data is absolutely crystal clear about.

Call up any land-grant university economist and ask where our record prices would be today without ethanol subsidies, or if we had the demand levels of the early 80s? The industry needs to work together to fix the real and substantial problems we face. To demagogue causes as a way of keeping movements alive and funded will do very little to begin the process of growing our industry.