Weigh In On Competition Rules

“Concerns about a lack of fairness and commonsense treatment for livestock and poultry producers have gone unaddressed far too long,” said USDA Secretary Tom Vilsack Friday. “This proposed rule will

June 21, 2010

4 Min Read
Weigh In On Competition Rules

“Concerns about a lack of fairness and commonsense treatment for livestock and poultry producers have gone unaddressed far too long,” said USDA Secretary Tom Vilsack Friday. “This proposed rule will help ensure a level playing field for producers by providing additional protections against unfair practices and addressing new market conditions not covered by existing rules.”

The proposed rule – to be issued by the Grain Inspection, Packers and Stockyards Administration (GIPSA) – is required by the 2008 farm bill, which specifies that USDA carry out specific rulemaking to improve fairness in the marketing of livestock and poultry. The rules were published in the Federal Register today (click here.) USDA offered a taste of those rules Friday (see the list at the end of this article).

“While we’re still looking at the details of the proposal, in general, we have serious concerns with any efforts to increase government intrusion in the marketplace,” says Steve Foglesong, president of the National Cattlemen’s Beef Association (NCBA). “Cattle producers support free-market principles and we deserve the right to enter into private negotiations between willing buyers and sellers – just like other sectors of American business. NCBA will fight to protect the use of contract and alternative marketing arrangements in the cattle industry to satisfy the demands of our consumers.”

According to the USDA, “During farm bill discussions in 2007, over 200 organizations across the country urged Congress to include a livestock title to improve market fairness and competition for producers. Additionally, USDA identified other areas where new rulemaking is needed to ensure the marketplace is fair and competitive for producers. Many of the concerns addressed in the rule were raised during the dozens of Administration Rural Tour stops attended by Vilsack last year, and the joint USDA-Department of Justice Competition Workshops held this year. Additionally, GIPSA held three public meetings in 2008 to gather comments, information and recommendations from interested parties.”

Incidentally, the aforementioned Competition Workshops are not complete. The one for cattle and beef is scheduled for Aug. 27 in Fort Collins, CO – four days after the comment period is scheduled to close for the new rules.

Many of the concerns raised by USDA are the same old suspects and straw men yammered about for years. For instance, there’s consolidation, concentration and captive supplies in the cattle business – all of which have been proven by credible studies to benefit rather than hinder both producers and consumers.

GIPSA will consider comments about the proposed rule received by Aug. 23. Comments may be emailed to [email protected] or mailed to Tess Butler, GIPSA, USDA, 1400 Independence Avenue, SW, Room 1643-S, Washington, D.C. 20250-3604. Copies of the proposed rule and additional info can be found at www.gipsa.usda.gov by clicking on Federal Register.

“At the end of the day, we’re not just cattle producers, we’re beef producers; and the success of our business relies on our ability to meet specific consumer demand at the local retail meat case, while at the same time get rewarded for the value we add to our cattle,” Foglesong says. “We encourage USDA to closely involve producer input throughout every step of the rulemaking process to make sure the final rule supports commerce that’s fair, open and transparent without undue government intrusion that would hinder producers’ ability to market cattle when, how and where they want to.”

Among the proposed rule protections announced by USDA Friday are:

  • Provide further definition to practices that are unfair, unjustly discriminatory or deceptive, including outlining actions that are retaliatory in nature, efforts that would limit a producer's legal rights, or representations that would be fraudulent or misleading. Additionally, the proposed rule reiterates USDA's position that a producer need not overcome unnecessary obstacles and have to always prove a harm to competition when they have suffered a violation under the Act.

  • Define undue or unreasonable preferences or advantages.

  • Establish new protections for producers required to provide expensive capital upgrades to their growing facilities, including protections to ensure producers have the opportunity to recoup 80% of the cost of a required capital investment.

  • Prohibit packers from purchasing, acquiring or receiving livestock from other packers, and communicate prices to competitors.

  • Enable a fair and equitable process for producers who choose to use arbitration to remedy a dispute. Additionally, clear and conspicuous print in the contract will be required to ensure producers are provided the option to decline the use of arbitration to settle a dispute.

  • Require that companies paying growers under a tournament system provide the same base pay to growers who raise the same type and kind of poultry, including ensuring that the growers’ pay cannot go below the base pay amount.

  • Provide poultry growers with a written notice of a company's intent to suspend the delivery of birds under a poultry growing arrangement at least 90 days prior to the date it intends to suspend the delivery.

  • Improve market transparency by making sample contracts (except for trade secrets or other confidential information) available on GIPSA's website for producers.

  • Outline protections so that producers can remedy a breach of contract.

  • Improve competition in markets by limiting exclusive arrangements between packers and dealers.

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