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Published September 07, 2010, 09:24 AM

Cattle industry has its day in antitrust battle

FORT COLLINS, Colo. — Agriculture Secretary Tom Vilsack and Attorney General Eric Holder got an earful from each side over proposed changes to the Packers and Stockyards Act when they held an Aug. 27 workshop in Fort Collins, Colo., on antitrust issues in the meat industry, but by the end of the day it was not clear where the Obama administration is headed in its large-scale investigation into antitrust in agriculture.

FORT COLLINS, Colo. — Agriculture Secretary Tom Vilsack and Attorney General Eric Holder got an earful from each side over proposed changes to the Packers and Stockyards Act when they held an Aug. 27 workshop in Fort Collins, Colo., on antitrust issues in the meat industry, but by the end of the day it was not clear where the Obama administration is headed in its large-scale investigation into antitrust in agriculture.

The meat industry workshop was the fourth of five workshops Vilsack and Holder are conducting around the country to try to figure out if antitrust laws have been violated as input suppliers and buyers of commodities and meat animals have merged in recent years. Vilsack said he is concerned about population loss in rural America and wants to find out if concentration in agriculture is making it unfair for producers to make a living. But while previous workshops on the seed, dairy and poultry industries explored the issues for future action, the Fort Collins event turned into a referendum on a Packers and Stockyards Act rule that the administration already has issued.

Two sides

Using authority from the 2008 farm bill and its own powers from the 1921 Packers and Stockyards Act, USDA’s Grain Inspection, Packers and Stockyards Administration has issued a rule that would require buyers of animals to reveal details of contracts to the government and to justify payments. The National Cattlemen’s Beef Association and the National Pork Producers Council, many of whose members have achieved specialized contracts with packers in recent years, say the rule would punish them for the increased returns they get for being innovative. The Ranchers-Cattlemen Action Legal Fund-United Stockgrowers of America, the National Farmers Union and their associates like the new rule, saying that it will help the government find out if buyers are giving undue preference to certain producers, particularly larger ones. They also contend the rule could revive the spot market for animals, which has gotten thinner and thinner in recent years.

Both sides arrived in Fort Collins a day before the workshop and put on presentations to the media that were a preview of testimony at the daylong workshop.

Alice Devine, the general counsel for the Kansas Livestock Association, said at the joint NCBA-NPPC briefing that the new rule is “pervasive government intervention.” The new rule will lower the standards for standards for what it takes to make a case and “opens the doors for trial lawyers.”

But R-CALF USA CEO Bill Bullard said at his briefing that the rule could stop the cattle industry from following the poultry and pork industries into contract production.

“We must preserve the integrity of the cash market,” Bullard said.

At the workshop, Holder said that, “as much as today’s discussion is about cattle, hog and other livestock industry issues, it is also about our nation’s founding ideas of fairness and equal opportunity . . . Although beef exports have been rising since the early ’90s, too many farmers and ranchers are fighting tooth-and-nail to make a living. This is a serious issue. And it’s a problem we can only solve by coming together — to listen, to learn, to share and to seek out solutions.”

Holder noted that after the Justice Department challenged the proposed merger of JBS and the National Beef Packing Co., the parties abandoned the transaction. “That was an important step — but we realize that it was only a small step. We would like to hear any lingering concerns. We would like to know what more we can do,” he said.

Battling Wal-Mart

But Mark Lauritzen of the United Food and Commercial Workers Union said that consolidation in the meatpacking industry is not as important an issue as consolidation at the retail grocery level led by Wal-Mart.

“Wal-Mart’s relentless quest for lower costs has unfairly squeezed income from meatpacking workers, farmers and ranchers resulting in Wal-Mart receiving a grossly disproportionate share of the retail food dollar at the expense of other stakeholders in the food supply chain,” Lauritzen said.

Food industry suppliers also have complained that Wal-Mart and other grocery chains are forcing them to push producers to keep costs down. The percentage of the food dollar that ranchers and farmers get has been going down in recent years. That issue of “margins” in agriculture is the subject of the final joint USDA-DOJ workshop to be held in Washington in December. Only after that will be it be clear where the Obama administration will take its anti-trust investigation.

Holder said that he does not think that “big is necessarily bad,” but as many agricultural lobbyists have said, it’s unlikely the attorney general and the agriculture secretary would spend so much time on this issue if they do not intend to pursue it before President Obama’s 2012 re-election campaign.

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