1 Montana senator blasts USDA for ditching meatpacker 'fair practice' rules
Senators from both sides of the political aisle are sharply criticizing a recent Trump administration decision to kill regulations intended to protect farmers and ranchers from unfair trade practices.
The new regulations were drafted as an amendment to the Packers and Stockyards Act, and were designed to make it easier for individual farmers and ranchers to sue large meatpacking corporations that engage in unfair, discriminatory, deceptive or retaliatory trade practices.
Rolled out during the final days of the Obama administration, the Farmer Fair Practice Rules was initially scheduled to come into force on April 22, 2017. But implementation was delayed by the Trump administration for 180 days. On Oct. 18, one day before the Farmer Fair Practice Rules were to become law, the Department of Agriculture announced that the rule was being withdrawn – a move that provoked an angry response from both Sen. Chuck Grassley (R-Iowa) and Sen. Jon Tester (D-Montana).
“They’re just pandering to big corporations. They aren’t interested in the family farmer,” Grassley told the Des Moines Register. “The USDA is the U.S. Department of Agriculture, not the U.S. Department of Big Agribusiness.”
“This rule that was thrown out by the Trump administration fills the swamp more,” Tester said to farmers attending the Montana Farmers Union’s annual convention in Great Falls. “It allows corporate agriculture and international agribusiness to take advantage of folk in production agriculture. That’s the wrong direction to take.”
Tester and Grassley coauthored a sharply worded letter to Agriculture Secretary Sonny Perdue, urging the secretary to reverse the decision.
“Many of our constituents believe the current practices of multi-national livestock operations, one of which is being investigated for unprecedented corruption, allow them to exploit farmers and ranchers,” the letter states. “The industry has consolidated for decades into its current structure that enables a handful of companies to have extraordinary market power.”
Concentration within the meatpacking industry has been a significant concern for 30 years. According to USDA statistics, the number of cow/calf operations in the U.S. has plummeted from 1.6 million in 1980 to less than 950,000 today. Fewer than 2,000 commercial feedlots now finish 87 percent of the cattle grown in the U.S. Some can now hold more than 200,000 animals at a time.
At the top of the meat production pyramid stand the international meat packing corporations. According to USDA statistics four companies, Tyson Foods, Pilgrim’s, Sanderson Farms and Perdue Foods control roughly 53-percent of all the poultry produced in the U.S. Smithfield Foods, Triumph Foods, the Maschhoffs and Seaboard Foods control close to 60-percent of all the pork.
The highest industry concentration is in beef, where four packers, Tyson Foods, Cargill Inc., JBS and the National Beef Packing Company now process and distribute roughly 80-percent of all the beef raised in the U.S.
This concentration of wealth and influence within the meat packing industry has led many to suggest that the Packers and Stockyards Act, written in 1921, is outdated and does not offer the protections necessary to maintain family farm agriculture.
“We’re seeing rural communities dry up, we’re seeing family farms and ranches go broke, and the reason for that, I believe, is there’s unfair pricing in the marketplace,” Tester said.
Discussions on ways to reform the Packers and Stockyards Act (PSA) began nearly a decade ago. The USDA and the U.S. Department of Justice received more than 61,000 comments on the proposed changes during a series of five joint workshops held across the country in 2010 and 2011.
Many farmers’ organizations applauded the reform effort, especially the proposed removal of language within the PSA, which forces a farmer or rancher to prove that a company’s actions harm competition in the entire industry before a lawsuit can move forward. That provision is seen by many as placing an unreasonably high burden of proof on producers.
“The idea that contract farmers should have to prove injury to the whole sector in order to receive compensation for having been the victim of an anti-competitive practice is an impossible standard,” said Paul Wolfe, senior policy analyst for the National Sustainable Agriculture Coalition.
“The PSA was never intended to protect the competitors; it was there to protect competition,” said Bill Bullard, President of R-Calf, a Montana based beef producer advocacy organization. “That means that if you have four meat packers and they merge into two – you have now reduced competition in the entire marketplace and that’s regulated by the Packers and Stockyards Act.
“On the other hand, if a meat packer were to defraud a rancher on a load of cattle – in other words pay the rancher far less than what the cattle are actually worth – that’s an unfair practice, but it’s not covered under the PSA. There’s no way that he or she could prove that that somehow harmed competition within the entire U.S. cattle industry and so they have no standing. That’s the issue.”
Retaliatory practices within the poultry industry were also a central focus of the USDA workshops. In 2010 the USDA heard from chicken growers who were promised long-term business relationships, but were soon bullied into signing narrower and narrower contracts until their business was unsustainable.
“If a chicken grower attempts to organize other chicken growers to bargain for better pay or publically expresses unhappiness with the way they are treated by a processor, processors could require growers to make investments that are not economically justifiable for the grower, or can terminate contracts with little notice,” a 2016 USDA news release states. “And because in contract growing, the processors own the birds and provide inputs like feed, they can choose to provide poultry growers with bad feed or sickly birds that have a higher mortality rate, which cuts deeply into a grower’s opportunity to earn income on those birds.”
Tester’s and Grassley’s letter to Perdue describes the current “Poultry Grower Ranking System” as “among the most unfair schemes we have ever seen forced on farmers.”
However, the eight-year effort to amend the Packers and Stockyards Act was vehemently opposed by conservative members of Congress and the meatpacking industry.
Ken Maschhoff, co-owner of the nation’s third largest pork processor and president of the National Pork Producers Council has said that the provision “eliminating the need to prove injury to competition” within the Farmer Fair Practices Rules would result in an explosion of lawsuits.
“That would reduce competition, stifle innovation and provide no benefits to anyone other than trial lawyers and activist groups that will use the rule to attack the livestock industry,” Maschhoff said. “For those reasons, we’re asking the administration to withdraw the rule.”
Sen. Pat Roberts (R-Kansas), Chairman of the Senate Ag Committee has also been a consistent critic of the Farmer Fair Practice Rules.
“Today, rural America has received long-awaited good news,” Roberts said in a news release issued the same day as Tester and Grassley published their letter. “The Obama administration spent the better part of a decade ignoring calls from farmers, ranchers and agriculture economists warning of the billion dollar blow this rule would have levied against American agriculture. Secretary Perdue’s actions today demonstrate the Trump administration’s commitment to promoting economic prosperity and reducing regulatory burdens in rural America.”
Tester does not agree.
“You cannot be supporting four companies to be controlling 80-percent of the beef products in this county, and being able to dictate prices,” Tester said. “That’s not competition, that’s not capitalism, that’s not free markets.”
“That rule established by the Obama administration was to make it so the market makers were more accountable – and the Trump administration threw that out,” he added. “That really is not draining the swamp. That’s filling the swamp and I think its very, very unfortunate.”
Absent a sudden reversal by the USDA, the changes proposed under the Farmer Fair Practice Rules are a dead issue.