Rural advocacy group lauds market reforms

LYONS, Nebraska -- Today, the USDA announced the publication of a new draft rule regarding how meatpacking corporations must deal with farmers and ranchers in the procurement of livestock and poultry. The administrative rule covers a number of reforms to help restore competitive markets and contract fairness to livestock and poultry markets, including establishing a definition for what constitutes an "undue or unreasonable preference."

The Packers and Stockyards Act specifically prohibits price discrimination by meatpackers against smaller volume, family farm and ranch livestock producers. Specifically, the Act makes it unlawful for packers to "make or give any undue or unreasonable preference or advantage to any particular person or locality in any respect whatsoever."

"The rule isn't perfect, but it is the most aggressive, significant livestock market reform to come out of Washington, perhaps since the passage of the Packers and Stockyards Act itself," said John Crabtree of the Center for Rural Affairs. "This rule will breathe some life, some competition back into our livestock markets. And we're going to work hard to keep improving it, and we're going to fight - tooth and nail - to ensure that the packers cannot weaken the rule."

According to Crabtree, USDA has not effectively enforced the Packers and Stockyards Act for decades. For example, packers routinely pay five, six or even ten cents per pound - even more in some cases - in purely volume-based premiums to the largest hog producers just because they are large.

"These sweetheart deals for large volume producers have become commonplace, but no less a violation of the Act," said Crabtree. "Six cents per pound may not sound like much of a discount, but, for a family farmer with 150 sows in a farrow-to-finish operation it amounts to receiving $56,000 less annually for hogs of the same quality, simply because he markets fewer hogs - in the end, that's what this rule needs to put an end to, that's what we set out to accomplish with this rulemaking provision in the farm bill."

The draft rule was written with the authority granted Secretary of Agriculture Tom Vilsack under the Packers and Stockyards Act. The Secretary was required to write the rule by a provision in the Livestock Title of the 2008 Farm Bill.

"That is precisely why the Center for Rural Affairs worked so diligently during the last farm bill debate to secure the provision compelling the Secretary of Agriculture to define what constitutes an 'unreasonable preference,' " Crabtree explained. "It became obvious that USDA would never make this move unless Congress forced the issue. However, to Secretary Vilsack's and Director Butler's credit, they had the courage to take that farm bill provision and run with it, resulting in a strong draft rule."

The draft administrative rule will be officially published Tuesday, June 22, 2010, in the Federal Register. A copy is available for download at [http://www.gipsa.usda.gov/GIPSA], and USDA will accept comments on the proposed rule for at least 60 days after the official publication on Tuesday.

"It is absolutely crucial that USDA receive comments from as many family farmers and ranchers as possible as well as everyone interested in making livestock markets more competitive and livestock production more economically, environmentally and socially sustainable," added Crabtree. "It's a strong rule, which means the packers and their minions are going to whine and complain. USDA needs to hear from the rest of us too, if we want to keep the rule strong and improve it along the way."

To find out more about making public comments or for other information on this USDA Packers and Stockyards rulemaking process as well as other livestock market reforms, monitor www.cfra.org/competition.