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Farm News
02/24/06
Bill addresses competition
By RANDY MUDGETT- Managing Editor
A new livestock market competition bill introduced in part by Iowa Sen.
Tom Harkin is designed to give USDA more power to enforce laws against
price manipulation in livestock markets.
The new bill, in response to a USDA Inspector General report released
recently, will also give producers more clout when challenging acts of
price manipulation.
Harkin said the Competitive and Fair Agricultural Markets Act of 2006
will allow the USDA to investigate more violations that come under the
Packers and Stockyards Act. ëëEconomic concentration is like the narrow
point of an hourglass,íí Harkin said. ëëOn one side, farmers are paid
less than they should, and on the other side, consumers have to pay more.
The livestock and poultry industries have changed dramatically in the
past 15 years making it all the more critical that there be increased
enforcement of bad actors in the marketplace.íí
The Office of the Inspector Generalís report showed that while there were
nearly 1,800 suspected violations of the Packers and Stockyards Act from
1999 to 2005, only 100 of those cases can be traced to a specific
complaint. According to Harkin, officials with the Packers and Stockyards
Administration blocked investigations from being referred to USDA lawyers
or the Justice Department.
John Crabtree, a policy analyst with the Center for Rural Affairs in
Walthill, Neb., said the Packers and Stockyards Administration was
working too close with the packing industry, and that led to many of the
complaints never being investigated. ëëThis has been going on for two
decades,íí Crabtree said. ëëThis bill will set the stage to light a fire
under the USDA to finally get something done on competition in the
livestock industry.íí
Harkin, along with fellow senators Mike Enzi of Wyoming and Craig Thomas
of Wyoming, introduced the bill in the Senate last week that calls for a
reorganization of the USDA to include an Office of Special Counsel
who would specifically deal with competition matters. The bill would also
strengthen the Packers and Stockyards Act language that relates to
producers. Producers would be given protections that would make it easier
for them to prove that a packer has been unfair with them. plus giving
producers a specific bill of rights when it comes to dealing with
packers.
Dave Fredrickson, president of the National Farmers Union, said the bill
is properly addressing the market domination the packers now enjoy. ëëIt
is a step toward ensuring farmers and ranchers do not continue to be
victims of anti-competitive practices.íí
One of the reasons the livestock market has become dominated by the
packing industry is the lack of buyers for the producer. According to
recent statistics, 84 percent of all purchases of cattle involve only
four companies and, likewise, 64 percent of all pork purchases are
controlled by four companies. The lack of an open, competitive cash
market is limiting producer profits.
Roger McEowen, an Iowa State University Extension ag economist, said the
bill addresses the issue that the courts laid out in the Pickett case.
ëëThe court said that cattlemen must prove that the
manipulated by packers but also prove that there was
competition,íí McEowen said. ëëSo far, that has been
to prove because the packer would simply say we have
supply in order to compete.íí
price was
injury to
virtually impossible
to have some captive
McEowen said the current bill will have little chance of passage if it
even comes up for a vote, which is also, unlikely. ëëIt is a long shot,íí
he said. ëëThe courts have gutted the Packers and Stockyards Act and the
only course cattlemen have now is legislatively. The problem is if it
somehow would pass the Senate and the House, the current administration
would veto it. Right now, the court is saying packers can manipulate
price, as long as they have good reason to do so.íí
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