March 10, 2017
So far, President Trump’s actions on agriculture have been limited to administrative delays on two rules formulated by the Obama administration. With no progress in sight for Sonny Perdue’s confirmation to head up the Department of Agriculture, the attention falls to the hotly debated GIPSA rules.
One of the few actions President Trump has taken on agriculture issues has reopened a long and contentious fight over the government’s role in protecting independent meat producers from alleged abuses of the meatpacking industry.
Shortly after taking office, Trump delayed implementation of the fair-farming practices rules, which were issued in the last weeks of the Obama administration. The rules would change how the Grain Inspection and Packers Administration (GIPSA) handles anti-trust enforcement. The rules are designed to help independent meat producers compete in a marketplace increasingly controlled by a handful of large buyers.
The only other administrative actions related to agriculture thus far have been the nomination of Sonny Perdue as secretary of Agriculture and reopening the Waters of the U.S. rulemaking process. The Perdue nomination was the last Cabinet position to be announced, and there is no word on when the Senate might hold confirmation hearings.
The Trump administration’s slow start on farm and food issues puzzles many long-time agriculture watchers, including journalist Chuck Abbott, who wrote, “Farmers voted by landslide margins for President Trump last fall, attracted by his support for ethanol and promises of tax and regulatory reform. But his first major moves in office left farm groups wondering, ‘What about us?’”
Revisiting the meatpacking competition rules, known as the GIPSA rules, puts the Trump administration in a familiar setting. The delay has prompted a charged debate with fierce political rhetoric.
The National Pork Producers Council (NPPC), for instance, praised President Trump.
“We’re very pleased that the Trump administration has extended the time we have to educate regulators about the devastating effects this rule would have on America’s pork producers,” said NPPC President John Weber, a pork producer from Dysart, Iowa. “The regulation likely would restrict the buying and selling of livestock, lead to consolidation of the livestock industry – putting farmers out of business – and increase consumer prices for meat.”
The National Cattlemen’s Beef Association (NCBA), for their part, was furious at former secretary of Agriculture Vilsack when the rules were issued on December 14, 2016. NCBA President Tracy Brunner told Agripulse: “If USDA was interested in real solutions rather than increased government regulations, they wouldn’t have rushed these rules out the door at the very close of the administration’s term, bypassing any input from industry,” Brunner said. “Cattlemen and women don’t appreciate Secretary Vilsack throwing a grenade in the building as he abandons it.”
These NCBA comments are supported by some in the cattle industry. Pete Crow, publisher of the Western Livestock Journal, is concerned about GIPSA Rule impacts on the beef industry. Crow writes: “These rules have the potential to take us back in time, just when the industry has developed functioning supply chains and everyone is focused on producing a better beef product. Then we get these lousy rules that are nothing more than regulation to create work for bureaucrats and lawyers. How can you say that removing the burden of proving competitive injury is constructive to the livestock industry? If these rules go through, producers will be able to sue livestock dealers and processors at the drop of a hat, on a whim or a hunch.”
Other beef producers, though, say more producer protections are exactly the cure for what ails struggling livestock markets. The GIPSA Rule debate is occurring in a broader context of declining income for farmers and ranchers across the board. While the Stock Market rallies to record heights and Wall Street celebrates its steady run of success, farmers and ranchers are expecting their fourth straight year in declining income.
Prices paid to beef producers have declined dramatically, falling from their peak just three years ago. Farmers and ranchers that were earning $2.50 to $2.75 per pound for their calves in 2014 are now collecting only $1.10 to $1.25 for the same product.
In a conversation with the Daily Yonder, Mississippi cattle rancher and former administrator of USDA GIPSA J. Dudley Butler expressed his support for the Obama administration’s GIPSA Rules.
“These are simple, straight-forward rules written in plain language. They seem fairly well written,” says Butler, who is also an attorney. “The rules are about fairness, really. We’re talking about legal concepts here like retaliation against farmers, bad faith from the packers, fraud,” Butler continues. “These are the legal means farmers should have without question under the Packers and Stockyards Administration.”
Many other beef producers agree with Butler. Weiser, Idaho, rancher Mabel Dobbs is a member of the Western Organization of Resource Councils (WORC). “WORC is especially glad to see that the final rules make it clear that a producer harmed by unfair practices does not have to demonstrate harm to the entire industry to win in court,” she said. “This standard is nearly impossible for an individual rancher to meet and was not what Congress intended when it passed the Packers and Stockyards Act.”
She said the rules are important to independent ranchers now because four meatpackers control over 85 percent of the beef market and dictate the terms of production, marketing and pricing for cattle producers. “The rancher needs access to the courts when meatpackers step over the line,” Dobbs said. “This rule will help restore that.”
The National Farmers Union (NFU), representing 200,000 farm and ranch families, has also supported the GIPSA rules. They are concerned about the Trump administration’s GIPSA delay. “Family farmers and ranchers have been waiting on the protections provided by the Farmer Fair Practices Rules for far too long, enduring heavily concentrated markets and the unfair practices associated with lack of competition,” said National Farmers Union president Roger Johnson in a statement. “After having been delayed and obstructed for the past seven years, it’s time to end the unnecessary delays to the Farmer Fair Practices Rules and allow these basic protections to be finalized.”
Rancher Gilles Stockton, of Grass Range, Montana, wrote a comprehensive analysis of the collapse in cattle prices in late January, There is a Solution . Stockton’s analysis, circulated throughout the agricultural press, provides lukewarm support the Obama administration’s GIPSA Rules. Stockton believes a much more rigorous competition and antitrust policy is required.
“The solution, however, is only available if we focus clearly on what is wrong in the cattle market. First we must understand that a collapse of 45% to 50% in feeder calf prices cannot be justified by citing supply and demand. Healthy markets do not have these kinds of swings.”
Diana Moss, of the American Antitrust Institute, explained to the Daily Yonder that the structure of food and agriculture supply chain is critically important. “What we have, really, is a giant hourglass shape with many, many geographically dispersed producers on the supply side,” Moss said. “All food products, things farmers produce, come down through the hourglass through a very small funnel,” before reaching consumers.
Moss, who has long studied the effects of consolidation in food markets explains that the concentrated structure is a problem for both farmers and consumers. “The massive concentration and consolidation creates a power imbalance,” Moss said. “For consumers, for eaters, this creates worries about higher consumer prices, loss of choice in brands, questions of quality in food and loss of innovation, including with local and alternative food systems.”
For beef producers, according to Moss, the GIPSA Rules are important, but not a sufficient solution.
“Enforcement is key. We need to really scope out the landscape of the livestock auction markets. We need to look at allegations of bid rigging, of exclusionary practices. …
“[B]eef is a poster child of meatpacker consolidation. There is alleged conduct in the auction markets that raise concerns about coordinated packer activities that lead to decreased prices paid to farmers. It’s a very toxic- potentially damaging-set of incentives for the packers. Cattle producers are the direct victim.”
Back in Mississippi, former GIPSA administrator Butler explains his disagreement with the National Cattlemen’s Beef Association over GIPSA Rules. “It doesn’t surprise me a bit,” said Dudley, who was once a very active NCBA member but has since withdrawn his membership. “I just couldn’t stand it. The so-called NCBA leaders are like Judas goats leading members to a slaughterhouse of vertical integration and consolidation. They don’t represent independent beef producers anymore.”