NCBA and state affiliates claim, “All producers will lose under new GIPSA rules.” — Not true!
In regard to the following claim:
The underlying assumption in this post, which is wrong, is that there no longer can be premiums paid for value added cattle under the GIPSA rules. This argument is a tactic supplied by the meat packers to make a straw man argument for people who don’t understand the market issues and to confuse them with utter nonsense. Meat packers don’t just want to be able to pay premiums for value added cattle, which is fine under the GIPSA rules, but they want to provide premiums that allow them to capture the value of the cattle market as a whole that is not based on providing value added premiums to everyone who supplies that product.
By getting these two things mixed up, the author shows he doesn’t have a clue about the issues involved. One clear way of telling if premiums are justified is the price that meat packers are able to get and the quality criteria for those prices. If the criteria has less to do with the actual value of the cattle and more to do with market manipulation, then it is prohibited. If the meat packers provide premiums for "better" or higher value cattle, then they must provide those premiums to all who produce same or similar product, not just a captive supply that allows them to manipulate cattle markets based on their futures positions, captive supply, or other devices that allow them to manipulate the cattle markets as a whole.
This isn’t just about allowing the author to have premiums for his "good work" in the cattle industry, but for all who do that "good work" to be able to get the premiums.
Tom T.
Opinion: All producers will lose under new GIPSA rules
By Guest Author
© Copyright Agri-Pulse Communications, Inc.
By Will Bentley, Georgia cow/calf producer and Executive Vice President of Georgia Cattlemen’s Association
While the U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration’s (GIPSA) proposed livestock marketing rule comes with a name like The Farmer Fair Practices Rule, those of us in the cattle industry know better than to trust a government program wrapped in a nice title.
We’ve witnessed the Federal Government use titles like this before.
A prime example would be the Waters of the U.S. Clean Water Act (WOTUS) and the Clean Air Act. Both have names that, on the surface, we can all agree on. But in reality they don’t do much to improve the environment and do more to impose burdensome regulations on hard working farmers and ranchers while adding cost to the consumer.
The proposed GIPSA rule claims to protect farmers from unfair pricing practices, but what it actually does is harm all cattle farmers that have built their livelihoods on producing high-quality cattle and being paid for their efforts. Cattle producers who have carefully selected for improved genetics that allow them to utilize alternative marketing arrangements will suffer from those programs being jeopardized under the new GIPSA rule.
Programs that pay producers a premium for their cattle, such as breed programs, grid values, forward contracts and other marketing agreements will be at risk.
With the new rule, those buyers that have been paying the premiums will now be open to frivolous lawsuits by anyone that feels that they received a "competitive injury" or "likelihood of competitive injury" for inferior cattle. The GIPSA rule will create a trial lawyer’s dream world as it is written so broadly that anything is open for litigation.
Under the proposed rule, USDA or a producer no longer needs to prove true economic harm but instead only needs to say that he or she was treated "unfairly" to sue a buyer or processor. The only problem is – there is no definition of what "fair" actually means.
Value-added marketing programs reward producers for investing in genetic improvements, herd management and cattle health practices to produce high-quality cattle that they can sell for a premium. The USDA, under the leadership of Secretary Vilsack, seems to prefer that there be no premiums available and all beef be treated as a commodity.
Ultimately, cattle producers are in the business of producing beef for families to enjoy. Consumers currently benefit from natural market competition that provides an abundant supply of safe, wholesome and quality beef at an affordable price. When the incentive to produce prime and choice cattle is removed, consumers will be left with a lower-quality product that is costing them more of their hard earned dollars.
No longer will cattlemen be able to, or have the incentive to, tailor their operations to meet consumers’ preferences as those desires usually incur higher production costs.
As a cattleman myself, it bothers me to think that the work done by our industry over the last 30 years to improve the quality of beef and the lives of our cattle will be erased overnight by an out-of-control regulatory environment in Washington, D.C. – one that seems to reward mediocrity and punishes any group that wants to outperform the status quo under the guise of “fairness.”
If stopping cattle producers from being paid based on quality and value sounds like a socialistic market, that’s because it is. It goes against everything that capitalism and a fair market stand for. When everyone gets the same price, no matter what the differences in quality and production practices exist, consumers will no longer turn to beef as their choice of high-quality protein, and then we all lose.
About the Author: Will Bentley is a cattle producer from Thomaston, Georgia. He and his family own and operate a small cow-calf operation. Will also serves as the Executive Vice President of the Georgia Cattlemen’s Association. Bentley originally wrote a version of this opinion piece for Growing Georgia www.growinggeorgia.com