R-CALF: Congress Hears From Real Producers Why GIPSA Rule Needed

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As a finale prior to the Nov. 22, 2010, deadline for public comments on the livestock competition rule (GIPSA rule) proposed by the U.S. Department of Agriculture’s (USDA’s) Grain Inspection, Packers and Stockyards Administration (GIPSA), a diverse group of livestock, poultry and farm organizations called the Competition Coalition sponsored separate briefing sessions for House and Senate congressional offices this week to explain why the GIPSA rule is needed to restore transparency and fairness to livestock and poultry markets accessed by the nation’s family farmers and ranchers.

“Rather than bring professional lobbyists to Washington to persuade Congress to support the ongoing corporatization of our nation’s livestock supply chains, our Competition Coalition brought actual livestock producers to D.C. to provide firsthand accounts of how their profitability has been improperly squeezed by monopolistic packers and how the GIPSA rule would restrict meatpackers from exercising their monopolistic power,” said R-CALF USA CEO Bill Bullard.

Bob Mack, a cattle feeder and cow/calf producer from Watertown, S.D., told nearly 60 congressional office staffers that the marketplace should produce winners and losers based on who does the best job and who is the most efficient, not based on decisions by just two or three meatpackers positioned to pick winners and losers by rewarding some producers and discriminating against others. Mack said the GIPSA rule makes sure that packers follow the rules of the market.

“All we want are fair rules for everyone and a referee,” he said. “From my perspective, this rule (the GIPSA rule) makes sure the rules are followed.”

Craig Watts, a North Carolina contract poultry grower who has been raising chickens under a production contract since the early ’90s, warned that the hog and cattle industries are fast moving toward the integrated poultry model where meatpackers have excessive control over the success and profitability of farmers. He said following the corporate-controlled poultry model would be the worst thing the hog and cattle industries could possibly do. Watts also explained how the GIPSA rule would benefit him by preventing packers from demanding equipment upgrades and other costly investments without providing an economic justification for their demands.

“I am a poultry producer and I support the GIPSA rule,” Watts said, after explaining how meatpacker control has severely hampered his opportunity to remain profitable.

Alan Hoefling, an independent hog producer from Marcus, Iowa, explained that market dominance by meatpackers has resulted in the loss of a viable, open market for hog producers, and as of now the open hog market has been damaged so severely, it is no longer capable of discovering a competitive price for hogs. Hoefling pointed out that the GIPSA rule’s requirement that packers provide sample contracts for livestock procurement contracts would benefit remaining hog producers by allowing them to review the various terms and specifications the packers in their area may be including in their various marketing contracts. He said under current conditions he has no way of knowing which of the remaining packers may be offering contract terms and specifications that would enable him to maximize his opportunity for profitability.

Among the questions raised by congressional offices was how packers could possibly justify different prices for livestock, as required by the GIPSA rule. Mack explained that the industry is already providing such justification. He said a simple review of USDA’s market reports show that USDA already provides notations to explain why different prices are paid for seemingly similar animals.

“Our industry already uses common terms like ‘fleshy,’ ‘green,’ ‘heavy,’ and ‘full’ to explain price differences,” he said. “The market records required under the GIPSA rule already are being generated in the normal course of the meatpackers’ purchasing transactions, and all the GIPSA rule does is require the packers to maintain those records.”

Another question by congressional staffers dealt with the economic studies issued by meatpacker trade associations – the American Meat Institute and the National Meat Association – which claim the GIPSA rule would be overly costly. Hoefling said these groups do not have a good track record, as evidenced by the recent “sky-is-falling” studies these groups issued for livestock mandatory price reporting and country-of-origin labeling (COOL), which both grossly exaggerated the actual costs of these programs. Hoefling urged Congress to consider where these studies have come from.

Bullard said the congressional briefing by producers was necessary to counter the meatpackers’ ongoing efforts to convince Congress to derail the GIPSA rule through the appropriations process.

“We’re hopeful this producer-led briefing will give Congress the information it needs to resist the intense and well-funded lobbying effort by the corporate meatpackers that are vehemently opposed to this pro-competition rule,” he said.

Groups that sponsored the congressional briefings in support of the GIPSA rule included: R-CALF USA, National Farmers Union, National Family Farm Coalition, Rural Advancement Foundation International-USA (RAFI-USA), Land Stewardship Project, Western Organization of Resource Councils (WORC) and the Organization for Competitive Markets (OCM), to name a few.



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