The Obama administration has started another fight with conventional agribusiness, this time over the way hogs, cattle and poultry are bought and sold, according to the Des Moines Register. The growing controversy centers around a proposed USDA rule that would amend the Packers and Stockyards Act.
USDA’s Grain Inspection, Packers and Stockyards Administration, or GIPSA, has issued the proposed rules clarifying certain provisions of the PSA and implementing new ones related to capital investments, arbitration and poultry contracts.
Agriculture Secretary Tom Vilsack says the regulations are in line with the drive to reverse the decline in rural populations and medium-size farms.
Members of a House Agriculture subcommittee recently expressed deep concern with the proposed rule-- a regulation that would limit pork producers’ options in selling pigs to processors, according to the National Pork Producers Council.
In addition, groups representing meatpackers and conventional livestock producers claim the rules are over-reaching and threaten to destroy the industry's marketing structure. They say the rules could make it difficult, or impossible, for farmers to get premium prices for higher-quality livestock.
Industry officials say packers will be so afraid of getting sued for paying some producers more than others that they'll quit doing the kind of contracts that many livestock producers prefer.
"This is a fear of every producer - not just me - every producer," said Sam Carney, an Adair pork producer and president of the National Pork Producers Council. "These rules are so vague and so undefined that no one knows where to go with them."
Administration officials defend the proposed rule. "If we're serious about keeping farmers in business, then we need to get serious about creating a market that is transparent and fair," said Edward Avalos, the USDA's undersecretary for marketing and regulatory programs.
Several key rules would affect hog and cattle markets. Packers, for example, would face new limits on their ability to pay some producers more than others. Packers would be required to justify price premiums and discounts. One practice the USDA wants to stop is packers’ refusal to pay volume-based premiums to a collection of farmers who can provide the same number of livestock as one large producer.
Another regulation would make it easier for producers to sue packers over price disputes and win. Producers would no longer have to prove that the processors were trying to stifle competition.
Under a rule intended to keep packers from manipulating livestock prices, the companies would no longer be allowed to sell livestock to one another. They would have to go through an independent buyer or other third party. Opponents of the rules say they force packers and producers to release trade secrets to justify price premiums and discourage processors from paying more for high-quality animals.
Packers also may cut back on contracting with producers and decide to buy their own farms, leading to the vertical integration the rules are supposed to discourage, Carney said.
Industry opposition to the rules spilled over into a House Agriculture Committee hearing on July 20, where Democrats and Republicans peppered Avalos with criticism and questions and scoffed at the idea that the rules would increase rural populations.
Rep. David Scott, (D-Ga.), was particularly harsh, accusing the USDA of overstepping its legal authority and trying to impose restrictions on the market that lawmakers had considered and rejected when writing the 2008 farm bill.
Source: Des Moines Register