Action Alert: Tell USDA to Rein In Meatpackers and Stand Up For Family Farmers

Today, a tiny handful of meatpackers and poultry processors dominates the livestock industry, making it hard for an individual farmer or rancher to get a fair deal or equitable price for cattle, hogs, or chickens.

There is a law on the books — the Packers & Stockyards Act of 1921 — that was supposed to protect farmers and ranchers from unfair practices by large companies. But the government has failed to enforce it. Until now.

The USDA is finally taking action, starting by releasing proposed rules to address unfair practices in livestock markets. These proposed rules would:

  • Make it easier for ranchers to sue companies accused of using deceptive trade practices or offering unfairly low prices
  • End discrimination against producers based upon size alone
  • Restrict livestock buyers from buying for more than one meat packer and prohibit packers from selling livestock to each other
  • Create requirements for contract pork and poultry growers to prevent unfair contract practices

Whether you are a livestock farmer selling into the conventional markets, a grassfed meat producer, or a consumer, the corporations’ control of livestock markets ultimately impacts you. From the availability of young livestock, to access to slaughterhouse facilities, to the price and quality of food, the control of our food supply by a handful of large companies harms us all. These rules are an important step toward creating truly functioning markets in livestock and meat!

 

TAKE ACTION #1

Send comments in support of the proposed USDA livestock rules to comments.gipsa@usda.gov by November 22, 2010. You can also mail them to: Tess Butler, GIPSA, 1400 Independence Avenue SW, Rm 1643-S, Washington, DC 20250-3604.

  • Thank USDA for writing these rules and tell them that you support measures to bring back competition and fairness to livestock markets.
  • Let them know that these rules are a good start towards solving the problems of market manipulation by the meat packing industry. Tell USDA the next step is to require packers to pay a firm base price for all livestock they procure and require them to purchase their livestock supplies and to sell livestock they already own in an open public market where all buyers and sellers have access.

You can also use the automated system on the Western Organization of Resource Council’s website to submit comments.

 

TAKE ACTION #2

Send a copy of your comments to your Congressman and Senators! The meat packers are putting pressure on Congress to try to halt the USDA rulemaking and protect their monopolistic power.

SAMPLE COMMENTS

RE: Farm Bill Comments published June 22, 1010 Fed. Reg. 35338

I am writing to support the proposed rules published by GIPSA on June 22. These rules will go a long way toward guaranteeing fair contracts for livestock producers and poultry growers. They will give me access to the information I need to make better marketing decisions and will ensure that my rights as a producer are upheld.

For years the meat packing industry has used their market power to bully livestock producers and feeders to accept unfair and deceptive contracts. The more consolidated the packing industry becomes, the more they are able to use this market power to manipulate contracts and the markets.

I am pleased that USDA is finally stepping up to protect the independent livestock producer, feeder and contract grower. By implementing these rules, USDA can better use the laws already in place to stand up for the independent producers of this country and stop the manipulative actions of these packers.

While these rules are a very positive first step regarding contract fairness, I look forward to the next steps in USDA’s work to return competition to the market.

Sincerely,
Name
City, State

 

MORE INFORMATION

The four largest companies in each industry slaughter nearly all the beef, process two-thirds of the pork, sell half the groceries, and manufacture about half the milk in the United States. At the regional or local level, one company often has a virtual lock on an industry. Packers are able to use their monopoly-like power to manipulate prices paid to livestock producers. The concentration of the livestock market has also been a significant factor in the loss of small and mid-sized slaughterhouses, hampering livestock producers who want to sell directly to consumers.

The Packers & Stockyards Act of 1921 was designed to prevent meatpackers and processors from using unfair or deceptive practices against farmers and ranchers who sell them livestock. Unfortunately, for the past 30 years, the federal government has abandoned its antitrust enforcement role. Regulators have approved giant mergers between meatpackers and processors that have reduced the number of firms and increased their power to levels that can even exceed the well-known monopolies and oligopolies of the 1800s. The federal government’s unwillingness to challenge the growing consolidation in agricultural and food markets has allowed a corporate transformation in the structure of the food system. A handful of food companies are able to make massive profits, while farmers go out of business and consumers pay higher prices for lower quality foods.

The USDA is finally taking action, starting by releasing proposed rules to address unfair practices in livestock markets. The agency has released proposed rules to identify practices that are illegal under the Packers & Stockyards Act. These proposed rules would:

  • Prohibit packers from selling livestock to each other
  • Make it easier for ranchers to sue companies accused of using deceptive trade practices or offering unfairly low prices
  • End discrimination against producers based upon size alone
  • Restrict livestock buyers from buying for more than one packer
  • Create requirements for contract pork and poultry growers to prevent unfair contract practices

The proposed rules address some specific unfair practices, but the USDA needs to implement additional safeguards to prevent meatpackers from unfairly favoring one cattle producer over another through marketing agreements and contracts. There are two additional steps that a coalition of organizations is urging both Congress and the USDA to take:

  • Ban packer and processor ownership of livestock. Both beef packers and pork processors own and control pools of livestock that allow them to effectively manipulate market prices by slaughtering their own stock when prices are high and only buying on the open market when prices are low. The USDA should ban the packer ownership of cattle or hogs more than 14 days before slaughter.
  • Enact captive supply reform. “Captive supply” refers to packers’ ability to control the price of livestock through owning livestock and through contracts that do not set firm prices for the producers. A proposal to reform captive supply arrangements in the beef cattle and hog markets has been sitting at the USDA since the 1990s and has been part of legislative proposals during the last two farm bill debates. The reforms would only allow contracts if they were based on pre-arranged, set prices, firm dates of delivery, and if the contracts are transparently and publicly offered.

Due to the consolidation of agriculture in the hands of a few large companies, farmers now make up less than 2% of the population of the United States. We need consumers to show their support for these reforms, shoulder-to-shoulder with farmers and ranchers.