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RSS By: Steve Cornett, Beef Today

Read the latest blog from Steve Cornett.

Packers' Congressional “Minions” vs. USDA

May 27, 2011

USDA and APHIS must be wondering where they went wrong. They seemed to have so much momentum.

Yet, somewhere in the halls of USDA lingers a rule that a year ago Secretary Vilsack promised  “would provide significant new protections for producers against unfair, fraudulent or retaliatory practices.”

Yes, I’m talking about the GIPSA rule from last year that touched off a firestorm of protest and counter protest and drew 2,000 producers and union boosters to Colorado for a much-ballyhooed “listening” session featuring two members of President Obama’s cabinet and a not-inconsiderable dose of rhetorical histrionics on both sides and then dropped off the radar.

Yes, the GIPSA rule from last year is baaaack. And it’s apparently in trouble. But who knows where it stands? Certainly not those of us outside USDA. Whatever they’re thinking, they don’t want us to know about it.

What brought it back onto my agenda was the animosity toward the rule expressed recently from the House of Representatives.

First, some 147 House members sent Vilsack a letter asking him to withdraw the rule pending the results of an economic impact statement they had demanded. Then, the agricultural subcommittee of the House appropriations committee included wording in its 2012 budget expressly prohibiting USDA from using any funds to “write, prepare, develop, or publish a final rule or an interim final rule …”

With so many members of Congress so put out with it, USDA has to be wondering how far it can go with the rule. I called and was promised a call back—I’m always promised a call back by a polite receptionist when I call USDA these days—but got none such. I guess I’m not the only one. As one congressional aide told me last week, “if we knew what was going on, we wouldn’t have sent the letter” to Secretary Vilsack.

I’d sure like to know. We have here a most interesting political situation revolving around what and how the government should do about evolving beef industry structure. (It’s not just beef, of course, but that’s all I want to talk about.)

Help me think through what it all means. Here’s how I see the current situation: The industry is divided. While my reading is that most professional cattle producers have doubts about the rule, there is a significant and vocal minority who deem it crucial to their survival. We’ve got a GIPSA headed by a lawyer steeped in the fetid intra-industry relationships of the poultry business, convinced that beef is bound for the same fate if he doesn’t intervene. You’ve got a House Ag committee with bipartisan opposition to his agenda. You’ve got a Congressional majority determined to “slow the growth of government.” So it’s Senate vs. House vs. USDA?

It strikes me as a battle not of wills but of priorities. This is a back burner issue for most of those congressmen. It is anything but for GIPSA and supporters of the proposed rule.

This whole idea of how government should—to the extent it can—try to direct the evolution of agricultural structure just keeps plugging itself into the political dialog. Just last week, a bipartisan group of Senators introduced a new version of their “marketing fairness” bill that would outlaw many of the forward contracts offered by beef packers.

This is all about how two different camps  want to see agriculture develop.

U.S. Rep. Reid Ribble (R-WI) was the lead author of the Congressional letter. "We all agree that transparent and efficient markets benefit producers, processors, retailers and consumers – and I believe that our laws governing market practices should be strictly enforced,” he said. “However, producers I talk with express concerns that this far reaching rule will create economic uncertainty for them and prove highly disruptive to our nation’s livestock sector….While this (GIPSA)  rule was prompted by the 2008 Farm Bill, troublesome provisions go far beyond Congressional intent.”

To whom retorted R-Calf’s Bill Bullard in his usual effort to catch flies with rhetorical vinegar:”The meatpackers have lined up their minions in Congress .…It’s business as usual in Congress – corporate greed trumping the well being of the people.

Bullard has better access to USDA than most of us. He and his volunteer leadership have a lot of history with GIPSA head Dudley Butler. I’m guessing his anger stems from realizing just how much trouble the GIPSA rule has brought on itself. I’m supposing what I’ve heard others suggest: Butler’s higher-ups were blindsided by the reaction of the producers they had been led to believe they were helping.

I don’t know if USDA is really going to do a cost-benefit analysis. I don’t know what it would show if they did, but a lot of people think it would show considerable cost balanced primarily by a benefit of being what some producers think is more “fair” to them.

There are parts of the rule I’d sure support. From the outside, it sounds to me like power in the poultry business is pretty concentrated on the top side. As I’ve argued before, competition from that business model has had far more effect on beef’s four decades of declining demand than anything the packers have done.

If I’m right, all the damage GIPSA can do to poultry processors will help beef’s market. And all the damage done to beef’s marketing efficiency will help poultry continue its long successful assault on beef’s market.

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COMMENTS (1 Comments)

sumitgupta008 - newyork, NY
This is a wonderful article. The things given are unanimous and needs to be appreciated by everyone.
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