Out to Pasture

USDA-GIPSA Gets a Trip to the Woodshed

By Steve Cornett  

It sounds like Dudley Butler—that “new sheriff in town” President Obama appointed to enforce the Packers and Stockyards Act—ran into a bipartisan buzz saw last week when he showed up at the House Agriculture Subcommittee on Livestock, Dairy and Poultry to defend his proposed rule to hamstring meat and poultry packers.

Oops. I said “hamstring.” Of course, the purpose of the rule is to make the market place “fairer” and a dose of “fundamental change” for the meat business. 

Your reporter missed the hearing. But Kim Watson-Potts, Beef Today editor, caught it and so did Roger Bernard with Pro Farmer. In fact, so did just about everybody I talked to.

It sounds like it was remarkable. The Democratic chair of the subcommittee, David Scott of Georgia, basically told Butler and Undersecretary Avalos that it looked to him like the rules were an attempt to circumvent the will of congress. 

Congress, during their considerable discussion of the issues at hand, had considered and decided against many of the provisions, he said. The message from the Republican side was the same.

You may have noticed in this space earlier that this reporter has mixed emotions about the proposed rules. It’s good that somebody has finally decided to include poultry in the rulemaking process. If you’re going to attempt to make free markets more “fair” rather than more efficient, it’s at least nice if some of the same anti-efficiency rules apply not just to beef, but to the competition as well.

But it also looks like Representative Scott is right. These rules are an attempt to do what congress discussed and agreed not to do—eliminate “captive supplies,” despite any convincing evidence they are contributing to industry consolidation. Or, for that matter, that consolidation is something so undeniably “bad” that it must be stopped at whatever cost to freedom and individual rights.

This writer is not without recognition of the challenge posed by the consolidation of the packing segment and the evolution of the feeder-packer marketing intersection. There’s no reason to doubt that Randy Stevenson was told by a packer buyer than he couldn’t pay more for a certain set of high-value cattle because it would impact the price of a much larger group of basis-priced contract cattle.

Moreover, I’ve no reason to doubt the feedyard owner who told me years ago—during the prompt payment debate of the 70s—that his packer buyer had promised to boycott his yard if he supported the law.

But new laws and GIPSA regulations are not likely to provide a solution we’ll like.

Rather, the industry should be looking for ways to adapt. That means finding new ways to price cattle. As more cattle move on contracts, the cash market gets thinner. You can’t continue to base the whole thing on an increasing thin, decreasingly representative, sliver of the cattle.

We’ve talked about other options. A few people have actually worked out risk-sharing and cost-plus arrangements. I’m not sure how long we’ve been batting around the idea of tying cattle prices to boxed beef values. I’m not sure where it will wind up. But as things change, things will change.  The laws need to allow the market to adjust. 

What the Dudley Butlers want isn’t going to work.  Consolidation is being driven by factors well beyond their control. You and I may not like it, but it is helping provide consumers with more affordable, higher quality products. We’re not all going to be able to make a living growing cattle in the future, I suppose. But by what reasoning do we suppose we have a right—a RIGHT!—to do so?

This is, when you boil it down, the same debate we’ve been hearing in recent years about big box stores driving the mom and pop locals out of business. I never believed that a local hardware man had a “right” to force me to pay more for his products. I’m not sure why, then I have a “right” to feed cattle when others can obviously do it better and cheaper.

We have a right to a fair market. A fair chance. We have a right to start the race, but we don’t have a right to win the blue ribbon.

And USDA just announced an extension to the public comment period. That only makes sense to extend the comment period until at least after the Denver DOJ-GIPSA hearing on these very matters.

And we can hope that the pressure from the Congressmen will make a difference.

Steve Cornett is editor emeritus at Beef Today. You can reach him via e-mail at scornett@farmjournal.com.