DTN Ag Policy Blog

As the debate about USDA funding for FY 2024 drags on, Sens. Jon Tester and Chuck Grassley have joined forces to press their fellow senators to oppose any policy riders that would block USDA from dealing with competition challenges through the Packers and Stockyards Act.

Tester, D-Mont., and Grassley, R-Iowa, wrote a letter to fellow senators on the situation. Right now, the House appropriations bill for USDA includes language that would prevent USDA from spending any money further drafting or implementing new competition rules under the P&S Act.

The increasingly consolidated meatpacking industry has "a concerning pattern of running roughshod over our nation's anti-trust laws," the senators wrote.

"Right now in the United States, four companies control over 80% of domestic beef processing, 60% of domestic hog processing, and 50% of domestic poultry processing. This level of concentration is a bad deal for consumers and a bad deal for family farmers and ranchers."

They added that the meatpackers have recorded record profits in recent years while livestock producers struggled and consumers paid higher prices. "The level of market concentration makes it too easy for these companies to engage in price-fixing tactics."

There are not enough "cops on the beat" to prevent some of the anticompetitive actions by meatpackers, the senators wrote. "There are also not current sufficient rules in place at USDA to hold them accountable to consumers and producers."

The letter from Tester and Grassley is similar to one sent the previous week by the National Farmers Union and several other organizations to the chairs and ranking members of the House and Senate Appropriations Committees also asking Congress not to include any riders that would block changes to the P&S Act enforcement. NFU noted Congress used similar tactics during the Obama administration to essentially halt the rulemaking process.

"The policy rider would not only halt implementation and finalization of the completed rules but would also endanger the most essential aspects of the work to strengthen the P&S Act. USDA is expected to propose a more comprehensive rule addressing abuses in the contract poultry growing system and a rule clarifying USDA's long-standing interpretation that it is unnecessary under the P&S Act to demonstrate industry-wide harm to establish a violation of the Act," NFU and other groups wrote.

USDA has three different P&S rules sitting in the cue at the White House Office of Management and Budget (OMB).

-- A potential final rule has been there since Oct. 17, 2023. That's the "Inclusive Competition and Market Integrity Under the Packers and Stockyards Act" rule. It spells out when certain conduct by packers, swine contractors or live poultry dealers is considered "unfair, preferential, unjustly discriminatory or deceptive."

-- A proposed rule sent to OMB on Dec. 18, 2023, would spell out unfair practices, undue preferences and "harm to competition." That proposed rule would deal with the thorny issue that has been a long-time stumbling block for producers attempting to sue meatpackers over unfair practices. Federal courts often refer back to the P&S Act and declare that a packer's act against a single producer did not cause "harm to competition." The proposed rule would seek to change that standard.

-- Another proposed rule would address problems with the way poultry producers are paid and disparities in the tournament system for poultry pay as well as address demands by poultry integrators that growers make capital improvements to their operations. That proposed rule also was filed at OMB on Dec. 18, 2023.

DTN reported in December that producer groups and antitrust advocates who support the rule changes are concerned about the slow pace and possible policy rider. See " Stronger Enforcement of Packers & Stockyard Act Jeopardized by Slow Pace of Rules" here: https://www.dtnpf.com/….

Reflecting that this is a regulatory battle going back now 16 years, the senators wrote, "Congress must reject the latest push by these special interests to attach a rider to the FY 2024 Agriculture Appropriations bill to once again block USDA from implementing the 2008 bipartisan Farm Bill reforms."

Congress will come back in session this week to determine how to reach a deal on spending bills by the end of the week. USDA, EPA, the Department of Transportation and a few other agencies could see their funding expire on March 1. Other agencies such as Defense, Labor, Interior, Homeland Security, Education and Health and Human Services have until March 8.

Chris Clayton can be reached at Chris.Clayton@dtn.com

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