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Livestock Market Rule Released

Groups Call Packers and Stockyards Rule a Small Step

Jerry Hagstrom
By  Jerry Hagstrom , DTN Political Correspondent
USDA released the latest proposal of a Packers and Stockyards rule meant to satisfy some competition protection guidelines spelled out in the 2008 farm bill. Advocates for individual livestock producers called the proposal a small step forward, but the lobbying group for meatpackers warns against rules that go against legal precedent. (DTN file photo by Chris Clayton)

WASHINGTON (DTN) -- Groups that have campaigned for strong rules to protect farmers and ranchers from anticompetitive business practices in meatpacking and processing said Friday that the rule proposed by the Trump administration to make changes to the Packers and Stockyards Act scheduled to be published in the Federal Register on Monday is at best only a small step.

The Agriculture Department's Agricultural Marketing Service said the proposed regulation specifies four criteria the secretary of agriculture would consider when determining whether an undue or unreasonable preference or advantage has occurred in violation of the Packers and Stockyards Act. The proposal has a 60-day comment period that will end March 13.

The rule was driven by a directive in the 2008 farm bill. The Obama administration proposed rules multiple times, but they were withdrawn, and the Trump administration canceled a rule proposed late in the Obama administration.

Under the proposed rule, the secretary of agriculture could consider whether a preference or advantage given to a seller can or cannot be justified based on cost savings or whether the preference can or cannot be justified as a reasonable business decision. Some preferences or advantages could be considered undue or unreasonable if they are so unfair they tend to restrain trade and create excessively unfair conditions for a certain group of people. The secretary would also consider whether a preference or advantage can or cannot be considered a reasonable business practice in the industry. The secretary could consider other factors beyond the four criteria on a case-by-case basis.

Julie Anna Potts, president and CEO of the North American Meat Institute, said the group that represents meatpackers will review the rule to ensure livestock producers have a variety of options to market their livestock and that meat and poultry markets remain competitive. Potts also said the packer group would seek to protect the standard that requires plaintiffs to show a packer's actions showed likely harm to competition in any litigation.

"Any rule must protect marketing agreements between packer/processors and livestock producers, which provide stability to the industry and benefits consumers with lower prices and better quality meat and poultry," Potts said. "Eight federal appellate courts have concluded that the Packers and Stockyards Act requires a plaintiff to show actual or likely harm to competition.

"Without such a requirement, frivolous lawsuits could flood the courts and hurt the producer-processor relationship, ultimately harming those the law is intended to protect."

National Farmers Union President Roger Johnson said, "After so many years of inaction, it is encouraging to see this administration take some small steps to level the playing field."

"However, this rule does not go far enough to safeguard farmers from unfair treatment, nor does it address many of the other difficulties farmers have been suffering at the hands of powerful corporations. In order to provide farmers with the protections they need and deserve, we strongly urge USDA to strengthen its definition of 'undue or unreasonable preference' as well as introduce additional rules to ensure fair treatment and competition in the livestock sector."

National Sustainable Agriculture Coalition Policy Specialist Candace Spencer said, "After much delay, we are very pleased to see AMS finally moving forward on the undue preference rule."

"Their proposed criteria focus solely on business justifications, which could be very helpful depending on how they are interpreted and whether or not they are actively enforced. One major concern we have about the criteria, however, is that they include language that would judge undue preference by whether or not such behavior can be considered customary for the industry.

"Unfair competition and undue preference has unfortunately become customary for the industry -- that does not mean it should be endorsed. In order to ensure this rule is fair and effective for contract farmers, this criterion must be either deleted or heavily revised.

"We will be working closely with our membership to analyze these criteria and put forward a more detailed analysis next week."

NSAC added, "The undue preference rules represent only a small part of a larger package of reforms advanced under the Obama administration at the end of 2016, known as the 'Farmer Fair Practices Rules.' These rules were strongly supported by contract producers and advocates like NSAC."

The Organization for Competitive Markets said, "USDA fails to own up to its longstanding position that the Packers and Stockyards Act is both an antitrust law and a producer protection law."

"Unlike the previous iteration of this rule, it fails to set out which actions are unfair, unjustly discriminatory, or deceptive by meat packers and processors. USDA leaves farmers, ranchers, and poultry contract growers under the threat of retaliation for speaking out against any wrong doing of the packer or processor. A particularly gross omission in this proposed rule is restoration of the right of an individual producer to bring a claim without proving competitive harm to the entire sector."

USDA Agricultural Marketing Service: Undue and Unreasonable Preferences and Advantages Under the Packers and Stockyards Act proposed rule: https://www.federalregister.gov/…

Comments for the rule can be filed at www.regulations.gov

Jerry Hagstrom can be reached at jhagstrom@njdc.com

Follow him on Twitter @hagstromreport

(CC/AG)

Jerry Hagstrom

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