Ag Policy Blog

Proposed USDA Cut: Get Rid of Packers and Stockyards Act

By Chris Clayton , DTN Ag Policy Editor

Ag groups have been busy writing letters asking President Donald Trump to protect agricultural trade, protect the Renewable Fuels Standard, deal with mergers, or protect the country from the impacts of climate change.

Nobody, however, is coming forward and offering many ways to cut costs at the U.S. Department of Agriculture, despite the White House pitching for as much as $4.7 billion in cuts at USDA.

And yet, it's also clear that several of the livestock industry's most influential organizations have heartburn for what they see as onerous regulatory burdens and market interference they could face if the 96-year-old Packers & Stockyards Act is retooled. These fights over livestock rules have dragged on since 2008, and really much farther back than that. They reflect conflict over how the federal government clashes with free enterprise.

As some leading livestock organizations have reiterated time and again, there is no justification for changing the law so the federal courts could recognize that driving an individual farmer into bankruptcy is an unfair market practice. There's no rationale for trying to prove that producers with the same quality of cattle should get the same prices. After all, one guy may be much better at marketing than the next guy down the line. And there's no reason to interfere with the tournament system for poultry because it would hinder the opportunity for the pork and beef industries to create they same kind of efficient production strategy.

Under an executive order signed February 24 by President Trump, federal agencies should be offering the president not only rules that should be revoked, but also laws that should be repealed because they are "outdated, unnecessary, or ineffective."

So here's a $23 million savings plan for USDA to drain part of the swamp. The Trump administration and Congress should just eliminate the entire Packers and Stockyards Program, and revoke the 1921 Packers & Stockyards Act. With inflation, etc., the Packers and Stockyards Program probably costs roughly $300 million over 10 years. Lawmakers could go to President Trump and let him know they found enough money at USDA to buy at least three more F-35 fighter jets. At $16 million per mile, the savings from dropping the P&S program could also go to help build roughly 18 miles of border wall as well.

It works out well because so many industry groups make the case that the Packers & Stockyards Act is indefensible because attempts to enforce it impede the free market. The 96-year-old law has become nothing more than outdated counterproductive government intrusion. Unless the law is revoked and the Packers and Stockyards Program is dismantled, then future misguided, unwarranted attempts to defend so-called "rights" of market participants will again flare up. Such undue regulatory barriers should not stand in the way of the dawn of a new era in free enterprise, individual freedom and limited government.

Nobody had a kind word for GIPSA, the archaic Packers & Stockyards Act or its livestock marketing rules at a March 21 House Agriculture Subcommittee hearing on "livestock producer perspectives on the next farm bill." House Ag Chairman Mike Conaway, R-Texas, said of the situation, "the so-called GIPSA rules that threaten the unique marketing arrangements producers have worked so hard to develop."

At that same hearing, Craig Uden, president of the National Cattlemen's Beef Association, stated in testimony that "The vast majority of cattle producers oppose the involvement of the federal government in determining how their cattle are marketed."

http://agriculture.house.gov/…

USDA under the Obama administration also had the audacity to propose user fees to cover the costs of the program. This could have either gouged into executive bonuses at the major meatpackers or more likely caused them to pay less to those contract growers scoring lower in the tournament system.

After all, the Packers and Stockyards Program at USDA didn't prevent the Eastern Livestock Co. case from happening, leaving roughly 200 cattle producers with millions of losses in 2010. Prosecutors in that case used wire fraud laws to go after the owners, not P&S laws. Going back to the George Young cattle fraud in 2001, it was the bankers who caught that, not GIPSA. Young was also prosecuted for wire fraud.

GIPSA now largely functions much like a local sheriff's department or small claims court. All you have to do is check the news releases. Generally, P&S cases seem to come down to a guy paying a $2,500 fine because his check bounced when he bought some cattle. Or a poultry company gets the same amount of fine for failing to pay for birds under a contract. https://www.gipsa.usda.gov/…

These cases are tying up USDA attorneys and administrative judges. Then, when you look at the volume of staff required to keep the Packers and Stockyards Program going, that's roughly 115 federal jobs scattered across the country. That includes bringing in appointed administrators who are told the best thing they could do in their time in office is not do anything that would cause ripples. Get 'em outta there! Close the doors and turn the space into a storage area for old USDA computers.

Getting rid of the Packers & Stockyards Act could all be part of making America great again. I'm just a little surprised no one is writing letters to do it.

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

Follow him on Twitter @ChrisClaytonDTN

Comments

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BDukowitz1375121425 4/16/2017 | 6:36 AM CDT
Are we sure the author of the blog did not make use of, lets say, sarcastic irony?
CFarmer276804432 4/14/2017 | 2:05 PM CDT
Mr. Clayton, you are so far wrong that I debated even writing a comment. The Packers and Stockyards Act was enacted to protect livestock producers from dealers, markets and packers. There are bonding requirements, regulations for poultry and swine production contracts, rules for markets and such that hold producers money as a fiduciary, and so much more. If P&S is removed, you are going to see so many producers need to go to court to receive payment for their livestock, to settle unfair contracts, etc. These entities are going to use producers as a bank loan and they'll unknowingly be incurring business risk of those they sell to until they get paid. Remember that the livestock industry is really the only industry that primarily555525 deals in cash anymore. You are argue that Eastern Livestock wasn't "prevented". Eastern Livestock and the Gibsons committed bank and wire fraud. The fact that they weren't prosecuted under P&S law is a stupid comment and shows that you aren't educated on the subject. Was Al Capone convicted on murder and prohibition era laws? No, he was convicted on tax evasion. Wire fraud is the easiest and cheapest way for the prosecution to get a conviction...but I'm sure you knew that already. P&S is the smallest agency within the USDA. So if you get rid of them, I hope you get your wish of a couple jets while farmers get screwed.