Commentary by Bill Bullard, CEO, R-CALF USA
One of the regulatory fights in Washington, D.C., right now is whether independent ranchers will be afforded the protections granted them over 100 years ago when Congress passed the Packers and Stockyards Act of 1921. It should surprise no one that the multinational meatpackers are lined up on one side of the fight – as they are who will be regulated by the Act – and organizations like R-CALF USA on the other – organizations that represent the independent cattle and sheep producers who are to be protected by the Act.
What brings this to the forefront today is that the Meat Institute, which is the largest trade association representing packers and processors of beef, pork, lamb, veal and poultry; and the National Cattlemen’s Beef Association and National Pork Producers Council, both of which have some of the same packers and processors seated on their governing boards, have recently circulated a joint white paper in Washington, D.C., as a lobbying tactic to support the packers’ position.
It’s important to note at the outset that collectively these three groups lobbying to win this fight on behalf of the packers’ interests receive tens of millions of government-mandated checkoff dollars each year.
So here’s what the fight is about: Before the Packers and Stockyards Act was passed in 1921 to specifically protect ranchers from actions by the packers that harmed their individual operations as well as the broader livestock industry as a whole, Congress had already passed three antitrust laws to protect competition within our entire U.S. economy to prevent the formation of monopolies and the conduct that monopolists are known to engage in – the most commonly known of which is price fixing. These earlier antitrust laws include the Sherman Act, Clayton Act, and Federal Trade Commission Act.
But Congress found these three earlier antitrust acts were lacking when it came to independent, family-scale livestock producers who had little choice but to market their livestock into a highly concentrated meatpacking industry.
Only one conclusion can be drawn. And that is that Congress recognized that ranchers needed more specialized protections against the potential market abuses of the highly concentrated meatpackers than the three preexisting antitrust laws could provide.
A key standard established for these three preexisting antitrust laws is that to prove a violation the alleged action must cause, or be likely to cause, harm to competition or the competitive process. This means that unless the alleged action harmed competition within the entire industry, a violation is unlikely to be found.
Another way to view this is that if a packer were to treat an individual rancher unfairly or deceptively, causing the rancher to suffer financial ruin, there would be no remedy if he or she could not first prove that the competitiveness of the entire industry had been harmed. This of course, is an untenable burden for individual ranchers who are subjected to targeted market abuses.
Now, I’ll bet you can guess that it is the concentrated meatpackers that want the Packers and Stockyards Act to be enforced in the very same way as the earlier three antitrust statutes. And that’s why the meatpackers and groups with meatpackers on their governing boards do not want the Department of Agriculture (USDA) to write rules that would protect the individual rancher from targeted market abuses inflicted only upon them.
And that’s why it’s “fight on” right now. The USDA is in the process of writing a rule that will make clear that when Congress stated meatpackers could not engage in unfair, deceptive, or unjustly discriminatory actions, it meant actions against both individual ranchers and the industry at large.
But the meatpackers argue that protecting individual ranchers from abusive market power, by enabling them to enforce the Packers and Stockyards Act, will incite litigation and create uncertainty throughout the supply chain.
Now shouldn’t we try something different rather than continuing to kowtow to the meatpackers “the sky will fall” scare tactics?
After all, we’ve lost 655,000 cattle ranchers during just the past four decades, with 107,000 of them quitting during just the past five years. We’ve also lost 31,000 sheep ranchers in four decades, and 12,500 of them just in the past five years. And remember too, during the past five years consumers have been paying record prices for beef. Clearly, the current system is broken.
Do you think ranchers are quitting because their industry is competitive and provides them with the opportunity to be profitable? Or do you think their inability to preserve competition in the face of unprecedented concentration and market power is a very real reason our nation’s food security has been severely weakened?
Call Congress and tell them to help the USDA implement strong, enforceable rules to level the playing field between the highly concentrated packers and independent ranchers.