National Campaign for Sustainable Agriculture

Over 170 organizations urge inclusion of livestock and poultry market improvement provisions in the Senate version of the Farm Bill.

September 4, 2007

The Honorable Tom Harkin
Chairman, Senate Committee on Agriculture, Forestry and Nutrition

The Honorable Saxby Chambliss
Ranking Member, Senate Committee on Agriculture, Forestry and Nutrition

Dear Senate Agriculture Committee Member:

The over 170 undersigned organizations strongly urge you to include livestock and poultry market improvement provisions in the Senate version of the Farm Bill. The House version of the Farm Bill falls short in promoting an economically strong, independent livestock and poultry sector. You have the opportunity to improve upon the House version and provide the leadership necessary to facilitate fair and transparent livestock and poultry markets and balance the economic relationships among producers and meat processors.

Modern technology allows independent livestock and poultry producers to be as innovative and efficient as the largest operations and the vertically integrated supply chains. The combination of technology and carefully balanced government rules to spur competition will increasingly spread the wealth of the food industry throughout America’s rural communities. Congress has an opportunity within the 2007 Farm Bill to help independent farmers, ranchers and contract farmers continue their role as a major economic engine in their communities.

Our coalition of citizens urges you to support the following provisions in the 2007 Senate Farm Bill to expand producer marketing opportunities and enhance producer protections.

Open and fair markets cannot exist without clear rules and enforcement. The Packers & Stockyards Act (PSA) of 1921 and the Agricultural Fair Practices Act of 1967 created rules to govern the free market in livestock and poultry, with enforcement from the U.S. Department of Agriculture (USDA). The proposed Livestock Title modernizes these Acts to improve markets and enforcement in agriculture. Major elements include:

Fairness Standards for Agricultural Contracts: In order to address the worst abuses contained in processor-drafted contracts, minimum standards for contract fairness is urgently needed. These standards include:

Prohibiting of the use of forced, mandatory arbitration clauses. The U.S. Constitution gives citizens the right to use an impartial court to resolve disputes. Processor lawyers take the right away through non-negotiable contract clauses mandating arbitration. Arbitration is often prohibitively expensive and inappropriate.
Giving the producer at least three days to review or cancel a contract.
Prohibiting companies from requiring the producer make additional investments without additional investment requirements.
Protecting producers from prematurely terminated contracts if they have made a sizable capital investment.

Closings Poultry Loopholes in the Packers & Stockyards Act: The proposed Livestock Title would provide USDA the authority under PSA to bring enforcement actions against poultry dealers for violations of the Act in their relations with all poultry growers, including those who raise pullets or breeder hens as well as broiler producers. Poultry producers should have the same basic enforcement protection provided to livestock producers.

Bargaining Rights for Farmers: Loopholes that allow processors to discriminate against producers should be closed and processors should bargain in good faith with producer organizations. The Agricultural Fair Practices Act of 1967 was enacted to ensure that livestock and poultry producers could join associations and market their products collectively without fear of retribution by processors. These goals have not been attained due to loopholes in the Act.

Clarification of Undue Preferences in the Packers & Stockyards Act

Direct USDA to define “unfair price preferences” so the law can be enforced.
Make clear that plaintiff’s need not additionally prove a “harm to competition” to show a violation of the PSA. Courts have split on the issue, the requirement does not appear in the PSA, and Congress should clarify that no such proof is necessary for producer plaintiffs.
Require courts to award attorneys fees to successful producer plaintiffs under the PSA.

2. Stop Price Manipulation
Livestock producers have many theoretical choices in how to sell livestock, but some of these methods actually harm markets. Captive supplies, which include unpriced forward contracts and cattle owned by processors, can be used to drive down prices to feeders and producers. By implementing two simple changes in market structure and resolving an important case law conflict, Congress can reduce the ability for packers to manipulate these markets.

The Captive Supply Reform Act ( S. 1017) requires that all contracts contain a firm base price that can be equated to a fixed dollar amount on the day the contract is signed, and requires the forward contract be offered or bid in an open public manner.

Currently packers are using a contract method known as “formula pricing” in which the processor bases the contract price on the cash market on a future date, rather than a firm base price. Meanwhile processors call on other forward contracts and packer owned livestock so they do not buy on the cash market on that date. This artificially drives down the cash price on formula contracts.

The Prohibition on Packer-Owned Livestock Act (S. 305) stops packers from owning livestock more than 14 days prior to slaughter. Meat packers such as Tyson, Cargill, and Smithfield Foods use packer-owned livestock as a major tool for exerting unfair market power over farmers and ranchers. When packers are both buyers and sellers, they can manipulate the market. Also, packer owned livestock have priority in getting processing plant space, so high quality independent producers can often not gain sufficient market access.

Clarify Circuit Court Conflicts: When a packer manipulates livestock prices, courts should not force producers to prove not only price manipulation, but that the packer had no legitimate reason for doing so. The 11th Circuit Court of Appeals has stated this, but other circuits have not. The PSA language prohibits price manipulation, and does not allow packers the loophole to argue they had a good reason to do it. The Farm Bill should make clear, as S.622 provides, that “pro-competitive effects” or “legitimate business justifications” are not defenses in price manipulation cases.

3. Include House Country of Origin Labeling Provision in Senate Bill

We support the Country of Origin Labeling compromise contained in the House version of the Farm Bill. We urge the Senate to adopt the House language on this issue.

Farmers, ranchers and consumers across the country are asking for these legislative reforms to ensure fair and transparent markets and a competitive share for family based agriculture. The legislative reforms summarized above are key to achieving the goals of promoting an economically healthy and diverse agricultural production sector and providing consumers with healthy, affordable food.

Please support these important reforms in the Senate 2007 Farm Bill.

Sincerely,

A Little Taste of Everything
A Taste of the North Fork (NY)
Adams County Farmers Union (ND)
Ag. and Land Based Training Association
Agricultural Missions
Agriculture of the Middle
Alabama Contract Poultry Growers Association
Alabama Women Involved in Farm Economics
Alaska Women Involved in Farm Economics
Alliance for a Sustainable Future
American Agriculture Movement
American Corn Growers Association
Appalachian Crafts/Ross' Creek Farm (KY)
Arkansas Women Involved in Farm Economics
Art and Nature Project, NY
Berkshire Co-op Market (MA)
Bird Conservation Network Executive Committee
Bronx Greens (NY)
Buckeye Quality Beef Assn.
California Dairy Campaign
California Farmers Union
California Institute for Rural Studies
Californians for GE-Free Agriculture
Campaign for Contract Agriculture Reform
Campaign for Family Farms and the Environment
Caney Fork Headwaters Association (TN)
Catholic Archdiocese of Dubuque Rural Life & Community Development
Catholic Charities of Kansas City-St. Joseph Inc.
Catholic Charities, Diocese of Sioux City, Iowa
Cattle Producers of Washington
Center for Earth Spirituality and Rural Ministry
Minnesota Center for Food Safety
Center for Popular Research, Education and Policy
Center For Rural Affairs
Chemung County (NY) Church Women United
Chemung County Council of Churches
Church Women United of Chemung County (NY)
Church Women United of NYS
Citizens Action Coalition of Indiana
CitySeed (CT)
Colorado Independent Cattle Growers Assn.
Community Action Resource Enterprises (OR)
Community Food Security Coalition
Concerned Citizens of Central Ohio
Cornucopia Institute
Corson County Farmers Union (SD)
Court St Joseph #139 Catholic Daughters of the Americas
Chemung and Steuben Counties, NY
Cumberland Counties for Peace & Justice (TN)
Dakota Resource Council (ND)
Dakota Rural Action (SD)
Delta Land and Community
Endangered Habitats League
Family Farm Defenders
Family Farms for the Future
Farm Aid
Farm and Ranch Freedom Alliance
Farm Fresh Rhode Island
FH King Students of Sustainable Agriculture at UW Madison
Florida Certified Organic Growers & Consumers, Inc
Food Alliance
Food and Water Watch
FoodRoutes Network
Foodshed Alliance
Georgia Organics
Georgia Poultry Justice Alliance
Global Resource Action Center for the Environment (GRACE)
Sustainable Table
Grassroots International
Harding County Stockgrowers Association (SD)
Heartland Center (IN)
Hispanic Organizations Leadership Alliance (HOLA)
Horseheads Grange #1118
Humane Society of the United States
Idaho Rural Council
Illinois Farmers Union
Illinois Stewardship Alliance
Independent Beef Association of North Dakota
Independent Cattlemen of Iowa
Independent Cattlemen of Nebraska
Independent Cattlemen of Wyoming
Indiana Farmers Union
Institute for Ag and Trade Policy
International Labor Rights Forum
Iowa Farmers Union
Just Food
Kansas Cattlemen's Association
Kansas City Food Circle
Kansas Farmers Union
Kansas Rural Center
Kansas Women Involved in Farm Economics
Kit Carson County Cattlemen’s Assn.(CO)
La C.A.S.A. de Llano
Ladies of Charity of Chemung County (NY)
Land Stewardship Project
Maryknoll Office for Global Concerns
McKenzie County Energy and Taxation Association (North Dakota)
Mesa County Cattlemen’s Association (CO)
Michigan Farmers Union
Minnesota Farmers Union
Minnesota Project
Mississippi Contract Poultry Growers Assn.
Mississippi Livestock Markets Association
Missouri Farmers Union
Missouri Rural Crisis Center
Montana Association of Churches
Montana Cattlemen Assn.
Montana Farmers Union
Montana Women Involved in Farm Economics
National Campaign for Sustainable Agriculture
National Catholic Rural Life Conference
National Center for Appropriate Technology
National Contract Poultry Growers Association
National Family Farm Coalition (NFFC)
National Farmers Organization
National Farmers Union
National Hmong American Farmers (Formerly Small Farm Resource and Training Center)
National Latino Farmers & Ranchers Trade Assn.
National Organic Coalition
National Poultry Justice Alliance
National Women Involved in Farm Economics
Nebraska Farmers Union
Nebraska Women Involved in Farm Economics
Network for Environmental & Economic Responsibility
Nevada Livestock Assn.
New York Sustainable Agriculture Working Group
New York Women Involved in Farm Economics
Nojoqui Ranch Produce
North Carolina Contract Poultry Growers Assn.
North Central Montana Stockgrowers Assn.
North Dakota Farmers Union
Northeast Organic Dairy Producers Alliance
Northeast Organic Farming Assoc. - New York
Northeast Organic Farming Assoc., Vermont
Northern Plains Resource Council
Northern Plains Sustainable Agriculture Society
Ohio Environmental Council
Ohio Farmers Union
Oregon Livestock Producer Assn.
Organic Consumers Assn.
Organization for Competitive Markets
Parish Social Ministry Dept, Catholic Charities of Louisville
Partnership for Earth Spirituality
Pennsylvania Assn. for Sustainable Agriculture
Pennsylvania Farmers Union
Pennyback Farm Education Center for Sustainable Food Systems
Perkins County Livestock Improvement Assn. (SD)
Powder River Basin Resource Council (WY)
Presbyterian Church (USA) Washington Office
Provender Alliance
Puget Consumers Co-op Farmland Fund (WA)
R-CALF USA
Regional Farm and Food Project, New York
Rochester Roots: Growing Youth, Growing Community
Growing Food (formerly Politics of Food)
Rocky Mountain Farmers Union
Rural Advancement Foundation Int’l - USA
Rural Coalition/Coalición Rural
Rural Life Committee of the North Dakota Conference of Churches
Selene Whole Foods Co-op (PA)
Social Concerns Office Diocese of Jefferson City
South Dakota District VI Farmers Union
South Dakota Farmers Union
South Dakota Stockgrowers Assn.
Southern Colorado Livestock Association
Southern Sustainable Agriculture. Working Group
Spokane County Cattlemen's Assn. (WA)
St John the Baptist Fraternity of the Secular Franciscan Order, Elmira NY
Stevens County Cattlemen's Assn. (WA)
Sustainable Agriculture Coalition
Texas Farmers Union
United Hmong Association
United States Cattlemens Association
Utah Farmers Union
Virginia Association for Biological Farming
Washington County Stockmen's Assn.
Western Organization of Resource Councils (WORC)
Western Plains Action Group (SD)
Western Sustainable Agriculture Working Group
Wisconsin Farmers Union

Cc. Senate Agriculture Committee

FOR FURTHER INFORMATION, CONTACT:

Jeri Lynn Bakken,
Regional Program Associate
Western Organization of Resource Councils
2305 5th Ave. NE
Lemmon, SD 57638
Phone/Fax: 701/376-7077
email:

Becky Ceartas, Program Director
Contract Agriculture Reform Program
RAFI-USA
PO Box 640
Pittsboro, NC 27312
Phone: 919-542-1396, ext.209
e-mail:

John Crabtree
Center for Rural Affairs
145 Main St
PO Box 136
Lyons, NE 68038
PH: 402-687-2100, ext. 1010
e-mail:

Steve Etka, Legislative Director
Campaign for Contract Agriculture Reform
PH: 703-519-7772
e-mail:

Martha Noble, Senior Policy Analyst
Sustainable Agriculture Coalition
110 Maryland Ave., NE, Suite 209
Washington, D.C. 20002
PH: 202-547-5754
e-mail:

Bill Bullard, CEO
R-CALF USA
P.O. Box 30715
Billings, MT 59107
PH: (406) 252-2516
e-mail:

Michael Stumo
Organization for Competitive Markets
PH: 413.854.2580
e-mail:

Katy Ziegler, Legislative Director
National Farmers Union
400 North Capitol St. NW, Suite 790
Washington, DC 20001
Phone: , 202-314-3103.
Email: