NSAC's Blog

Reverse Corporate Control Over the Livestock Industry

September 11, 2010

The recent developments in the livestock industry have highlighted the issue of mega meatpackers and poultry processors controlling the market, leading to price manipulation and unfair trade practices. Despite this issue being overlooked by the USDA in the past, there has been a significant shift in June. The Grain Inspection Packers and Stockyards Administration (GIPSA) has introduced new rules that prohibit some of the worst corporate practices in the industry. These rules will aim to provide farmers, ranchers and poultry growers with fair market opportunities. Perhaps these new regulations will show scales and balances between the meatpacking industry and the farming community.

As you might imagine, the reaction of the multinational meat packers and poultry processors has been fierce.  They are squealing like stuck hogs to Congress and to the USDA in an all-out effort to get USDA to kill or severely weaken the rules.  For years, they have used their monopolistic power to hold up family farmers and ranchers and in this fight they’re not about to play fair.

We need to send a strong message to USDA:  Don’t weaken the rules!

Stand up to their blatant untruths about their practices and the impact of these new rules on family farm agriculture.  They want to retain full corporate control over contract terms and prices.  Don’t let them do it.

Take Action – Send a Message to USDA

Let USDA know that we need rules that curb corporate control over livestock and poultry markets.  We need rules that foster fair prices for farmers and ample opportunities for farmers and ranchers to pursue value-added products that respond to consumer demand for high quality food.  Aggressive enforcement of the Packers and Stockyards Act is essential to these aims. This is an historic opportunity to make a major structural transformation within the U.S. food and agriculture system.  Winning this fight will establish a new progressive baseline for further changes in competition policy and agricultural policy in general.

For beef and pork producers the rules should:

  • End price discrimination against small and mid-sized producers by outlawing any price preference based upon size alone.
  • Remove phony barriers to suing packers for unfair practices against individual farmers or groups of farmers.
  • Restrict price setting and collusion by prohibiting the largest packers from selling livestock to each other.

For poultry producers the rules should foster fair contracts that:

  • Guarantee the same base payment rate for all growers raising the same type and kind of poultry;
  • Outlaw retaliation by the corporations against growers who speak out against unfair practices;
  • Protect growers’ very substantial investments in poultry houses and equipment from unjust contract terminations.

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Packers and integrators use their market power to manipulate prices paid to livestock producers and contract terms to poultry producers and increasingly to livestock producers.

The Packers and Stockyards Act of 1921 makes it unlawful for meat and poultry packers and processors and companies that contract with farmers to raise hogs and poultry from engaging in any “unfair, unjustly discriminatory, or deceptive practice or device,” or to “make or give any undue or unreasonable preference or advantage to any particular person or locality in any respect, or subject any particular person or locality to any undue or unreasonable prejudice or disadvantage in any respect.”

But until now, USDA has never issued the regulations necessary to define these broad prohibitions in order to adequately enforce the protections for livestock and poultry farmers.  That changed because in the 2008 Farm Bill, Congress voted to include directives to USDA to issue the regulations to define these prohibitions.  In addition, Congress told USDA to clarify how the Act should be applied to give individual farmers and ranchers a fair shake when dealing with the large corporate entities that control our nation’s meat and poultry processing.  The proposed rule does exactly what the Farm Bill directed USDA to do.

In addition, for both livestock and poultry farmers and ranchers, the proposed rule would clarify that when a farmer or rancher shows individual harm because of unfair or deceptive practices by livestock and poultry processors, the farmer and rancher does not also need to a show harm to competition throughout the livestock or poultry market.  USDA has the authority under the Packer & Stockyards Act to clarify for the courts that farmers and ranchers do not need to show this “competitive injury”  to the market as a whole, in order have the legal protections for fair play provided under the Packers and Stockyards Act.

Categories: Action Alerts, Competition & Anti-trust

2 responses to “Reverse Corporate Control Over the Livestock Industry”

  1. Willard Dahlinghaus says:

    I’m retired and rehired so I have a half a century of exposier of the mergers and take over of our ag production and markets. The cheap food policy that some so called experts with the help of our government promoted, caused low controlled commondity prices, which in turn puts us farmers at a well below parity prices. trying to heep going, the farmers were forced to go into contrat farming. Meaning we provide the labor and investment in the buildings, land, and operation cost, for a small return set by the large feed and grain companies at that time. The CAFO have also caused must problem with out enviroment because of the concentration of the unit in one area.

    I have hoped for a long time the law would finally be enforced.

  2. Harriet Purtell says:

    Please end all price discrimination against mid size producers and guarantee same base pay for all growers.Regulations should be the same for all meat producers what ever their size.