Billings, Mont. Today, the American Meat Institute the trade association that represents multinational meatpackers released a "study' that claims the proposed competition rule (GIPSA rule) issued by the U.S. Department of Agriculture's (USDA's) Grain Inspection, Packers and Stockyards Administration (GIPSA) would cost the nation as a whole about $14 billion in economic activity.
However, according to R-CALF USA, the study is not an economic study at all, but rather a direct political threat by the monopolistic meatpackers to exact financial harm on producers and consumers as a retaliatory measure if GIPSA proceeds to prohibit them from exerting abusive market power to lower cattle prices to producers and increase beef prices to consumers.
"The entire study is based on the outrageous threat that packers likely will collude to destroy certain marketing arrangements that benefit everyone in the marketing chain from consumers to retailers to packers to cattle producers by providing high quality beef for consumers," said R-CALF USA President/Region VI Director Max Thornsberry. "This threat would be laughable if it weren't coming from one of the most economically and politically powerful trade associations known in Washington, D.C. We think the U.S. Department of Justice should step up its antitrust investigation of the packing industry given AMI's admission that the concentrated meatpackers likely possess, and likely intend to exercise, their abusive market power to coordinate actions to increase food prices for consumers. Indeed, AMI's entire study presumes this outcome."
The study states: "Were the proposed GIPSA rules to take effect. . . packers will for the most part be subject to an extremely variable "cash' or "spot' market . . . to purchase their livestock. . . [and that] will lead to an increase of about 3.33 percent in the retail price of beef at the national level."
But the GIPSA rule does not, in any way, require packers to limit or cease their participation in the mutually beneficial marketing agreements.
"Thus, the only way consumer prices would increase as claimed by the study is if the packers affirmatively decide to retaliate against the GIPSA rule by refusing to participate in certain mutually beneficial marketing agreements, which they now acknowledge would inflict harm on consumers and producers, and the only way that harm could accrue on a national level is if the four major packers collude in that anticompetitive effort," said R-CALF USA CEO Bill Bullard.
"If the packers carry out their threat, which they believe would inflict harm on producers and consumers, their willful actions likely would be sanctioned by the Packers and Stockyards Act itself, which quite clearly prohibits packers from engaging in any course of business or doing any act for the purpose or with the effect of manipulating or controlling prices, or of creating a monopoly," he continued.
AMI's study assumes the GIPSA rule would increase the packers' risk of lawsuits and "make it easier for a disgruntled supplier to sue and win in a Packers and Stockyards Act lawsuit."
Thornsberry said this is a gross misrepresentation of what the GIPSA rule requires.
"The GIPSA rule only clarifies existing requirements under the Packers and Stockyards Act, but does not expand those requirements," Thornsberry said. "The GIPSA rule clarifies that practices prohibited under the Packers and Stockyards Act are unlawful regardless of whether they are targeted at the entire livestock industry, or at individuals or groups within the industry. The GIPSA rule does nothing more than clarify that a prohibited practice is a prohibited practice, period."
"That's the basis for AMI's threat and the reason for the skewed results of AMI's study," Bullard said.
"The packers think they are above the law and should not be stopped from engaging in unlawful practices so long as they only target individual citizens. The packers detest the rule's clarification that the Packers and Stockyards Act reaffirms the sovereignty of individual U.S. livestock producers by expressly protecting them from the abusive, monopolistic practices of the highly concentrated meatpackers."
Bullard also said the GIPSA rule's impact on beef packers is primarily limited to recordkeeping requirements, which he said GIPSA needs in order to: 1) readily identify and correct anticompetitive conduct; 2) prevent packers from limiting producers' marketing choices by excluding producers that can meet the packers' input needs; 3) prevent packers from forming exclusive agreements with select cattle sellers; and, 4) prevent packers from exerting market power to apportion market territories or restrain commerce in an effort to lower cattle prices.
"We are not at all surprised by AMI's "the-sky-will-fall'-type study, as AMI is using the same strategy against the GIPSA rule that it used to deprive U.S. cattle producers and U.S. consumers for nearly seven years of Congress' 2002 decision to provide U.S. consumers with labeling information as to the origins of the meat they purchase for their families," he said.
"AMI's strategy is to capture control over the live cattle supply chain just as they've already accomplished in the poultry and hog industries, which resulted in the exodus of 90 percent of all U.S. hog farmers in just the past three decades," Bullard concluded. We don't intend to let them chickenize the cattle industry, and the GIPSA rule is the first step in halting their anticompetitive advances."
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R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) is a national, nonprofit organization dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. R-CALF USA represents thousands of U.S. cattle producers on trade and marketing issues. Members are located across 47 states and are primarily cow/calf operators, cattle backgrounders, and/or feedlot owners. R-CALF USA directors and committee chairs are extremely active unpaid volunteers. R-CALF USA has dozens of affiliate organizations and various main-street businesses are associate members. For more information, visit www.r-calfusa.com or, call 406-252-2516.
