Billings, Mont. R-CALF USA President/Region VI Director Max Thornsberry, D.V.M., called the proposed rule issued today by the U.S. Department of Agriculture (USDA) "a bold and absolutely essential step in ridding the U.S. cattle market of anticompetitive practices."
USDA's proposed rule was issued pursuant to provisions in the 2008 Farm Bill that required the agency to promulgate rules to define what actions would constitute undue or unreasonable preference or advantage under the Packers and Stockyards Act of 1921 (PSA), as well as protect poultry and swine contract growers from unfair and deceptive practices committed by meatpackers.
The proposed rule not only establishes standards for identifying when meatpackers have unlawfully engaged in granting unreasonable preference or advantage to a select group of cattle sellers, but also, it clarifies that a violation of the PSA can be proven without the need to also provide proof of predatory intent, competitive injury, or likelihood of competitive injury.
In recent high-profile class action lawsuits, U.S. cattle producers proved to juries that they were materially injured by unfair and deceptive practices committed by meatpackers in violation of the PSA, resulting in significant jury awards to class members. The jury in the Pickett v Tyson Fresh Meats case awarded $1.28 billion to class members within the cattle industry and the jury award in the Herman Schumacher et al. v. Tyson Fresh Meats, Inc. et al. was $9.25 million.
However, both those jury awards were overturned by appellate courts that decided the burden of proof for prohibiting unfair and deceptive meatpacker practices under the PSA was much higher than the juries' findings of unlawful conduct. The appellate courts essentially decided that conduct prohibited by the PSA was not actionable without additional proof of intent or injury to competition.
"As a result of these overturned jury decisions, the Packers and Stockyards Act was relegated a toothless tiger," said Thornsberry, adding, "U.S. cattle producers were left without any recourse from the highly concentrated meatpackers' exercise of monopoly-type power, which enables them to capture profits that should be flowing to independent cattle producers."
Thornsberry said the inability to enforce the PSA has contributed to the exodus of about 150,000 cattle operations since the mid-1990s, which has, consequently, caused the hollowing out of rural communities all across America.
"This proposed rule corrects the core problem that prevents U.S. cattle farmers and ranchers from obtaining relief from the anticompetitive practices of the highly concentrated meatpackers and will help restore competition to our industry by providing a means to discipline anticompetitive behavior," asserted Thornsberry.
Other provisions in the proposed rule include a requirement that meatpackers retain written records to justify differential prices offered to livestock sellers, a prohibition to prevent two or more meatpackers from using a single cattle buyer to procure cattle, and a prohibition to prevent meatpackers from trading live cattle among themselves.
"Taken together, the long-awaited provisions in the proposed rule are monumental and represent a genuine effort to reverse the ongoing loss of competition that has ravaged Rural America for well over a decade. While more must be done to reestablish a fully functioning competitive market for independent U.S. cattle producers, this is definitely a positive start," Thornsberry concluded.
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R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) is a national, non-profit organization dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. R-CALFUSA 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-CALFUSA directors and committee chairs are extremely active unpaid volunteers. R-CALFUSA 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.