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AMI Study Attacks GIPSA Rule, Exemplifies Abusive Monopolistic Power of the Concentrated Packing Industry

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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.

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"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."

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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.

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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."

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R-CALF USA, Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America, represents thousands of U.S. cattle producers on domestic and international trade and marketing issues. R-CALF USA, a national, non-profit organization, is dedicated (more...)

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