Conference Wrap-Up

Written on:September 1, 2011
 
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Anita Poole-Endsley
Executive Director

The 13th Annual OCM Conference entitled “Voices Rising from the Land” was held on August 12-13, 2011 in Kansas City, MO at the Westin Crown Center. The meeting carried three themes
which illustrate the strategy used by the organization to fight for fair, open and
competitive markets: legislation, litigation, and alternative solutions.

According to Fred Stokes, former OCM Executive Director and current OCM President, litigation has not been completely successful, and efforts at passing legislation have been successful only to be challenged in the rule making process. There are many alternative solutions which may help develop truly competitive markets that can, and are,
being explored such as electronic marketing, local food markets, and internet marketing.

The first speaker at the conference was Mr. Steve Etka who is a lobbyist for the Campaign for Contract Agriculture Reform. Stokes pointed out that the new Grain Inspection Packers and Stockyards Act (GIPSA) rule changes the previous interpretation of the law outlined in the Tester court ruling by removing the requirement that a producer prove harm to competition in order to prove harm to an individual. That standard was impossible to overcome. The new rule provides for a reasonable interpretation that will align with the original intent of the Packers and Stockyards Act of 1921.

Etka stated that he is pushing the USDA to finalize the GIPSA Rule which was supported by a large majority of all comments by producers in the rule making process. The new rule would provide growers with access to information that would allow them to make wise business decisions – information that only transparency in the marketplace can provide. The rule would prevent collusion, prevent terms that are unfair in contracts, and prevent retaliation by packers against growers. Etka explained that the rule still allows packers to pay premiums to producers, but requires packers to explain the higher payment.

Etka outlined the opposition to the rule and our counter arguments as follows:

The rule goes beyond congressional intent – it goes beyond intent of industry relying upon the Tester Rule and some members of Congress.

The rule exceeds GIPSA’s authority – the PS&A did not limit GIPSA’s authority under the act.

The rule is attempting to overturn longstanding practice to show competitive injury – the focus in the act is on protecting “individual” producers not competitive harm. The GIPSA rule historically lays out the same interpretation.

And, the USDA should reopen comment period and do a full economic analysis – but, this is a stalling tactic. Going back to the beginning of comment period in the rule making process is unprecedented.

Etka pointed out that Senator Pat Roberts and others have claimed that GIPSA Administrator Dudley Butler had stated the GIPSA rule was a “trial lawyer’s dream”. The truth is the exact opposite. Administrator Butler explained that vague terms in the Packers and Stockyards Act (PSA) were a “trial lawyer’s dream” while the new rule will reduce
litigation due to clarification of terms that are currently subject to litigation.

In recent action, the House introduced a rider prohibiting going further with the rule. Now the Senate must take action in the appropriations process. We have some supporters on the Sen. Appropriations Committee, but all supporters of the rule should call their senators as soon as possible to express their support and request the rule not be delayed nor derailed!

Etka pointed out that those opposing the rule claim to be the voice of the producers. All producers seeking fairness in the marketplace need to make it clear to Washington that they have their own voice and demand to be heard. Fortunately, both the National Farmers
Unions and the American Farm Bureau have come out against the House rider designed to derail the GIPSA Rule.

Next was a panel discussion on Transgenic Seed Concentration and its ramifications. Some of the changes noted as troublesome included privatized public research; change in marketing methods and changes in rural communities.

Concerns about private cotton breeding programs by companies such as Monsanto were raised by Dr. Peggy Thaxton Smith who conducts cotton breeding research at Mississippi State
University. Dr. Smith pointed out that public universities have historically conducted
most conventional breeding research designed to develop specific traits through variety trials to improve yield. Transgenic research conducted by private companies utilizes “back crossing” which according to Dr. Smith “has not improved yield ever.” She expressed that university research is unbiased, and that private companies are now seeking to obtain publicly funded research seed materials for free which they would then capitalize upon. She also expressed concern that there is a growing resistance to round-up ready seeds developed by privatized companies, and a concern about a disease caused by bacterial blight
which may be related to seeds purchased from private companies. More research is needed.

Also on the seed panel was Dr. Diana Moss of the American Antitrust Institute. Dr. Moss is an economist who discussed the benefits of competition in promoting generics in the market. She expressed concern about the window of time there will be to develop generic seeds from research becoming available as patents run out. When a company develops a new
seed variety and patents the research, no one can develop a generic version for approximately 20 years if the patent is maintained. Dr. Moss explained that usually there is a transition process in place that allows others access to the research prior to the expiration of the patent so that generic products can be developed and on the market when the patent expires. However, she stated that with respect to seeds from certain companies,
particularly round-up ready seeds, she is unclear about whether there is a transition
plan in place.

A second concern expressed by Dr. Moss which may affect competition and spur anti-trust litigation is the practice of stacking traits in transgenic seed varieties. Generic competition according to Dr. Moss would push stacking along to the benefit of producers, but the competition debate comes from when a dominant firm hesitates in coordinating with
others to produce a seed product.

Dr. Bob Kremer, a U.S.D.A. Agricultural Research Service microbiologist presented an eye opening discussion cutting edge research showing potential harm to the environment due to the abundant use of glyphocate. A recap of his research can be found elsewhere in this newsletter and should be read closely.

A panel discussing global fertilizer cartels raised awareness that there are no global anti-trust laws or police! Dr. C. Robert Taylor who an Agriculture Economics and Public Policy professor at Auburn University expressed a concern over super competitive prices, strategic issues, and sustainable issues. He stated that there are several government sanctioned cartels (marketing coalitions) between 3 to 4 large fertilizer companies
that supply the majority of all fertilizer globally. These cartels hurt competition
and manipulate supply to manipulate cost to farmers and ranchers. He has been very vocal in requesting a sector analysis, but the agencies empowered to investigate have had push back from congress.

Dan Owen, a prominent attorney on anti-trust cases with the firm of Polsinelli, Shughart PC, is in the trenches trying to create a private solution to some of the problems that Dr. Taylor outlined. He discussed a case from 2008 focused on potash. Prior to the lawsuit, potash went from very stable prices to tripling in cost. Evidence was found that the companies providing potash were managing supply to support the cost.

In a competitive market when one company has a problem that shuts down production, other companies pick up production. But in the potash case that did not happen. All of the colluding companies stopped production when one company experienced a problem. Owens
stated that they are still looking for compelling evidence to expose the price fixing
conspiracy. They are also looking for evidence in Phosphates as well. There is a US cartel sanctioned in 1918 designed then to keep Germany for getting access to explosives by running up the price. It is supposed to keep global prices high -but not in the US- but that is not what happens. Owen’s firm is vigilant it trying to identify anti-trust violations with other agricultural additives as well.

Following a lunch break, Owen gave a primer on anti-trust law. He outlined some of the pertinent laws including the Sherman Antitrust Act of 1890 and the Packers and Stockyards Act of 1921 (PS&A). Owen focused much of his discussion on the judicial branch of government which was designed to be independent and not subject to political winds.
Federal judges are appointed for life and their salary cannot be reduced by Congress.
This makes the judicial branch independent and not subject to pressure from agencies or politicians.

Owen discussed the challenges in bringing a suit under the PS&A which prohibits “unfair” prices which was interpreted to mean that must cause injury to competition. However, the new GIPSA rule defines “unfair” and takes out that almost impossible standard to prove of
causing injury to competition.

Owen further discussed theories and evidence collection for suits brought under the Sherman Act. He urged producers to be vigilant in watching how companies, particularly in the beef industry operate and identify acts that may be unfair in the marketplace.

A discussion later ensued regarding the Beef Checkoff which focused on who pays and who benefits. Syndicated columnist Alan Guebert reported that the National Cattlemen’s Beef Association (NCBA) President recently said the actual value of the checkoff compared to
1983 is 23% and that per capita consumption has fallen. He suggested that the Cattlemen’s Beef Board (CBB), which is congressionally responsible for the checkoff, should declare defeat on the checkoff and just move on!

Checkoff funds are mandated by Congress to be used to promote the beef industry and no funds may be used to influence government action. Guebert expressed concern that the leadership of the organization contracted to utilize the checkoff funds, NCBA, stated at a
CBB annual meeting in Florida in the first week of August, 2011 the “at some point there will have to be legal action to stop the GIPSA rule.” Guebert expressed that the Beef Checkoff will never succeed and as evidence pointed out the Dairy Checkoff. He pointed out
the Dairy Checkoff raised $250 million but there are virtually no dairy producers. A comment by one of the conference participants quoted Joel Salatin who said “I’m always amazed at how proficient we have become at hitting the bulls eye of the wrong target”

Guebert expressed concern that many in the agriculture industry want Washington to stop the rule-making process for the GIPSA rule. He said they just want to take the “chicken way” out and defund the rulemaking. This action would be unconscionable.

The afternoon of the OCM Annual Conference concluded with a discussion of the newly formed U.S. Farmers and Ranchers Alliance (USFRA). USFRA is funded in large part by checkoff
dollars. For example, the CBB recently voted to send USFRA another $250,000, after sending a similar amount earlier. It is likely that the Federation of State Beef Councils has also contributed beef checkoff funds. USFRA claims that it was formed to promote agriculture in
general. However, there is great danger that this group will seek to influence
governmental policy. Upon a request by the OCM Board, OCM Board member Richard Oswald wrote a song/poem in response to this alliance entitled “They even want my name” which is included in this newsletter and very clearly captures the concerns that many producers
and OCM have – a worry that others utilize our money to push agendas we do not agree with which have the effect of pushing farmers and ranchers out of the marketplace.AP


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