Congressional Letter Urges USDA to Prioritize Producers Under Packers and Stockyards Act

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WASHINGTON, D.C. – The Organization for Competitive Markets (OCM) praises Senators Tester and Grassley and Congresswoman Kaptur, along with 14 of their colleagues, for sending U.S. Department of Agriculture (USDA) Under Secretary Ibach a letter outlining farmers’ rights that should be addressed when drafting new farmer protection rules under the Packers and Stockyards Act of 1921 (P&S Act). As a result of a recent OCM lawsuit, USDA released a notice of proposed rulemaking this Spring and it is expected this rule will be released in the next month.

The letter urged USDA “to ensure that any draft rule prioritizes the rights of America’s small independent cattlemen, hog producers, and contract poultry growers.” The letter advises USDA to address the following:

  • Protect the rights of farmers to join together in producer associations to advocate for themselves, free from retribution.
  • Clarify the long-standing USDA position, that the Packers and Stockyards Act does not require a demonstration of harm to competition across the entire sector.
  • Ensure packers are not providing such preferential marketing arrangements to only a select group of large livestock feeders, while excluding opportunities for smaller, independent feeders to remain profitable.
  • Grower payment systems (tournament) should be objective, transparent, and reward growers for their management skills, not penalize them for factors outside of their control.

The letter follows a Congressional Briefing hosted by Senator Tester and Congresswoman Kaptur on July 16, 2019, where OCM, RAFI-USA, and the Government Accountability Project presented the abusive practices farmers and ranchers are facing at the hands of large meatpacking and processing corporations.

The groups revealed that when farmers speak out against abusive practices of large meatpackers or processors, the corporations retaliate against them by terminating their contract or refusing to buy their livestock. Because there is usually only one buyer or processor in any one region of the country, this action, by the corporation, spells certain bankruptcy for the farmer. As a result, the corporation holds all of the cards against the farmer.

The P&S Act was enacted to address the abusive power meatpackers and processors have in the market. Unlike the other U.S. antitrust laws, Clayton and Sherman Acts, P&S Act is both a producer-protection statute and an antitrust statute. Over time the courts have diluted the protections guaranteed to producers requiring them to not only show they have been harmed or damaged by the actions of the meatpackers, but that the harm or damage they suffered not only harmed them but the market as a whole. 

“Requiring a farmer or rancher to have to show in court the harm they suffered at the hands of these global giants harmed the entire market is equivalent to me having to show every farmer in America was harmed if I had my truck stolen. If I couldn’t prove that, then I can’t get my truck back,” stated Vaughn Meyer, Vice President of OCM. “Secretary Perdue has a choice to make: he can side with the likes of Brazil’s JBS or he can fix this issue on behalf of America’s family farmers.”

It is through market competition that efficacy in production and innovation is enhanced. Antitrust laws that provide safeguards for independent family farmers, as well as independent feeders, packers, and retailers will rebuild the agricultural foundation of the United States of America.

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