By Allen Sents, U.S. Cattlemen’s Association Marketing and Competition Chairman
In light of the recent hearings held on the Hill in Washington, D.C. the U.S. Cattlemen’s Association would like to address a few points that were repeatedly left out of the discussion. In the Senate, Chairwoman Debbie Stabenow (D-MI) convened “The State of the Livestock Industry in America” hearing at the beginning of the month. USCA appreciates Chairwoman Debbie Stabenow convening this hearing as with discussions beginning on the 2012 Farm Bill and the future of a livestock title is discussed, USCA welcomes such opportunities to discuss the current issues facing the industry. While the Senate hearing sought to address all issues within the livestock industry, the House Small Business Committee Subcommittee on Agriculture, Energy, and Trade’s Hearing “Regulatory Injury: How USDA’s Proposed GIPSA Rule Hurts America’s Small Businesses” focused solely on the Grain Inspection, Packer and Stockyards Administration (GIPSA) proposed rule, and notably carried with it an overtly biased platform in which to discuss the issue.
The Senate livestock hearing highlighted some successes in farm policy including natural resource programs, record commodity prices driven by strong exports and pending free trade agreements (FTA’s) to open more export markets. The USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) proposed rule to increase fairness in the marketing of livestock and poultry was one of the more controversial topics of the day and was discussed extensively. Unfortunately, the hearing failed to clarify many misconceptions about the rule. Numerous participants and Senators railed against the proposed rule, yet, none of those opposed to the rule offered any suggestions on what their remedies would be. If hearings such as this are to accomplish anything, it seems people on all sides of an issue should be allowed to respectfully present their case. Unfortunately, the deck was effectively stacked against the GIPSA rule in this hearing.
USDA Chief Economist, Dr. Joe Glauber, did an admirable job of describing his role in conducting a cost-benefit analysis of the proposed rule. He recognized the difficulties in evaluating the effect of the rule before implementation and response in the marketplace becomes known. An interesting question for Dr. Glauber might have been what the effect would be if in fact the rule is implemented as intended by the authors and current grids rewarding premium cattle are not affected. A confusing aspect that rule opponents, such as Steve Hunt from US Premium Beef (USPB), bring up is the burden of justifying different prices paid in the marketplace. USPB, of all packers, appears to have a detailed system in place that already does that. The USPB grid is based on third party, USDA reported prices. A detailed explanation of premiums and discounts is currently reported for each group of cattle settled on their grid. To use the language of the law, how could a “reasonable” person refute that process as being “unjustly discriminatory?” It seems rule opponents resort to “fear mongering” to dream up outlandish possibilities to make their case.
Another perplexing scenario was presented by Ranking Member Pat Roberts (R-KS). Senator Roberts began his comments by misquoting GIPSA Administrator J. Dudley Butler. Administrator Butler did say once that the 90 year old Packers and Stockyards Act (P&S) was a “plaintiff lawyer’s dream” because of vague terms like “unreasonable” and “undue preference.” That ambiguity was also the reason Congress directed GIPSA to clarify terms in the act. Yet, Senator Roberts tried to demonize Administrator Butler as one intending to profit from this rule because of his past and possible future role as a lawyer, Senator Roberts stated, “To be perfectly blunt, this rule as proposed looked like a trial lawyers Full Employment Act. Better yet, I’ll read a quote from Administrator Mr. Dudley Butler regarding the core of the material in the rule. His quote, ‘That’s a lawyers dream-a plaintiff lawyer’s dream.’ He was a plaintiff’s lawyer.” However, Administrator Butler made no such quote about the new proposed rule and rather, has said he intends to provide the clarification Congress directed to prevent such a scenario from taking place.
Senator Roberts was also critical of USDA extending beyond Congressional intent. However, USDA is accountable to the entire congressional intent going back to the formation of the P&S Act in 1921. The P&S Act was implemented to be different than anti-trust law and provide unique protection to the livestock industry. Recent court rulings have distorted and confused those protections. Presumably, one of the rules Senator Roberts opposes is clarification of the term “business justification.” Senator Jon Tester (D-MT) introduced legislation in 2008 to do just that. That legislation was defeated. Perhaps though, the Senator could explain why, in our Republic, personal conduct should determine what is legal instead of the “rule of law.” Why does one packer’s practice make it acceptable for another to adopt a similarly discriminatory practice, when the law states differently?
Another misinterpreted term is “competitive harm.” Some judges have interpreted this to mean a practice must be shown to harm the entire industry, not just an individual, before it is deemed illegal. How can a practice ever be stopped before causing great harm if individuals cannot bring that charge? How will individual freedom be protected under such an “industry” standard? What freedom do we enjoy in this country that is not protected by our government? We need to work together to find that minimal, but effective government role.
The same misconstrued testimonies and panelist objectives that were center stage during the Senate hearing carried over to the House Small Business Subcommittee hearing as well. The majority of panelists and Member questions during the hearing focused on the publicized notions that dissenters of the proposed rule have continued to push into the public spotlight. The same skewed representation of a decreased viability of alternative marketing agreements and value-based incentives were once again highlighted without any mention toward how such instances may be remedied or addressed once the final rule is published. In order for public hearings to be productive, one must look at both sides of the issue and make an honest attempt to address the concerns and possible solutions that both sides bring to the table.
Hopefully, future discussions will include admission from rule opponents that the continued presence of competition issues necessitates the need for reform. If they do not like the proposed GIPSA rule, what are their suggestions? Why do we not engage in a debate that recognizes “truth” in opposing views and seeks to develop solutions that will sustain our rural economies, positioning us to feed a hungry world?