[Congressional Record Volume 157, Number 158 (Thursday, October 20, 2011)]
[Senate]
[Pages S6856-S6858]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
LIVESTOCK COMPETITION RULE
Mr. HARKIN. Mr. President, throughout the decades since the Packers
and Stockyards Act was enacted in 1921, livestock and poultry producers
and growers have depended upon the U.S. Department of Agriculture to
enforce basic rules of honest dealing, fairness, and nondiscriminatory
treatment when livestock and poultry growers and producers engage in
sales and contractual transactions with meat and poultry packers,
processors, and dealers.
The underlying justification for the Packers and Stockyards Act, and
the regulations that have been issued to carry it out, is basic and
straightforward. There is inherently a substantial inequality in
bargaining power and economic leverage between the individual producer
or grower of hogs, or cattle, or poultry, on the one hand, and the
packing or processing company on the other hand. That is not to accuse
or disparage the packers and processors, but simply to recognize the
inherent disparities in economic power in the real world. It is
accordingly only reasonable to have some basic Federal rules of the
road, so to speak, because livestock and poultry production and
processing is a national industry of huge importance to our country and
its economy.
For many years we have heard repeated testimony before Congress that
the Packers and Stockyards Act is not being carried out by the
Department of Agriculture, specifically by the Grain Inspection,
Packers and Stockyards Administration, in a manner that fully and
effectively lives up to the language of the statute, its intent, and
purposes. For that reason, in crafting the Food, Conservation, and
Energy Act of 2008, as chairman of the Committee on Agriculture,
Nutrition, and Forestry, I was proud to work with my colleagues in the
committee and with our counterparts in the House of Representatives to
include language directing the Secretary of Agriculture to issue new
regulations under the Packers and Stockyards Act that would clarify
criteria and interpretations for carrying out and enforcing the act.
These new regulations are required to establish criteria that the
Department of Agriculture will use in determining whether the actions
of a packer or processor constitute an undue or unreasonable preference
or advantage for one or more producers or growers to the disadvantage
of others, in violation of the act; whether a live poultry dealer has
provided reasonable notice for suspending the delivery of birds to a
grower under a poultry growing contract; under what circumstances it
would be an unfair practice in violation of the act for a packer or
processor to require a swine or poultry grower to make additional
capital investments during the life of a contractual arrangement; and
whether a live poultry dealer or swine contractor has provided a
reasonable period of time for a swine or poultry contract grower to
remedy a breach or failure to perform in order to avoid termination of
the contract.
In accordance with the farm bill, the Department of Agriculture
issued a proposed rule on June 22, 2010, and kept the public comment
period open until November 22, 2010. Some 61,000 comments were
submitted, which the department has been reviewing and responding to in
the process of developing a final rule. The proposed rule is not
perfect, of course. That is why there is a public comment process so
that anyone who is interested can comment and make recommendations.
Secretary of Agriculture Vilsack has made it very clear that the
comments were being carefully reviewed so that the proposed rule can be
appropriately modified and improved in response to the comments.
Contrary to some of the arguments that are being made, the topics and
subject matter covered in the proposed rule, and which therefore likely
would be encompassed in the final rule, are entirely consistent with
the rulemaking process that the 2008 farm bill directed the Secretary
of Agriculture to conduct and with the authority provided by the
Packers and Stockyards Act. It is not at all correct to assert that the
Department of Agriculture has exceeded its authority or in some manner
or contradicted the farm bill's directive to issue regulations on
specified matter.
It is true the proposed rule would do more to interpret and clarify
terms in the Packers and Stockyards Act than is specifically required
in the farm bill. Most important, the proposed rule would clarify what
many believe to be a misinterpretation of the act by some courts that
have held that an individual grower or producer cannot succeed on a
claim for harm suffered from a violation of the act without an
additional showing of harm to competition in the broader market. The
effect of these holdings is effectively to deny relief to independent
producers and growers for harm caused by unjust, discriminatory, or
unfair practices, which are clearly in violation of the act's
protections, unless they can show the broader injury to competition.
That showing of injury to competition in the broader market is usually
very hard or impossible to make. What is lost in these decisions is
that the Packers and Stockyards Act was written and intended to provide
protection to individual producers and growers against harm from
unfair, unjustly discriminatory, or deceptive practices and similar
actions by packers, processors, and dealers. The act was not written or
intended to require that harm to competition in the broader market must
be shown in order to establish a violation.
The Department of Agriculture clearly has the authority to issue
regulations to clarify interpretations of the Packers and Stockyards
Act in order to ensure that it is properly carried out. This authority
of a department or agency to issue regulations that will clarify the
interpretation of a statute within its purview is fully supported by
basic principles of administrative law established in the decisions of
the Supreme Court and other Federal courts. Claims that in some way the
proposed rule exceeds the authority of the Department of Agriculture
are plainly unfounded.
As for the details of the proposed rule, it is not designed or
intended to put an end to systems in which packers pay premiums for
higher quality or distinctive livestock, for example, ``Certified
Angus'' beef, or assess a discount if animals fail to meet standards.
The proposed rule is quite clear that it is not designed to prohibit
premiums and price differentials that are based on the quality of the
livestock or poultry or similar features or circumstances. Because
there is a valid economic justification for quality-based premiums and
discounts, they are not prohibited by the Packers and Stockyards Act.
Accordingly, the proposed rule is clear that such quality-based
premiums or discounts are entirely valid and won't be prohibited or
jeopardized by the final rule. It just stands to reason, that since
there is now obviously economic justification and reward to packers as
well as producers for these systems of quality-based premiums and
discounts, there will still be incentives and motivation to keep them
in place after the final rule is issued.
Finally, regarding the claims that the proposed rule will be very
costly and eliminate jobs, the short answer is that these studies, as I
understand them, are founded on basic misreading and
mischaracterization of the terms and intent of the proposed rule and
upon misguided and exaggerated predictions of the effects of carrying
it out. They are undoubtedly very extreme predictions of the effects of
a rule that is designed and intended, fundamentally, to do no more than
simply to ensure fair and nondiscriminatory treatment of livestock and
poultry producers and growers in the market.
This rule is vitally important to producers and growers across our
country. We should not in legislation prevent the Department of
Agriculture from going ahead to make improvements and modifications and
issue a final rule that is greatly needed to enhance the effectiveness
of the Packers and Stockyards Act.
Mr. JOHNSON of South Dakota. Mr. President, today I rise to reiterate
and again offer my full support of the United States Department of
Agriculture Grain Inspection, Packers, and Stockyards Administration's,
GIPSA, authority to continue promulgating its proposed rule concerning
livestock competition. There have been some comments made with concern
about both the substance of GIPSA's proposed rule as well as the
authority of
[[Page S6857]]
the Department to continue its rulemaking process. I would like to
respond to some of those concerns and to discuss the critical
importance of the protections afforded under the proposed rule.
The 2008 Farm Bill, more formally known as the Food, Conservation,
and Energy Act of 2008, was enacted by overwhelming majorities in both
the House of Representatives and the Senate with amendments to the
Packers and Stockyards Act of 1921 as well as directions to USDA to
conduct rulemaking with respect to additional issues relating to
implementation and enforcement. As a result of this rulemaking
authority, as well as given the authorities permitted explicitly in the
Packers and Stockyards Act, GIPSA in 2010 issued a proposed rule that
would provide a variety of new protections for livestock producers.
Among these protections would be to further define practices that are
unfair, unjustly discriminatory or deceptive, establish new protections
for producers required to provide expensive capital upgrades to their
growing facilities, prohibit packers from purchasing, acquiring or
receiving livestock from other packers, and bar them from communicating
prices to competitors, as well as including arbitration provisions that
give contract growers opportunities to participate in meaningful
arbitration. The Department has not yet published a final rule.
In August 2010, I joined with Senator Harkin in leading a bipartisan
letter with 19 of our Senate colleagues to USDA Secretary Tom Vilsack
that reiterated our belief that GIPSA has the authority to promulgate
such rules as is consistent with its responsibilities under the Packers
and Stockyards Act and that the rules should and will allow for
continued marketing opportunities including pricing premiums and
contracting.
I am fully supportive of the proposed rule as I have consistently
supported efforts to strengthen our anti-trust and competition laws.
Independent farmers and ranchers must have an opportunity to leverage a
decent price for their products. Market consolidation has done a severe
disservice to our producers, and it is critically important that we
maintain market access and price discovery options for independent
farmers and ranchers. I am also fully supportive of GIPSA's authority
to continue the rulemaking process as directed in the 2008 farm bill.
The proposed rule takes an important first step toward finally enabling
livestock producers to get a fair shake in the marketplace.
Opponents of the rule were able to include a provision in the House-
passed version of the Fiscal Year 2012 Agriculture Appropriations bill
which prohibits GIPSA from spending funds to finalize the proposed
rule. A letter written by 190 organizations from across the country,
including the South Dakota Farmers Union, the South Dakota Livestock
Auctions Markets Association, and the South Dakota Stockgrowers
Association, was recently sent to Congress outlining the important
protections provided for in the proposed rule and urging Congress to
allow the rulemaking process to continue. I ask unanimous consent that
the letter be printed in the Record. Fortunately, the Senate version
does not contain this provision. As the appropriations process
continues, I will work to defend GIPSA's ability to continue the
rulemaking process, and I urge my colleagues to do the same.
There being no objection, the material was ordered to be printed in
the Record, as follows:
August 3, 2011.
U.S. Senate,
Washington, DC.
Dear Senator: In the 2008 Farm Bill, Congress directed USDA
to propose rules to address unfair, deceptive and anti-
competitive trade practices that have become rampant in the
livestock and poultry sectors. Congress included these
provisions to address concerns over the increasingly abusive
and anti-competitive trade practices employed by meatpacker
and poultry companies that have harmed farmers, ranchers,
growers and consumers. Meatpacker and poultry companies
opposed these provisions in the Senate, but compromise
language was included in the final Farm Bill requiring USDA
to use their existing authority under the 1921 Packers &
Stockyard Act to take action.
USDA's Grain Inspection, Packers and Stockyards
Administration (GIPSA) issued a proposed rule in June 2010.
USDA received more than 66,000 public comments on the
proposed rule, most of which were supportive. The same
meatpacker and poultry companies that opposed the strong
farmer and rancher protection provisions in the 2008 Farm
Bill are now fighting the regulations to implement those
provisions. These special interests, joined by purported farm
groups that have meatpackers entrenched on their boards, have
launched a misleading public relations campaign that distorts
the provisions of the proposed rule.
The proposed rule includes many commonsense measures that
protect farmers, growers and ranchers from abusive and unfair
treatment at the hands of the meatpackers and poultry
companies. These safeguards include:
Prohibitions against company retaliation against farmers
for speaking out about problems within the livestock
industry, joining other farmers to voice concerns to seek
improvements, or raising concerns with federal officials.
Today, meatpackers and poultry companies can and do
economically retaliate against farmers that exercise these
legal rights;
Sensible protections for contract poultry and hog growers
that make expensive facility investments or upgrades on their
farms to meet packer or poultry company requirements;
Requirements to provide growers and ranchers with
information necessary to make wise business decisions
regarding their operations;
Disclosure and transparency requirements to eliminate
deception in the way packers, swine contractor and poultry
companies pay farmers;
Eliminating collusion between packers in auction markets;
Clarification of the types of industry practices the agency
considers unfair, unjustly discriminatory, or a granting of
unreasonable preference or advantage.
These are all terms used in the existing statute to prevent
unfair trade practices, but these broad terms have never been
defined in regulations.
Clarifying the ambiguity in interpretation of the terms of
the Packers & Stockyards Act. Such ambiguity can lead to
litigation as farmers and packers attempt to clarify the
intent of the Act. Moreover, added clarity would enable the
agency to address unfair trade practices, which likely would
further reduce litigation.
Expressly ensuring that meatpackers can pay premium prices
for premium livestock, but prohibit companies from unfairly
offering select producers sweetheart deals but paying other
producers less for the same quality, number, kind and
delivery of livestock.
Recordkeeping requirements that would enable regulators to
identify unfair trade practices while ensuring that livestock
producers and companies can offer justified premiums or
discounts.
Unfortunately, under pressure from meatpackers and poultry
companies, the House approved a legislative rider in its FY
2012 Agriculture Appropriations bill that would prevent USDA
from taking any further action on this regulation. The
provision would even prohibit USDA from analyzing the 66,000
public comments received on the proposed rule and from
completing an economic analysis of the rule. The meatpackers
and poultry companies oppose the sensible transparency and
disclosure provisions of the proposed rule that would shine
sunlight onto their unfair practices. The two largest general
farm organizations in the United States--the American Farm
Bureau Federation and the National Farmers Union--have joined
with over 140 farmers, consumer and community groups across
the nation to oppose this rider.
The 190 undersigned groups urge you to stand with our
nation's farmers, ranchers, growers and consumers to oppose
the meatpacker and poultry special interest efforts to
insulate themselves from federal scrutiny of their anti-
competitive behavior and unfair treatment of farmers and
ranchers. Congress should allow USDA to move forward
expeditiously to implement a final rule that will strengthen
and clarify the Packers & Stockyards Act with commonsense
protections for farmers and ranchers.
8th Day Center for Justice (IL), Adams County North Dakota
Farmers Union, Added Value (NY), Alabama Contract Poultry
Growers Association, Alliance for a Sustainable Future (PA),
Ambler Environmental Advisory Council (PA), American
Agriculture Movement, American Federation of Government
Employees (AFL-CIO), Local 3354, USDA-St. Louis, American Raw
Milk Producers Pricing Association (WI), Ashtabula, Geauga,
Lake Counties Farmers Union (OH), Assateague Coastal Trust
(MD), Assateague COASTKEEPER (MD), Black Farmers and
Agriculturalists Association (BFAA) (NC), BLK ProjeK (NY),
BUGS: Black Urban Growers (NY), Bronx Food and Sustainability
Coalition (NY), Brooklyn Food Coalition (NY), Buckeye Quality
Beef Association (OH), Bull Mountain Landowners Association
(MT), California Dairy Campaign, California Farmers Union,
California Food & Justice Coalition, California Institute for
Rural Studies, Campaign for Contract Agriculture Reform,
Campaign for Family Farms & the Environment (CFFE), Carolina
Farm Stewardship Association, C.A.S.A. del Llano (TX),
Catholic Charities of Central and Northern Missouri, Cattle
Producers of Louisiana, Cattle Producers of Washington,
Center for New Community (IL), Center for Rural Affairs,
[[Page S6858]]
Church Women United of New York State, Citizens for
Pennsylvania's Future (PennFuture) Citizens for Sanity.Com
(FL), Colorado Independent CattleGrowers Association, and
Columban Center for Advocacy and Outreach (MD).
Community Alliance with Family Farmers (CAFF) (CA),
Community Farm Alliance (KY), Community Food Security
Coalition, Community Vision Council (NY), Contract Poultry
Growers of the Virginias, The Cornucopia Institute (WI),
Crawford Stewardship Project (WI), Cumberland Countians for
Peace & Justice, (TN), Dakota Resource Council (ND), Dakota
Rural Action (SD), Dawson Resource Council (MT), Delta
Enterprise Network (AR), Earthworks Urban Farm, East New York
Farms!/United Community Centers, Endangered Habitats League
(CA), Environment Maryland, Environmental Health Watch (OH),
Family Farm Defenders (WI), Farm Aid, Farm and Ranch Freedom
Alliance (TX), Farmworker Association of Florida, Fay-Penn
Economic Development Council (PA), Federation of Southern
Cooperatives, First Unitarian Universalist Church of Columbus
(OH), Flatbush Farm Share (NY), Food Chain Workers Alliance
(CA) Food Democracy Now! Food First, Food Freedom, Food for
Maine's Future, Food & Water Watch, Friends of Family Farmers
(OR) Friends of the Earth; Gardenshare: Healthy Farms,
Healthy Food, Everybody Eats (NY), Georgia Poultry Justice
Alliance, Grassroots International, Great Lakes Bioneers
Detroit, Hattie Carthan Community Garden (NY), Hattie Carthan
Herban Farm (NY), Hmong 18 Council of South Arkansas, Hmong
Association Inc. (AR & OK), and Hmong National Development,
Inc.
Hunger Action Network of New York State, Idaho Rural
Council, Illinois Stewardship Alliance, Independent Beef
Association of North Dakota, Independent Cattlemen of
Wyoming, Institute for Agriculture and Trade Policy,
Institute for Responsible Technology, Intertribal Agriculture
Council, Iowa Citizens for Community Improvement, Iowa
Farmers Union, Island Grown Initiative (MA), Jackson County,
South Dakota, Board of Commissioners, Johns Hopkins Center
for a Livable Future (MD), Just Food (NY), Kansas Farmers
Union, Kansas Rural Center, The Land Loss Prevention Project
(NC), La Familia Verde (NY), La Fines Del Sur (NY), Land
Stewardship Project (MN), Local Matters (OH), Madison Farm to
Fork (MT), Maine Organic Farmers and Gardeners Association
(MOFGA), Michael Fields Agricultural Institute (WI), Michigan
Farmer's Union, Michigan Interfaith Power and Light, Michigan
Land Trustees, and Michigan Organic Food & Farm Alliance.
Midwest Environmental Advocates (IL), Minnesota Farmers
Union, Missionary Society of St. Columban (MD), Mississippi
Association of Cooperatives, Missouri's Best Beef
Cooperative, Missouri Farmers Union, Missouri Rural Crisis
Center, Montana Farmers Union, Mvskoke Food Sovereignty
Initiative (OK), National Catholic Rural Life Conference,
National Cooperative Grocers Association (NCGA), National
Family Farm Coalition, National Farmers Organization,
National Farmers Union, National Latino Farmers & Ranchers
Trade Association, National Organic Coalition, National
Sustainable Agriculture Coalition, National Young Farmers
Coalition, Nebraska Environmental Action Coalition (NEAC),
Nebraska Farmers Union, Nebraska Sustainable Agriculture
Society, Nebraska Women Involved in Farm Economics (NE WIFE),
Network for Environmental & Economic Responsibility (TN), New
Agrarian Center (OH) New England Farmers Union, New York City
Community Garden Coalition (NY), North Carolina Contract
Poultry Growers Association, and North Dakota Farmers Union.
Northeast Organic Dairy Producers Alliance, Northeast
Organic Farming Association of Massachusetts (NOFA-Mass.),
Northeast Organic Farming Association of New York, Inc.
(NOFA-NY), Northern Plains Resource Council (MT), Northwest
Atlantic Marine Alliance, NYC Foodscape, Oglala Lakota
Livestock and Land Owners Association (SD), Ohio Ecological
Food and Farm Association (OEFFA), Ohio Environmental
Council, Ohio Environmental Stewardship Alliance, Ohio
Farmers Union, Oregon Livestock Producers Association, Oregon
Rural Action, Organic Consumers Association, Organic Farming
Research Foundation, Organic Seed Alliance, Organization for
Competitive Markets, PCC Natural Markets (WA), Peach Bottom
Concerned Citizens Group (PBCCG) (PA), Pennsylvania Farmers
Union People's Food Co-op (MI), Pesticide Action Network
North America, Powder River Basin Resource Council (WY),
Progressive Agriculture Organization (PA) , Ranchers-
Cattlemen Action Legal Fund, United Stockgrowers of America,
(R-CALF USA), and Rocky Mountain Farmers Union.
Rural Advancement Foundation International--USA, Rural
Empowerment Association for Community Help (REACH) (NC),
Rural Coalition/Coalicion Rural, Slow Food Portland (ME) Slow
Food USA, Slow Food USA--Rocky Mountain Region, Small Planet
Institute, Socially Responsible Agricultural Project (ID),
South Dakota Farmers Union, South Dakota Livestock Auction
Markets Association, South Dakota Stockgrowers Association,
Southwest Nebraska Women Involved in Farm Economics, Stevens
County Cattlemen's Association (WA), Sustain LA (CA),
Sustainable Economic Enterprises of Los Angeles (SEE-
LA), Tidal Creek Cooperative (Food Market) (NC), Tilth
Producers of Washington, Trappe Landing Farm & Native
Sanctuary (MD), United Church of Christ Justice and
Witness Ministries, United Poultry Growers Association,
Virginia Association for Biological Farming, Western
Colorado Congress, Western Organization of Resource
Councils (WORC), West Side Campaign Against Hunger (NY),
WhyHunger, Williams County Alliance (OH), Wisconsin
Farmers Union, Women, Food and Agriculture Network (IA),
and Yellowstone Valley Citizens Council (MT).
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