[Congressional Record (Bound Edition), Volume 157 (2011), Part 11]
[Senate]
[Pages 15981-15984]
[From the U.S. 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

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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 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:

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       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, 
     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,

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     Williams County Alliance (OH), Wisconsin Farmers Union, 
     Women, Food and Agriculture Network (IA), and Yellowstone 
     Valley Citizens Council (MT).

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