Out to Pasture: Do We Really Want Change?

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President Obama promised fundamental change, and USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) is planning to deliver a big dose of just that to the way cattle are marketed.

The proposed rule has run into a lot of opposition from the industry and members of Congress. The rule is open for public comment until Nov. 22. Find a link to offer your suggestions at www.BeefToday.com.

For reference, recall the intra-industry conflicts of the last few years. On the one hand are what we’ll call the "establishment," meaning the National Cattlemen’s Beef Association, major cattle feeding groups and representatives of processors and marketers.

They defend the status quo based on efficiencies, the power of free markets and free enterprise and the industry’s need to adopt new efficiencies to compete with other protein sources.

On the other hand are, what we formerly—before Obama—called the "outsiders." They believe packers are too big and powerful and that the way packers buy cattle is a major reason why so many cattlemen have gone out of business. They think government should do more to "keep families on the farm." They include the family farm lobby and splinter cattle groups like R-CALF and the U.S. Cattlemen’s Association.

They worry the beef industry is being "chickenized" and that cattle producers will become indentured servants on their own land, hostage to the whims and dictates of a monopolistic packing industry. And they want mandates from Washington to prevent that.

Controversy ensues. The two sides have been arguing for years, with the establishment winning most of the time. The turmoil has led to several studies of the market structure’s impact on producers and prices, but none have found a demonstrable negative effect.

Nonetheless, the tide may be turning.

The outsiders have had two notable victories—mandatory price reporting and mandatory country-
of-origin labeling. Neither one has had much of a noticeable impact, but the interventionists say that’s because USDA hasn’t followed through well enough.

But with the Obama administration’s eagerness to embrace change, feathers may indeed get ruffled. If the rule GIPSA proposes takes effect, cattle feeders and packers will be more closely regulated.

The "if" part has to do with kickback from industry leaders and from both parties in the farm policy sector of the House of Representatives. In mid-July, members of the House Agriculture Committee came unglued at USDA’s Undersecretary for Marketing Edward Avalos and GIPSA administrator J. Dudley Butler.

Their complaint was that the rule seeks to reverse the committee’s decision during farm bill debates not to impose strict limitations on the producer-packer relationship.

Go to www.BeefToday.com to read the GIPSA rule. But also read concerns from the other side.
Under the current administration, this USDA isn’t one that wants to be a neutral referee in the matter.


Steve Cornett, Editor Emeritus, writes from Canyon, Texas scornett@farmjournal.com

 

 

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