In my last column I asked how a rancher could buy a ranch at today’s prices and make it work – even at today’s record cattle prices. Well, on June 25, the USDA might have answered that question when they announced the Fair and Competitive Livestock and Poultry Markets - Proposed Rule which will soon be published in the Federal Register. Okay, I am being facetious. But seriously, when any government agency starts the rule-making process, particularly when it concerns markets, it is time to pay attention.
This new rule was written to “ensure that appropriate competitive and fair trade and market protections are afforded to those participating in the livestock, meat, and poultry industries.”
According to USDA, the rule “defines unfair practices as conduct that harms market participants and conduct that harms the market.” On the surface, those words, “conduct that harms the market” may not sound very ominous, but I can feature cannon fodder for lawsuits, and while I am not a lawyer, I am a firm believer in fair markets. However, I am also a firm believer that the current Packers and Stockyards Act assures us of a competitive, capitalistic, free-market system in the U.S. beef industry where economies of scale are critical.
The rule defines “unfair practice with respect to markets” and I am not going to reiterate all of that in these few comments except to say they covered all the bases for anyone who might believe that the market is not working for them. Secretary Vilsack’s went further in his comments with the release of the rule to include consumers who will also benefit. I would argue that when markets are functioning well in a free market system, farmers, ranchers, and consumers will all benefit.
I certainly hope this is not USDA’s solution to “high” prices for consumers. Ranchers are now experiencing record-high prices in the face of tightening cattle supplies and strong consumer demand for beef and subsequently making record profits. This proposed rule may have an eye toward the packing industry, but I would submit that USDA does not need to tamper with the Packers and Stockyards Act.
