GIPSA Signals End To Value-Based Marketing

[Douglas]

Surprised no dicussin on this so far

According to this guy:
http://beefmagazine.com/cowcalfweekly/0 ... /#comments

Consider this scenario:

Every marketing arrangement would have to be disclosed and posted for everyone in the world to see. GIPSA then would become the judge to determine if the arrangement was fair. I am not making this up; just think about those implications.

The proposed rules would make it far easier for virtually any party to sue for grievances. Imagine if Joe sells his calves for $125 after concentrating for years on creating superior genetics in his herd, managing his cattle extremely well and collecting 10 years of historical data and information. His contract is posted and, after review, GIPSA determines that the weigh-up conditions were out of specs because they were shrunk 2.5% instead of 3% under the formula GIPSA created. GIPSA also informs the parties involved that gathering the calves and sorting them without access to water for two hours is inhumane and must be addressed next year.

Meanwhile, another producer sells similar weight calves on the same day, slightly different location, vastly different management and biological types, but is bid $110. He then sues the buyer for discrimination, citing GIPSA rules that indicate differentiation based on a contention that quality or quantity could be considered unfair preferential treatment.

[Oldtimer]

USDA proposed rules aim to protect producers from unfair packers

By Rita Jane Gabbett on 6/18/2010


Agriculture Secretary Tom Vilsack has proposed sweeping changes in the way USDA uses its existing authority under the Packers and Stockyards Act that he said would "provide significant new protections for producers against unfair, fraudulent or retaliatory practices.

"Concerns about a lack of fairness and commonsense treatment for livestock and poultry producers have gone unaddressed far too long," said Vilsack in a statement. "This proposed rule will help ensure a level playing field for producers by providing additional protections against unfair practices and addressing new market conditions not covered by existing rules."

The proposed rules, which will be published in the June 22Federal Register for a 60-day comment period, would provide the following protections for livestock and poultry producers:

Provide further definition to practices that are unfair, unjustly discriminatory or deceptive, including outlining actions that are retaliatory in nature, efforts that would limit a producer's legal rights or representations that would be fraudulent or misleading.

Additionally, the proposed rule reiterates USDA's position that a producer need not overcome unnecessary obstacles and have to always prove a harm to competition when they have suffered a violation under the Act.


Define undue or unreasonable preferences or advantages.


Establish new protections for producers required to provide expensive capital upgrades to their growing facilities, including protections to ensure producers have the opportunity to recoup 80 percent of the cost of a required capital investment.


Prohibit packers from purchasing, acquiring or receiving livestock from other packers, and communicate prices to competitors.


Enable a fair and equitable process for producers that choose to use arbitration to remedy a dispute. Additionally, clear and conspicuous print in the contract will be required to ensure producers are provided the option to decline the use of arbitration to settle a dispute.


Require that companies paying growers under a tournament system provide the same base pay to growers that raise the same type and kind of poultry, including ensuring that the growers pay cannot go below the base pay amount.


Provide poultry growers with a written notice of a company's intent to suspend the delivery of birds under a poultry growing arrangement at least 90 days prior to the date it intends to suspend the delivery.


Improve market transparency by making sample contracts (except for trade secrets or other confidential information) available on GIPSA's Web site for producers.


Outline protections so that producers can remedy a breach of contract.


Improve competition in markets by limiting exclusive arrangements between packers and dealers.
Workshopfeedback

The 2008 farm bill required USDA to carry out specific rulemaking to improve fairness in livestock and poultry marketing. As part of that process, USDA and the Department of Justice held a series of workshops on competition in the meat and poultry industry. Vilsack told reporters on a teleconference that some producers were afraid to participate in the workshops "forfear of retaliation" by the packers they sell to.

He characterized recent court decisions upholding the need for a producer suing a processor for unfair practices to also show harm to the regional market as akin to having to show that the theft of your car impacted all your neighbors.

Asked if USDA was aiming to set price minimums, Vilsack said, "I don't think this is an issue where we are suggesting producers should get a better price or a worse price," but rather to ensure that special deals are not made with certain producers that are not transparent and that others don't have the chance to receive if they meet the same requirements.

On the issue of packer buyers having unfair access to pricing information by representing more than one packer, USDA officials explained that under the new rules, a packer buyer could only buy for one packer.

Vilsack concluded by saying, "There are a number of great companies, and they are treating folks right. They shouldn't be negatively impacted by these rules at all. But it certainly is a message to those who have maybe in the past taken advantage of folks that this is not going to be tolerated."

To comment

USDA will consider comments received by Aug. 23. Comments may be sent via email to comments.gipsa@usda.gov or sent by mail to Tess Butler, GIPSA, USDA, 1400 Independence Ave., SW, Room 1643-S, Washington, D.C. 20250-3604.

[Oldtimer]

Cattlemen's group says new USDA livestock rules to benefit Nebraska's producers



The Grand Island Independent (NE) - June 28, 2010



New rules from the U.S. Department of Agriculture's Grain Inspection, Packers and Stockyards Administration (GIPSA) are supported by the Independent Cattlemen of Nebraska (ICON).



According to ICON officials, the new rule, released Tuesday, will be open for comment until Aug. 23. It will provide new protection for producers against unfair marketing practices that ICON officialsfeels it is "a long time coming."



"Finally, the Packers and Stockyards Act will have teeth," said ICON Executive Director Destry Brown. "It has been floundering ever since it was created and now GIPSA will have some grounds for enforcing it."



For years, Brown said, there has been concern in the cattle industry about the fairness of marketing practices for livestock and poultry. In 2007, he said, several ag-related organizations pushed Congress to create a directive for market fairness and competition between livestock producers and add it to the 2008 Farm Bill.



During rural tours sponsored by Agriculture Secretary Tom Vilsack in 2008, the need for changes in the competitive market in the livestock industry was reiterated. Brown said that at every meeting place across the U.S., farmers and ranchers told their story of how they were faced with increasing expenses while income dwindled when forced to compete with afew large packer concentrations of livestock and poultry.



"This is a way to revitalize rural communities," said ICON President Dave Wright. "Smaller producers will support their hometown businesses and this rule to increase fair competition will definitely be an advantage to small rural communities who right now are dying. The mega-huge producer facilities do not rely on rural businesses but often order from large companies in bigger cities or over the Internet. We have been working to change that, to keep our rural lifestyle alive."



According to Wright, the development of the proposed rules comes from a grassroots effort by farm organizations that see the disadvantages and unfair marketing practices which have left their members helpless.



ICON participated in the rural tours and also invited the new GIPSA administrator, Dudley Butler, to its convention last fall in North Platte, where he gave ICON members a glimmer of hope. Butler has worked hard to carry out his promises, Wright said.



"A victory for the small farmer and rancher, but a huge victory for small and mid-sizefeedlot operators, which are such an important factor in setting the price of cattle in the country and at the sale barn," said ICON Treasurer Al Davis. "Dudley Butler made promises to ICON when he addressed us at our 2009 convention and he obviously intends to fulfill those promises. I couldn't be happier about this decision and must credit the work of ICON, R-Calf, and USCA, in putting pressure on the USDA to enforce the Packers and Stockyards Act."

[Oldtimer]

June 18, 2010 Phone: 406-252-2516; e-mail: billbullard@r-calfusa.com



Group Calls USDA Rulemaking “Bold” and “Absolutely Essential”



Billings, Mont. – R-CALF USA President/Region VI Director Max Thornsberry, D.V.M., called the proposed rule issued today by the U.S. Department of Agriculture (USDA) “a bold and absolutely essential step in ridding the U.S. cattle market of anticompetitive practices.”



USDA’s proposed rule was issued pursuant to provisions in the 2008 Farm Bill that required the agency to promulgate rules to define what actions would constitute undue or unreasonable preference or advantage under the Packers and Stockyards Act of 1921 (PSA), as well as protect poultry and swine contract growers from unfair and deceptive practices committed by meatpackers.



The proposed rule not only establishes standards for identifying when meatpackers have unlawfully engaged in granting unreasonable preference or advantage to a select group of cattle sellers, but also, it clarifies that a violation of the PSA can be proven without the need to also provide proof of predatory intent, competitive injury, or likelihood of competitive injury.



In recent high-profile class action lawsuits, U.S. cattle producers proved to juries that they were materially injured by unfair and deceptive practices committed by meatpackers in violation of the PSA, resulting in significant jury awards to class members. The jury in the Pickett v Tyson Fresh Meats case awarded $1.28 billion to class members within the cattle industry and the jury award in the Herman Schumacher et al. v. Tyson Fresh Meats, Inc. et al. was $9.25 million.



However, both those jury awards were overturned by appellate courts that decided the burden of proof for prohibiting unfair and deceptive meatpacker practices under the PSA was much higher than the juries’ findings of unlawful conduct. The appellate courts essentially decided that conduct prohibited by the PSA was not actionable without additional proof of intent or injury to competition.



“As a result of these overturned jury decisions, the Packers and Stockyards Act was relegated a toothless tiger,” said Thornsberry, adding, “U.S. cattle producers were left without any recourse from the highly concentrated meatpackers’ exercise of monopoly-type power, which enables them to capture profits that should be flowing to independent cattle producers.”



Thornsberry said the inability to enforce the PSA has contributed to the exodus of about 150,000 cattle operations since the mid-1990s, which has, consequently, caused the hollowing out of rural communities all across America.



“This proposed rule corrects the core problem that prevents U.S. cattle farmers and ranchers from obtaining relief from the anticompetitive practices of the highly concentrated meatpackers and will help restore competition to our industry by providing a means to discipline anticompetitive behavior,” asserted Thornsberry.



Other provisions in the proposed rule include a requirement that meatpackers retain written records to justify differential prices offered to livestock sellers, a prohibition to prevent two or more meatpackers from using a single cattle buyer to procure cattle, and a prohibition to prevent meatpackers from trading live cattle among themselves.



“Taken together, the long-awaited provisions in the proposed rule are monumental and represent a genuine effort to reverse the ongoing loss of competition that has ravaged Rural America for well over a decade. While more must be done to reestablish a fully functioning competitive market for independent U.S. cattle producers, this is definitely a positive start,” Thornsberry concluded.

[Angus Cowman]

I am sorry but I don't see how this is going to help the beef producer
yes it might help the guy who raises below average calves but I really don't think so becasue the order buyers aren't going to pay anymore for these calves they are just going to get the set price at the feedlot or packer so therefore the guy selling at the salebarn isn't gonna make anymore money
Also IMO it will hurt the guys who raises quality calves and sells directly to the feedlot or packers because his calves aren't worth anymore than the guy who's cattle will only grade select

just my 2cents and I know it isn't worth a penny

[Oldtimer]

Well I don't see it as interfering with mine or any producers marketing in any way- on the contrary the law keeps the Packer monopoly (which has now become a Feedlot monopoly too) from using their captive supply cattle to manuever the cattle prices down whenever they want to....

This is also NOT a new law- its just that for the last 20-30 years and especially the last 10 as the USDA/government crawled in bed with the big money of the multinational Packers- it hasn't been enforced- even tho in several lawsuits cattle and poultry producers showed where the Packer conglomerates were artificially controlling prices down....It became so bad- and the uproar from producers was so bad (especially after GIPSA investigators testified "they were told to do nothing, just shuffle papers, and look busy") that Congress in the 2008 Farm Bill told USDA to start enforcing it....

If you don't think its happening- read the book "Past, Present, and how we can survive for the Future in the beef cattle business"....You'd think you were reading about the Costa Nostra- and the Gambino family rather than about the major corporate packers and John Tyson or John Morrell....

ThePackers and Stockyards Act of 1921 (7 U.S.C. §§ 181-229b; P&SAct) was enacted followingthe release in 1919 ofthe Report ofthe Federal Trade Commission onthe meatpacking industry.

Asthe outbreak of World War Ioccurredandthe cost of living rose, President Woodrow Wilson orderedthe FTC to investigatethe industry fromthe "hoof tothe table" to determine whether or notthere were any "manipulations, controls, trusts, combinations, or restraints out of harmony withthe law orthe public interest."

The FTC reportedpackers were manipulating markets, restricting flow of foods, controllingthe price of dressed meat, defrauding producersand consumers of foodand crushing competition.The FTC, in fact, recommended governmental ownership ofthestockyardsandtheir related facilities.

The meat packing industry had also became a prime concern of Wilson's Attorney General Alexander Mitchell Palmer. After threatening an antitrust suit, in February 1920 Palmer managed to forcethe "Big Five"packers (Armour, Cudahy, Morris, Swiftand Wilson) to agree to a consent decree underthe Sherman AntitrustActwhich drovethepackers out of all non-meat production, includingstockyards, warehouses, wholesaleand retail meat.

Agitation for legislation to regulatethepackers persisted intothe Warren Hardingadministration despitethe decree,and CongresspassedthePackers and Stockyards Act on August 15, 1921 as H.R. 6320andthe law went into effect in September 1921.

And as Secretary Vilsack noted- this will not affect those companies that have been following the law- but will give some enforcement ability against those that haven't been/don't...

Vilsack concluded by saying, "There are a number of great companies, and they are treating folks right. They shouldn't be negatively impacted by these rules at all. But it certainly is a message to those who have maybe in the past taken advantage of folks that this is not going to be tolerated."

[upfrombottom]

I may be out of line and don't my ass from a hill of beans, but would it not be fair practice to have a quoted price from a feedlot/packer, as grain producers have in the grain markets, and then be docked for misgivings, also as the grain markets do? Seems a producer would then know he got a fair price, and where he needed to improve to get top dollar. Which most should know anyway, but very few do. Private treaty, and other sales between producers could still be carried out at the sale barns and on the farm.