Opinions on GIPSA Rules

[hayray]

So what are your opinions on these proposed GIPSA rules? If what I read is true seems like it is all about goverment regulation. So R-Calf supports it I gather and a large group of other beef organizations oppose it is what I am gathering?

 

[Oldtimer]

Too Big to Fail Strikes Agriculture



Source: Organization for Competitive Markets

Nov 23, 2010



Lincoln, Nebraska: The American economy is now pockmarked with evidence of economic landmines—leaving huge craters after each and every "too big to fail" episode.



Banks, auto manufacturers, airlines, and industries across the economy have been devastated largely because of concentration of market power in few firms and management arrogance that each is too big to fail.



Until now, agriculture seems to have drawn an exemption from the process. But, the latest crater left from a detonated large firm's failure is in the cattle business.



Eastern Livestock LLC, New Albany, Indiana, is a big name in cattle country. Eastern's business—matching buyers with sellers of calves big enough to leave the ranch and enter feedyards—was the dominant company in the industry. It may have handled nearly onethird of all US cattle.



According to papers filed in court in Indiana, Eastern's revenue tripled during the past year. But, this was because it was trading with itself—kiting checks so its money movement looked like it was three times the true volume. The banks caught on, stopped the check kiting, and Eastern collapsed.



The Grain Inspection Packers & Stockyards Agency ("GIPSA"), a USDA agency responsible for oversight of cattle traders, has been on the spot. GIPSA audited Eastern in 2010 and was trying to regulate the firm.



But GIPSA's authority is very limited. The maximum bond it could require to protect unpaid livestock sellers was $875,000—less than one percent of the total estimated losses caused by Eastern's demise.



GIPSA is in the process of issuing new rules to regulate the marketplace. The proposed rules would have only a modest effect on a firm like Eastern, but they have drawn the ire of big players in the cattle, hog, and poultry industries. The biggest packers and producers call the proposed new regulations "draconian" and claim they will "set the meat industry back 50 years."



OCM's General Counsel, David A. Domina said: "Too big to fail is simply not working; too big to fail is a failure in and of itself. The collapse of this massive firm is going to be devastating to thousands of cattlemen, sale barns, truckers, ranch hands, and many others.



It may take years to sort out the full scale of devastation. We cannot allow this kind of concentration to continue."



Eastern Livestock's business is now in the hands of a court-appointed receiver. All indications are the firm's principals can expect more, and more complex, legal problems

to come.



competitivemarkets.com

 

[Oldtimer]

http://mobile.americanagriculturist.com/main.aspx?ascxid=cmsNewsStory&rmid=0&rascxid=&args=&rargs=9&dt=634266136846664000&lid=a8yebu2d9qxnz7lo&adms=634266136844792000Xe300c99a0a&cmsSid=44192&cmsScid=9



51 Ag Groups File PSA Abuse Brief With U.S. Supreme Court


This weekend, while most Americans were counting their blessings and watching football, 51 farm groups filed a brief with the U.S. Supreme Court. They're asking the court to consider a lower court case involving deceptive practices by a large food processor.

The particular case was Terry v. Tyson Foods, which involved an effort by a contract poultry producer to receive a fair price for his broilers and organize farmers to battle deceptive conduct by Tyson Foods. "The Terry case is critical to fulfilling Congressional intent that the Packers and Stockyards Act protects farmers from abusive practices by dominant processors," says Bill Bullard, president of R-CALF.

" All types of farmers and ranchers are receiving less of every food dollar, because of abusive and anti-competitive practices by the major food processors," he charges. "Each year, farmers receive a smaller portion of every food dollar. Dominant food processors such as Tyson, JBS/Swift, and Dean Foods are using their economic clout to engage in a wide range of anticompetitive and deceptive practices to severely reduce revenue for farmers and ranchers."

The PSA is a 1921 statute enacted to protect farmers from deceptive and abusive practices by processors. Some courts have mistakenly concluded that in order to prevail under the PSA a farmer must demonstrate an antitrust violation.

That wasn't the intent of its authors, argues the group. "The PSA was enacted as the antitrust laws had failed to protect farmers and Congress recognized the need for a separate statute to protect farmers," explains Attorney David Balto.

Groups leading the effort include National Farmers Union, R-CALF, National Family Farm Coalition, Western Organization of Resource Councils, Rural Advancement Foundation International, and the Organization for Competitive Markets.

"We hope the court reviews the Terry case and directs the courts to follow the statute," said Fred Stokes of the Organization for Competitive Markets. "U.S. farmers and ranchers play by the rules every day; food processors should play by the same rules."

 

[vclavin]

It gets confusing, but I can see some of it could help..and some could very possibly hurt the cattleman.
Valerie