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Proposal To Address ‘unfair Practices’ In US Livestock Markets
Proposal to address ‘unfair practices’ in US livestock markets
By Elizabeth Schroeder |5 July 2024 | 2:30 pm
A new proposal by the US Department of Agriculture (USDA) has outlined a framework clarifying how competition rules will be enforced in that country’s meat industry.
According to the agriculturedive.com, consolidation in the food industry was becoming the central focus of the US government’s plan to address inflation.
What is considered ‘unfair practices’ under the Packers and Stockyards Act will be defined in a framework that was released on 2 July.
The act, which is more than 100 years old, was originally designed to prevent meat packers from “taking anti-competitive actions that could hurt consumers”, the report said.
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Administrative arbitration on a case-by-case basis was previously used by the USDA to determine fairness.
“Farmers, ranchers, consumers, and smaller processors all depend upon the Packers and Stockyards Act to protect them from bad actors in the marketplace,” Andy Green, senior adviser for Fair and Competitive Markets at the USDA, said in a statement.
“It’s time to provide the regulatory clarity and simplicity needed to put an end to unfair conduct that harms the market, or that harms market participants.”
The framework defines unfair practices as “conduct that harms the market or market participants such as farmers and ranchers”.
According to the framework, the extent to which a practice restricts a farmer’s ability to participate in a market would be considered, as well as whether “a company’s conduct denies a producer the full value of their products or services”.
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The proposal was launched against the back of a suite of rules currently being prepared by the USDA aimed at ensuring transparency and fairness in the poultry- and meat-packing industries.
“We applaud the USDA for developing clear regulations that will help prosecute the big packers who run the American Meat Cartel for their mafia-like tactics that have put countless American family farmers out of business,” Marty Irby, representing the Alabama Contract Poultry Growers’ Association and president of Competitive Markets Action, said.
Groups representing beef and poultry producers are, however, strongly opposed to the USDA’s competition rules because they contend that it is undermining a long-standing practice of rewarding individual producers for innovation or efficiency, agriculturedive.com said.
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“USDA’s newly proposed rule is a direct attack on cattle producers’ profitability,” according to a statement by Ethan Lane, vice-president of government affairs at the National Cattlemen’s Beef Association.
“By creating criteria that effectively deem any innovation or differentiation in the marketplace improper, USDA is sending a clear message that cattle producers should not derive any benefit from the free market, but instead be paid one low price regardless of quality, all in the name of so-called fairness,” he said.
According to an earlier report by agriculturedive.com, mergers and acquisitions in the latter half of the 20th century paved the way for just four firms to control the majority of beef and poultry markets in the US.
“Half of all broiler growers, for example, have two or fewer processors for which they can raise chickens,” the report said.
“A consolidated market has allowed meat packers to wield inordinate power over their growers, often requiring producers to substantially invest in infrastructure or operations as part of their contracts. Growers have complained that they are often unaware of these costs, and a lack of contract transparency prevents them from making informed business decisions,” the report concluded.
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