Sandhusker
Well-known member
GIPSA Response to Investigation Request Neglectful and Skewed,
Shows No Serious Commitment to Enforcement of Packers and Stockyards Act
Washington, D.C. – In a written response to R-CALF USA’s formal complaint to the Grain Inspection Packers and Stockyards Administration (GIPSA) to request an investigation of a pattern of practice by the meat-packing industry that raised concerns about compliance with the Packers and Stockyards Act, as revealed in GIPSA’s 2007 RTI Study, GIPSA Administrator James Link denied that request.
R-CALF USA’s complaint highlighted the fact that, on the average, the RTI Study revealed that cattle sold on a grid or carcass basis bring less than cattle sold on the hoof – precisely the opposite of what market fundamentals would dictate. Producers accept a higher risk selling on the grid, and therefore, should command a higher average price than selling on the hoof. The RTI Study shows that these producers, who bear more risk by participating in grid arrangements, are not only not compensated for taking on those risks – they actually are penalized in the form of lower average returns even when controlling for quality.
“While we got a timely response from GIPSA, the content of that response is as disturbing as it is amazing,” said R-CALF USA Vice President/Region II Director Randy Stevenson. “Administrator Link wasted valuable ink detailing the econometric equations used in the RTI Study, which are irrelevant to a legal analysis of our claims that there may have been violations of Section 202(a) or (b) of the Packers and Stockyards Act (PSA). Proving those violations does not require an econometric calculation.
“While an explanation of the economic analysis in the RTI Study from the perspective of the authors of that study is informative, it does not substitute for a serious, independent investigation of the actual pricing practices revealed by that study,” he continued. “It is these pricing practices which R-CALF seeks to have investigated. Such an investigation should not begin and end with an explanation of the economic methods used in the RTI study, but should consist of GIPSA’s own economic and legal analysis of actual market practices and trends the study revealed.
“Our complaint sought something much more important to U.S. cattle producers – the investigation of pricing practices by the meatpacking industry that appear to violate the PSA – and the full promise of the Act will not be fulfilled until GIPSA shows a serious commitment to undertaking vigorous enforcement of the Act against systematic market distorting practices that disadvantage U.S. cattle producers,” Stevenson emphasized. “We believe the RTI Study reveals one such set of practices, and GIPSA’s initial response to that concern provides no basis for a different conclusion, and GIPSA must not rely on the perspective of outside contractors to be the final word on whether GIPSA’s own statutory mandates require further action.
“This response is the same ol’, same ol’ from this agency,” he commented. “There’s no other way to say it. GIPSA’s response truly underscores the need for Special Counsel in that office and highlights the need for reform. Incompetence and bias are so deeply rooted at the agency that nothing else will do.
“R-CALF USA respectfully reiterates its request for a meaningful, independent investigation of the actual pricing practices employed by the meatpacking industry for cattle purchased on a carcass weight basis or grid basis to determine if those practices violate the PSA,” Stevenson asserted. “R-CALF USA believes the investigation merits a thorough analysis from legal counsel and qualified, independent economists within GIPSA, and we look forward to working with GIPSA on this important matter.”
Shows No Serious Commitment to Enforcement of Packers and Stockyards Act
Washington, D.C. – In a written response to R-CALF USA’s formal complaint to the Grain Inspection Packers and Stockyards Administration (GIPSA) to request an investigation of a pattern of practice by the meat-packing industry that raised concerns about compliance with the Packers and Stockyards Act, as revealed in GIPSA’s 2007 RTI Study, GIPSA Administrator James Link denied that request.
R-CALF USA’s complaint highlighted the fact that, on the average, the RTI Study revealed that cattle sold on a grid or carcass basis bring less than cattle sold on the hoof – precisely the opposite of what market fundamentals would dictate. Producers accept a higher risk selling on the grid, and therefore, should command a higher average price than selling on the hoof. The RTI Study shows that these producers, who bear more risk by participating in grid arrangements, are not only not compensated for taking on those risks – they actually are penalized in the form of lower average returns even when controlling for quality.
“While we got a timely response from GIPSA, the content of that response is as disturbing as it is amazing,” said R-CALF USA Vice President/Region II Director Randy Stevenson. “Administrator Link wasted valuable ink detailing the econometric equations used in the RTI Study, which are irrelevant to a legal analysis of our claims that there may have been violations of Section 202(a) or (b) of the Packers and Stockyards Act (PSA). Proving those violations does not require an econometric calculation.
“While an explanation of the economic analysis in the RTI Study from the perspective of the authors of that study is informative, it does not substitute for a serious, independent investigation of the actual pricing practices revealed by that study,” he continued. “It is these pricing practices which R-CALF seeks to have investigated. Such an investigation should not begin and end with an explanation of the economic methods used in the RTI study, but should consist of GIPSA’s own economic and legal analysis of actual market practices and trends the study revealed.
“Our complaint sought something much more important to U.S. cattle producers – the investigation of pricing practices by the meatpacking industry that appear to violate the PSA – and the full promise of the Act will not be fulfilled until GIPSA shows a serious commitment to undertaking vigorous enforcement of the Act against systematic market distorting practices that disadvantage U.S. cattle producers,” Stevenson emphasized. “We believe the RTI Study reveals one such set of practices, and GIPSA’s initial response to that concern provides no basis for a different conclusion, and GIPSA must not rely on the perspective of outside contractors to be the final word on whether GIPSA’s own statutory mandates require further action.
“This response is the same ol’, same ol’ from this agency,” he commented. “There’s no other way to say it. GIPSA’s response truly underscores the need for Special Counsel in that office and highlights the need for reform. Incompetence and bias are so deeply rooted at the agency that nothing else will do.
“R-CALF USA respectfully reiterates its request for a meaningful, independent investigation of the actual pricing practices employed by the meatpacking industry for cattle purchased on a carcass weight basis or grid basis to determine if those practices violate the PSA,” Stevenson asserted. “R-CALF USA believes the investigation merits a thorough analysis from legal counsel and qualified, independent economists within GIPSA, and we look forward to working with GIPSA on this important matter.”