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HARKIN CALLS FOR INVESTIGATION OF USDA

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HAY MAKER

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FOR IMMEDIATE RELEASE:

April 4, 2005 202-224-3254



HARKIN CALLS FOR INVESTIGATION OF USDA OVERSIGHT OF LIVESTOCK AND POULTRY MARKET FAIRNESS

Senator questions USDA’s commitment to enforcing the Packer and Stockyards Act



WASHINGTON, D.C. – In the face of a rapidly concentrating livestock industry, Senator Tom Harkin (D-IA) today requested a full account of how thoroughly and effectively the Department of Agriculture (USDA) is carrying out its responsibilities under the Packers and Stockyards Act of 1921. This legislation was passed to protect producers from unfair, anti-competitive and deceptive practices in the livestock and poultry markets. In a letter to USDA Inspector General Phyllis Fong, Harkin specifically called for an investigation into how aggressively and accurately USDA’s Grain Inspection and Packers and Stockyards Administration (GIPSA) is examining and reporting anti-competitive and unfair market practices. GIPSA is the agency within USDA responsible for enforcement of the Packers and Stockyards Act. Harkin is the ranking Democrat on the Senate Committee on Agriculture, Nutrition and Forestry.



“In Iowa and across the country, many of our family-sized livestock producers are disappearing as large, corporate, vertically integrated operations grow,” Harkin said. “This trend is very disturbing and the lack of attention given to this issue by USDA is unacceptable. Serious questions persist about USDA’s commitment to enforcing the provisions of the Packers and Stockyards Act. That is why I am asking Ms. Fong to take a very close look at what USDA is doing to protect producers and root out unfair, anti-competitive actions in livestock markets.”



Harkin’s letter to the USDA Inspector General focuses on a number of major concerns with GIPSA’s enforcement of the Packers and Stockyards Act, including:



USDA’s failure to act against bad actors for anti-competitive activities in the marketplace in the form of administrative complaints or proposing new rules or modifications to existing rules to keep up with the rapid changes in the market system.
Possible inflation of the number of actual investigations conducted by the competition division in annual GIPSA reports to suggest a high rate of enforcement activity is taking place when in fact it is not.
How USDA has interpreted and carried out recommendations from a 2000 Government Accountability Office (GAO) report, reportedly in ways that block and tie up investigations at GIPSA headquarters in Washington, D.C.
A high rate of staff turnover within the competition division attributed to low office morale, problems with leadership and GIPSA staff believing they are not allowed to conduct or move investigations forward.


“More than 80 years has passed since passage of the Packers and Stockyards Act, yet we are still having constantly tourge USDA to enforce the law,” Harkin said. “It is time for USDA to step up to the plate and actively and aggressively investigate anti-competitive behavior to ensure that all livestock producers have an open and fair marketplace.”



Senator Harkin has worked for many years to increase competition and fairness in livestock and poultry markets. Last October, he released a Democratic staff report detailing the detrimental affects that an overly consolidated and unfair market system in the livestock industry poses to independent producers. This report can be obtained by going to Senator Harkin’s website at www.harkin.senate.gov and clicking on agriculture. The report is titled “Economic Concentration and Structural Change in the Food and Agricultural Sector: Trends, Consequences and Policy Options.”



A copy of the letter is attached.

# # #



April 4, 2005







The Honorable Phyllis K. Fong

Inspector General

U.S. Department of Agriculture

14th Street and Independence Avenue S.W.

Room 117-W

Washington, D.C. 20250





Dear Ms. Fong:



It is my understanding that as part of its fiscal year 2005 annual business plan, USDA’s Office of Inspector General will conduct a followup audit review of the Grain Inspection, Packers and Stockyards Administration (GIPSA). This review of GIPSA, particularly the competition division, is especially important since there have been many changes in the livestock and poultry industry and in the structure and operations of GIPSA since the OIG’s 1997 audit report and the Government Accountability Office’s (GAO) report in 2000. I commend you for planning this OIG review, very strongly support it and request that you examine the specific issues and concerns described in this letter.



For several years, there has been growing concern that GIPSA’s competition division is not sufficiently meeting its responsibilities to enforce the Packers and Stockyards Act. Despite rapid changes in livestock and poultry markets, for the past four years there has been little or no activity by GIPSA to investigate and act against anti-competitive activities in markets or to implement needed regulatory reforms. For example, in the past several years, GIPSA’s competition division has not filed any administrative complaints against market participants for anti-competitive activity. And while the Secretary of Agriculture is directed by statute to write rules to carry out the Packers and Stockyards Act, there have not been any new rules or modifications to existing rules proposed or issued by GIPSA’s competition division in the past four years. Given these concerns, I request that the OIG investigate and make a full accounting of why GIPSA has apparently not aggressively pursued these matters as required by the Packers and Stockyards Act.



It also appears that GIPSA has interpreted and carried out recommendations from the 2000 GAO report in a manner that frequently thwarts investigations that are initiated in the regional offices. GAO recommended in that report that GIPSA develop a more systematic approach to investigations and make them more in line with the process utilized by the Department of Justice and Federal Trade Commission. Prior to the 2000 report, GIPSA regional offices could start investigations on their own and there were no specific requirements for approving an investigation plan at GIPSA headquarters. Today, it appears that elaborate investigation plans are required to be approved by GIPSA headquarters in Washington, D.C. before an investigation can move forward. I request that the OIG examine whether GIPSA headquarters’ current practice of particularized management and approval of investigations initiated by regional offices is blocking meritorious investigations of and action against anti-competitive conduct. It is important that the OIG locate any memoranda, letters, e-mails or other types of communication from any official in GIPSA, or from USDA’s Office of General Counsel, that would shed light on whether GIPSA headquarters is impeding meritorious investigations. In addition, I request that the OIG determine whether GIPSA has fully and properly implemented the other recommendations in the 2000 GAO report.



Serious questions are now evident about the manner in which GIPSA accounts for and represents the number of investigations it undertakes and completes of possible violations of the Packers and Stockyards Act. It is my understanding that GIPSA’s longstanding practice had been to classify investigations separately from actions consisting of relatively routine or simple monitoring or followup to complaints. A complaint is typically initiated when a producer calls or writes to GIPSA detailing a certain problem, but GIPSA may also initiate complaints itself. Once a complaint is initiated, GIPSA then evaluates it and determines if it deserves further action. If the further action involves sending field representatives to a firm’s location to examine records or taking similarly substantial steps, such action would be characterized as an investigation. If the followup to a complaint merely involves a telephone call or calls, or similarly insubstantial steps, such action would not be characterized as an investigation.



It clearly appears that GIPSA’s approach to what actions are characterized as investigations has changed quite substantially within the past few years. Specifically, GIPSA appears to be inflating the number of investigations conducted by the competition division and listed in fiscal year GIPSA reports by tallying any followup in response to a complaint – no matter how minor – as an “investigation”. By evidently redefining what constitutes an investigation, GIPSA’s internal records and annual reports appear to give a false impression that investigations are being conducted when in many cases they are not. Given the close overlap among GIPSA divisions, this same inflation of the number of investigations undertaken and reported could be occurring within the trade practices and financial protection divisions as well.



Accordingly, I request that you specifically examine the issues listed below involving GIPSA’s handling of and accounting for complaints and investigations for each of the Packers and Stockyards enforcement areas: competition, trade practices and financial protection. In examining these issues, it is essential that the OIG uses a clear and meaningful definition regarding the types and extent of actions that rise to a level constituting an investigation. GIPSA’s longstanding distinction between routine followup to a complaint and a true investigation, which was clear up until a few years ago, seems to be a reasonable basis for the OIG’s examination of the following questions.



1. It is critical to evaluate the GIPSA complaints and investigations log for the years 1999 through 2005, which is maintained within the Packers and Stockyards program’s three regional offices in Atlanta, Denver and Des Moines. This evaluation will help gain an understanding of the actual number of complaints filed by producers with GIPSA and the number of complaints initiated by GIPSA itself.



2. Of these complaints, how many became actual investigations? What number of investigations were resolved or evaluated within the confines of GIPSA’s offices and how many required GIPSA to do field work? Are there investigations that have been left open for an extended period of time? If so, why have they not been concluded or closed? Have there been any investigations unexpectedly halted or closed due to directions from GIPSA headquarters?



3. Of the investigations approved by GIPSA headquarters to move forward, how many resulted in formal administrative complaints for violations of the Packers and Stockyards Act? It is essential that this information be separated to account clearly for the number of complaints, investigations and formal administrative complaints within each of GIPSA’s Packers and Stockyards program’s three main areas of enforcement: competition, trade practices and financial protection.



There have also been indications that GIPSA is not allocating adequate resources to the competition division or effectively utilizing resources within that division to carry out and complete investigations. I urge the OIG to evaluate GIPSA’s competition division budget from 1999 to the present to determine if the competition division is receiving an adequate level of funding and effectively using it to fulfill its responsibilities – specifically, pursuing, and completing competition investigations. For example, how much money is being spent each year for travel by GIPSA’s Packers and Stockyards program staff to investigate producer complaints in the field and pursue competition investigations? How much is spent each year by GIPSA for training staff regarding competition investigations? Are these amounts sufficient to fulfill GIPSA’s responsibilities? What is the dollar amount spent each year by GIPSA for office retreats for staff of the Packers and Stockyards program?



Anecdotal reports indicate a high rate of turnover within GIPSA’s competition division, particularly among staff located in the regional offices. This turnover has been attributed to low office morale, problems with GIPSA leadership and staff believing they are not allowed to conduct or move investigations forward. If those reports are correct, such problems would dramatically reduce the effectiveness of the GIPSA competition division. I ask that the OIG closely examine the following issues:



1. The OIG should interview both past and present staff at GIPSA to determine if they are allowed by their supervisors to conduct competition investigations and otherwise fulfill their responsibilities to enforce the Packers and Stockyards Act.



2. Are there any leadership deficiencies or problems at GIPSA that would hinder staff in pursuing competition investigations or otherwise limit their ability to execute normal job requirements?



3. What number of GIPSA staff for each of the three enforcement divisions (competition, trade practices and financial protection) have been relocated from one office to another (including relocation to other offices within GIPSA) or to another agency within USDA, particularly those who were transferred without promotions?



4. For new staff hired by GIPSA, how do their years of experience and training for a particular position compare to the experience and training of their predecessors?



I respectfully ask that you review my concerns and issues described above and provide me in no less than 30 days a detailed letter describing whether the OIG will prepare an audit report covering the issues and answering the questions I have outlined. Please also include a time frame for completing such a report. In this letter, please describe any expected problems or reasons any specific issues in my letter cannot or will not be addressed. Please let me know if you have any questions about this request. The staff contact on the Committee for this matter is John Ferrell.
 
A

Anonymous

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An interesting research project would be to study how many government investigations and hearings have ended up revealing absolutely nothing.

Every time I turn around another packer blamer is conducting another investigation that ends up finding no wrong doing.

Poor little packer blamers!


~SH~
 
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Anonymous

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~SH~ said:
An interesting research project would be to study how many government investigations and hearings have ended up revealing absolutely nothing.

Every time I turn around another packer blamer is conducting another investigation that ends up finding no wrong doing.

Poor little packer blamers!


~SH~

HEIL der Fuehrer!!!
 

frenchie

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Oldtimer said:
~SH~ said:
An interesting research project would be to study how many government investigations and hearings have ended up revealing absolutely nothing.

Every time I turn around another packer blamer is conducting another investigation that ends up finding no wrong doing.

Poor little packer blamers!


~SH~

HEIL der Fuehrer!!!

Well what do we got here? a Hitler loving Nazi
 

Murgen

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yep, he likes Socialism or Communism, either one does away with free enterprise and diversity.
 

Murgen

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By his desire to end competition within the industry, his inability to see that a harmonized product only plays into the hands of those who now have the most control of said industry.

By government regulating trade, and not just food safety. By courts having more power than the people (majority)


Would you like me to go on?
 
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Anonymous

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reader (the Second) said:
Murgen said:
yep, he likes Socialism or Communism, either one does away with free enterprise and diversity.

And these are connected to his using a sarcastic German quote how???

I guess Canadians don't understand sarcasm-- Didn't realize you had to use the right emoticons :lol:
The radical conservative right is as dangerous or maybe even more dangerous than the ultra liberal left.....Thats the reason we need a country of checks and balances and the ability to question what our leadership tells us...........
 

Murgen

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It just seems funny this questioning comes from a person who has trusted the government to outline his professional duties and has allowed him to work within the system of Government regulations, and then this said person questions the ability of those same government agencies to regulate the industry that he is involved with in retirement?

OT, wha :???: t do you stand for, additional Governmental control or less?
 

Murgen

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Reader, I hope your last post wasn't directed at me, I think most on this board will say that I'm very open minded. But when it comes to closed minded people, I have a problem.

"Looking in one direction, only gets you blind sided!" :)
 

Murgen

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Would you like me to bring more facts to arguments and not ask people questions, so they can decifer info. for themselves?

Let me know Reader, and I can do that for you!

I'd rather ask questions, and have people think about it a bit, but if you would rather me put words in their mouths and think for them, I can do that too.

I just thought that there is enough of that going on here and I might add some balance by having my own thoughts and not just copying articles and pasting them!
 

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