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OCM Supports Legislation to Revitalize Packers and Stockyard

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Jul 16, 2005
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OCM Supports Legislation to Revitalize Packers and Stockyards Act

Lincoln, NE ~ On Thursday, February 16, Senators Tom Harkin (D-IA), Mike Enzi (R-WY) and Craig Thomas (R-WY) introduced legislation that will enhance and strengthen the 1921 Packers and Stockyards Act. The Organization for Competitive Markets (OCM) announced today its support for the "Competitive and Fair Agricultural Markets Act of 2006".

The bill addresses the U.S. Department of Agriculture’s (USDA) failure to prevent unfair, anti-competitive and deceptive market practices under current laws, and effectively defines the role of the Grain Inspection Packers and Stockyards Administration (GIPSA) as an enforcement and investigative agency charged with preserving and protecting competitive agricultural markets.

The legislation comes on the heels of a report issued by the Office of the Inspector General, depicting USDA’s significant failure to initiate investigations of anti-competitive practices and failure to refer cases to the Office of General Counsel for prosecution.

"When the judicial branch and the executive branch of government ignore the original intent of the Packers and Stockyards Act, it’s very appropriate for Congress to step forward and bring them back into line," noted Randy Stevenson, OCM Vice-President.

"The bill provides both regulators and the judiciary with the original and literal intent of the Packers and Stockyards Act of 1921, which has been needed sorely," continued Stevenson. "The legislation will reform and enhance GIPSA’s focus on predatory market behaviors. This legislation clarifies language that GIPSA and USDA officials have chosen to hide behind and that the courts have chosen to interpret differently than intended 80 years ago. We thank these Senators for their diligence and support for U.S. agricultural producers."

The bill establishes an office of Special Counsel, which will have the authority to investigate and prosecute violations of the law.

Further, the bill would strengthen the Packers and Stockyards Act by:

Strengthening producer protections by making it easier for them to prove unfair actions by packers without additional burdens of having to prove adverse affects on competition. For example, recent court decisions such as London v. Fieldale Farms and Pickett v Tyson Fresh Meats have ruled that in order for producers to succeed in cases involving unfair market actions they must prove how it adversely affects competition for their region. These rulings conflict with the original intent of the Packers and Stockyards Act.

Strengthening USDA’s authority in enforcing the Packers and Stockyards Act over the poultry industry and correlate it with livestock. Currently, it is illegal for poultry integrators to engage in unfair or anti-competitive practices, but the enforcement section of the law to prosecute these violations was left out many years ago.

The legislation will make the following changes to the Agricultural Fair Practices Act:

Prohibits unfair or deceptive practices by a person that affects the marketing, receiving, purchasing, sale or contracting of agricultural commodities.

Provides needed contract protections to ensure that the contract clearly spells out what is required of the producer. The legislation will require giving producers at least three days to review or cancel the contract and will prevent confidentiality clauses so that producers are free to share the contract with family members or a lawyer to help them decide whether or not they should sign it. The legislation will also protect producers from having their contracts prematurely terminated if they have made a sizeable capital investment. The bill also prevents mandatory arbitration so that producers are not prevented from seeking relief through the courts.

Prevent discrimination against producers belonging to an organization or cooperative by removing a disclaimer clause allowing processors, handlers or contractors to refuse to do business with producers just because they belong to such organizations.

"The conflicting rulings by several appellate courts in recent months demonstrate that the courts are imposing their own interpretation of the Packers and Stockyards Act and this is problematic," said Stevenson. "The OIG report illustrates that USDA administrators have literally blocked investigations of anticompetitive practices while administrators use hollow excuses not to enforce the laws. GIPSA officials have adamantly refused to examine plaintiffs' expert testimony in the historic Pickett cattle price-fixing trial. Yet, the agency spent $4.2 million of taxpayer funds on a captive supply study conducted in part by Kansas State University. Kansas State faculty testified for the packers during the Pickett trial. In effect then, GIPSA is consorting with the packers and their representatives but will not seek balancing information from independent experts. Without this legislation, producers will be left open to further exploitation by corporate interests and the very soul of our democracy will be at stake."

The Organization for Competitive Markets is an independent, nonpartisan, nonprofit public policy organization working for American food producers, consumers and rural communities.

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