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R-CALF Supports Legislation

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Anonymous

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February 23, 2006



Cattle Producers Support Bipartisan Legislation to Enhance Competition in Markets



(Billings, Mont.) – U.S. cattle producers support legislation introduced Feb. 16 by Sen. Tom Harkin, D-Iowa, Sen. Mike Enzi, R-Wyo., and Sen. Craig Thomas, R-Wyo., that aims to strengthen the 1921 Packers and Stockyards Act (PSA).

Titled the “Competitive and Fair Agricultural Markets Act of 2006,” the bill establishes an Office of Special Counsel, which will have the authority to investigate and prosecute violations of antitrust and market competition laws. The measure further defines the role of the Grain Inspection Packers and Stockyards Administration (GIPSA) as an enforcement and investigative agency charged with protecting agricultural producers from unfair, deceptive and discriminatory market practices.

The legislation comes just one month after the U.S. Department of Agriculture’s (USDA’s) Office of Inspector General issued a report that revealed GIPSA administrators had failed to initiate investigations of anti-competitive practices. The report demonstrated GIPSA administrators had blocked investigations from occurring and had inflated the number of investigations underway in its reports to Congress.

R-CALF USA Marketing Committee Co-Chair Randy Stevenson pointed to conflicting court rulings in recent months as evidence the legislation is needed.

“The courts set aside the jury verdict in the historic Pickett v. Tyson Fresh Meats cattle price-fixing trial, ignoring the economic evidence proving Tyson used captive supply cattle to manipulate markets,” Stevenson said. “The judges in this case applied their own interpretation of the PSA rather than enjoining the original intent of the law.

“In London v. Fieldale, the courts ruled growers must prove harm to competition in their region, not to just themselves,” he continued. “The new legislation clarifies language that GIPSA and USDA officials have chosen to hide behind, and that the courts have interpreted differently than intended 80 years ago.

“When the judicial branch and the executive branch of government ignore the original intent of the PSA, it’s very appropriate for Congress to step forward with legislation that clearly prohibits certain predatory market practices while clarifying the roles of the responsible enforcement agencies,” Stevenson added.

The legislation comes at a time when meat packers have stepped out of the cash market, drawing on captive supply cattle to drive fed cattle prices downward. In recent weeks, packers have been successful in taking $8 per hundredweight off the fed cattle high of $97 by pulling from captive supply cattle to fulfill slaughter needs. So few cash transactions have occurred during this event, that market analysts and feedlot managers have little transaction information to report.

“The last three weeks are a vivid illustration that captive supplies are a critical issue to live cattle producers and independent feeders,” said Ken Winter, R-CALF USA Marketing Committee Co-Chair. “Drawing on captive supply cattle gives the packers the ability to step out of the cash market and leave feeders holding the bag. USDA officials agree, but say that administrators do not have the tools they need to deal with the issue. The new legislation is the first step in providing those tools.

“It’s unfortunate that some feed yard managers are compelled to deliver cattle to the packers on a ‘high of the week’ arrangement, giving the packers un-priced cattle to slaughter while still trying to establish a cash market. That allows the packer to locate the weakest seller and establish a market with very few cattle,” Winter explained. “Many feeders also forward-contract cattle under various programs provided by the packers, giving them even more leverage. The overall solution is to strengthen laws already in place with legislation that closes loopholes, redefines agency roles and clarifies language that’s 80 years old. It’s clear that the PSA needs help legislatively.”

The proposed legislation would remove language in the PSA, making it easier for producers to prove unfair and deceptive market practices by packers.

“Recent actions by courts across the country have put producers on the defensive,” said Enzi. “They’ve been forced to carry an unfair burden by being required to show the competitive harm to themselves as well as to everyone in the industry.

“This is an almost impossible situation,” Enzi continued. “This bill would put fairness into the system by making it so producers only have to prove competitive harm to themselves, or for the particular case in question.”

The measure will give USDA more authority to regulate poultry markets and improve protections for producers who use contracts to sell to meat packers.

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R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) represents thousands of U.S. cattle producers on domestic and international trade and marketing issues. R-CALF USA, a national, non-profit organization, is dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. R-CALF USA’s membership consists primarily of cow/calf operators, cattle backgrounders, and feedlot owners. Its members – over 18,000 strong – are located in 47 states, and the organization has over 60 local and state association affiliates, from both cattle and farm organizations. Various main street businesses are associate members of R-CALF USA. For more information, visit www.r-calfusa.com or, call 406-252-2516.
 

mrj

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Will someone please post a copy of this bill?

MRJ
 

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