Debate rages over the USDA’s Grain Inspection, Packers and Stockyards Administration’s announced update in regulations that “protects the rights of farmers.”
Proponents of the rules say they are long overdue, especially in the chicken industry where many feel they have been the victim of chicken company, or integrator, retaliation for a variety of things.
Opponents say they have the potential to stifle business practices that benefit buyers and sellers of livestock.
The Farmer Fair Practices Rules are a combination of an interim final rule and two proposed rules GIPSA sent to the Federal Register. The interim final rule says it is not necessary to demonstrate that an unfair practice harms the entire market in order to prove a violation of the Packers and Stockyards Act.
The issue some have with the interim rule is the definition of “unfair practices,” but the proposed rules set out to define which practices GIPSA deems unfair.
PROPOSALS AIMED AT POULTRY GROWERS
The latest proposals appear to be aimed at poultry production with some implications for cattle and hog producers. Anecdotal and isolated evidence of retaliation by chicken integrators have abounded for years, yet potential growers appear to be lined up waiting to grow chickens for the companies.
Supporters of the rules say chicken integrators have growers over a barrel right from the start. They feel cajoled into taking out massive loans to construct state-of-the-art chicken-growing facilities only to wind up with growing contracts for one cycle of chickens, none of which the grower chooses or owns unless they die.
If a grower complains that he was treated unfairly, the next batch of chicks just happen to be sick, and many may die.
“You know you’re in trouble when they deliver the medicine before they deliver the chicks,” one former grower said.
Growers already holding massive debt can be forced to upgrade to the newest and latest equipment even though they are near or at the top of their peers in producing quality chickens.
Yet the proposed rules have implications for cattle and hog producers, too.
Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America CEO Bill Bullard said in a web site release that the rules are “intended to facilitate competition in the livestock and poultry markets.” One of the proposed rules clarifies language prohibiting packers from giving any undue or unreasonable preference or advantage to some market participants but not to all.
DETRACTORS
The National Cattlemen’s Beef Association says the rules could jeopardize the livestock industry. If adopted, the rules will drastically limit the way producers can market cattle and open the floodgates to litigation, said Tracey Brunner NCBA president.
“In a time of down cattle markets, the last thing USDA needs to do is limit opportunity, Brunner said in a release. “The fact of the matter is, we don’t trust the government to meddle in the marketplace.”
CASH CATTLE TRADE QUIET
Superior auction prices Wednesday were steady to slightly stronger at an average of $110.47 in a range from $110 to $111.50 in the south to $109.50 to $111 in the north.
Cash action then got underway at $110 to $111.50 on a live basis, steady to down $0.50. Dressed-basis trading was at $170 to $171.
The USDA’s choice cutout Thursday was $2.58 per cwt higher at $193.46, while select was up $2.17 at $178.54. The choice/select spread widened to $14.92 from $14.51 with 70 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Wednesday was $130.53 per cwt, up $0.60. This compares with Thursday’s Jan settlement at $127.70, unchanged.