Commodity farmers get the lion’s share of focus in the farm bill, but
there are several provisions in the Senate farm bill that could affect
the way livestock producers do business.
Senate debate is stalled over how to accept amendments, but several
senators are expected to offer proposals on the Senate floor as early as
next week to tighten buyer-seller arrangements in the complex livestock
The Senate farm bill includes a ban on packer ownership of livestock
longer than 14 days before slaughter. But the Senate bill also has a
provision that would allow private companies to forward contract with
dairy producers. There also is a provision to create an office of
special counsel on competition issues at USDA. Arbitration in livestock
and poultry contracts would also be voluntary and could not be a
required provision in such contracts.
Livestock producers and groups generally come down on different sides of
these issues depending on whether they back open cash sales or argue
that a producer and packer should be able to do business with limited
Allan Sents, a Kansas feedlot manager and board member for the U.S.
Cattlemen’s Association (USCA), said some key amendments are needed to
clean up and clarify language in the 1921 Packers and Stockyards Act
that courts have repeatedly interpreted broadly to justify packer
“To me, the clarification on the Packers and Stockyards Act is more
import than the ban on packer ownership,” Sents said.
Senate Agriculture Committee Chairman Tom Harkin, D-IA, plans to offer
one such amendment to clarify a “competitive injury.” It would redefine
the legal requirements for a producer to show in court that they have
been injured by the way packers are buying cattle. Now, a producer must
show that he and several others were affected by a packer’s actions,
instead of just his own operation.
“It’s just an untenable burden to be placed on a producer,” said Bill
Bullard, R-CALF United Stockgrowers’s Association CEO.
R-CALF backs the Senate provisions on country-of-origin labeling, the
packer ban, interstate shipment of state-inspected meat, and the
establishment of an office of special counsel for livestock at USDA.
Further working on language in the packer laws, Sen. Charles Grassley,
R-IA, and Sen. Jon Tester, D-MT, will offer a provision stemming from
the Pickett versus Tyson court case. In that case, Tyson argued that
acts violating the Packers and Stockyards Act were a justifiable
business practice. The Grassley-Tester Amendment would state that claims
of business justification would not be a legitimate defense for an
Other senators keep offering a litany of amendments, but National
Farmers Union President Tom Buis said it’s likely a lot of those
amendments are just political posturing and will be eventually pulled.
Buis said his group likes much of what is in the Senate livestock
provisions, with the exception of the provisions allowing forward
contracting in the dairy industry.
“We think it certainly could lead to further consolidation of the dairy
industry,” Buis said.
One proposal creating a lot of debate is a proposed amendment by Sen.
Mike Enzi, R-WY, that is meant at getting to the issue of captive supply
of livestock. The amendment would restrict confidential one-on-one
business deals with prospective buyers. Under the proposal, forward
contracts would be prohibited for more than 40 head of cattle.
“The Enzi amendment is probably the most problematic provision out
there,” said Colin Woodall, executive director of legislative affairs
for the National Cattlemen’s Beef Association (NCBA). “The way it looks,
it will probably be in the final Senate version.”
Packers have sent out letters saying the Enzi provisions would take away
premiums and niche-marketing contracts, but producer groups such as
R-CALF and USCA have denounced those letters as fear mongering.
Sents said he would like to hear the debate and merits of the Enzi
amendment. Right now, Sents said cattle feeders often have to wait until
sometime on Friday afternoon before the week’s cash trade really begins.
Captive supplies by packers have created smaller trading windows and
fewer cattle sold in negotiated markets, he said.
“I certainly favor the concept of the Enzi amendment,” Sents said.
Others argue that this focus on livestock is a holdover from price
collapses nearly a decade ago and isn’t a reflection of the more recent
strong markets in cattle and hogs.
“Why is it so wrong to have contracts now that we’re making money?” said
Joy Philippi, a Nebraska pork producer and past president of the
National Pork Producers Council.
The ban on packer ownership too may have a bigger ripple effect on pork
than cattle, given the vertical integration in the pork industry.
Philippi said contract-feeding hogs for packers is the way a growing
number of younger producers are getting established in agriculture.
“What happens to the people who have good feeding contracts with
packers?” Philippi said.
Restrictions on contracts and supply could generate a great deal of
debate on the Senate floor. For instance, Harkin said he supports
forward contracts as long as there are producer protections. Contracts
should have provisions for resolving disputes between a buyer and
seller, and there should be no mandatory arbitration clause in the
contracts. Contracts must be transparent, and Harkin said there should
be a window of time, 24 or 48 hours, to get out of the contract.
“If you have all of those in there, it would be fine,” he said.
The Senate bill has a provision for a new special counsel, but some
senators want to broaden the authority in the language. Twenty industry
groups ranging from NCBA and National Grain and Feed Association to the
Grocery Manufacturers Association, the Pet Food Institute, Biotechnology
Industry Association, and the U.S. Chamber of Commerce co-authored a
letter earlier this week to express concern about an amendment by
Grassley and Sen. John Thune, R- SD, on the special-counsel provisions.
Senators are trying to address the perceived ineptness of the USDA’s
Grain Inspection Packers and Stockyards Administration. The agency,
known as GIPSA, has received a great deal of criticism from Congress
over the past two years after a USDA Office of Inspector General report
in early 2006 found GIPSA had done very few actual livestock
investigations over the previous six years yet had artificially inflated
the numbers. Some members of Congress sought to even separate GIPSA’s
Packers & Stockyards oversight from USDA. Still, NCBA resists the
argument that a special counsel is needed.
“It’s just redundancy,” Woodall said. “It’s adding another layer of
bureaucracy that we don’t think is going to do anything but slow things
down ... It’s like having Kenneth Star on staff 24 hours a day and the
sole purpose is to prosecute people.”
Starr was the special prosecutor who investigated the Clinton
presidency, leading to President Clinton’s impeachment trial by