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DAVID KRUSE

By Staff | Sep 10, 2010

R-Calf-USA CEO, Bill Bullard is no Glenn Beck. Bullard hoped 25,000 livestock producers would join him at Fort Collins for the Competition Workshop hosted by USDA and DOJ and just 1,000 to 1,500 attended.

The rest must have been in the throng in Washington at Beck’s honor rally. I think that in many ways, the hearings in Colorado were about revival of honor too.

For since I can remember, integrators and major packers have dominated USDA and key Congressional posts controlling enforcement of Packers and Stockyards regulations. The regulated essentially controlled the regulation, so that meaningful enforcement was purposefully circumvented. USDA officials pushed through revolving doors as they traded jobs in the industry and government.

I believe the time they spent in Washington carrying water for integrators/packers was rewarded in the private sector later for services previously rendered. What occurred may not have been criminal, but that was a technicality.

It was noted that three Congressmen are under investigation by the Ethics Committee for links from campaign contributions to their vote on the Health Care Bill. Why is that different than House Agriculture Committee Chairman, David Scott, who blasted APHIS rules in hearings, accepting, “$10,000 from the National Chicken Council; $7,500 from the National Pork Producer’s Council; $3,500 from Pilgrim’s Pride; $2,500 each from Cargill and Tyson; $1,500 from JBS, the largest meatpacker in the world; $4,500 from the American Meat Institute and $7,500 from the National Cattlemen’s Beef Association.”

The livestock integrators/packers own every move that key Congressmen make.

It was, therefore, extremely ironic and reprehensible to hear integrators/packers charge the USDA is now biased against them. After so many years of them running the show, returning balance and honor to USDA regulation must seem like bias to them.

The opposition to GIPSA enforcement likes things as they were. Over the period of a few decades the poultry industry has integrated into just a few hands, eliminating market access for new players. Birds are now grown with their permission on their terms, the only avenue to market access.

The pork industry has its producers subjugated by the packer control of market access, too. Shackle space was the fulcrum that leveraged control of the industry to the point where 94 percent of hogs were produced under contract market terms the first half of this year. Pork product market reporting is still controlled by packers. Most hog producers are now employees of investors.

The Packers and Stockyards Act has been around forever from the life experience of those producing and processing livestock today. What happens historically to regulation is that over a period of time, the regulated find ways around stationary rules like a river does some blockage of the channel.

The Packers and Stockyards Act has been circumvented by a dynamic evolving industry and concentration of players. Those benefiting don’t want change. It took them a long time to get things like they want them so any advantage that they have carved out for themselves they want to keep.

For regulation to be effective, it needs to be revisited during historical intervals and the interval since when the Packers and Stockyards rules were last given a tune up has been too long.

As to the new proposed rules, most of them are directed at the integrated poultry industry and procurement contracts. In reading the rules pertaining to poultry contracts, I could not see how any reasonable person could find fault with them.

First of all, I’m an independent cattleman. I have no idea why anyone would raise chickens for integrators if half the stories about how they have been treated were true. Where do they find people who put up with that?

Are we to believe that the poultry industry finds new suckers that haven’t heard how they screwed the last suckers they’re replacing to grow chickens? I don’t know why anyone would work with these people, but it is the USDA’s job to see to it that the abuse is kept to a minimum.

I didn’t see any proposal in the new rules that was unfair to poultry integrators, but after you have had it your way for so long, the tilt of the playing field goes un-noticed as natural in favor of the integrators.

The response to rules from the poultry industry should have been, “Yeah, you got us, this is fair.” One rule change in particular that stuck out to me was giving the producers the right to watch their chickens being weighed.

Believe it or not, contracts denied them that right despite weights contributing to their compensation. Integrators fought this something terrible. One poultry producer broke the rules, followed the trucks and watched his birds sit in them for hours before being weighed.

My father in law, a cattleman, told me how years ago when sending his cattle to the Sioux City stockyards, if he couldn’t be there, he would send his two teenage daughters to watch the scale manager to ensure he punched the scale ticket when the arrow was where it should be. We don’t watch our cattle get weighed today; weights can be checked on a local scale, but producers should have the right to observe their livestock being weighed any time they desire.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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