Republicans oppose Obama industry reform efforts
Feb. 14, 2011
by Meat&Poultry Staff
WASHINGTON – Efforts being made by the Obama administration to overhaul antitrust rules for the meatpacking industry, which have the toughest regulations since the Packers and Stockyards Act was passed 90 years ago, have run into tough opposition from Republicans, according to The Associated Press.
The reforms, which would redraw the balance of power between meat companies and the farmers and ranchers who raise animals for them, have been one of the administration's signature efforts in addressing the growing concentration of corporate power in agriculture. The new rules have faced resistance since they were proposed in June. However, with Republicans now in control of the House of Representatives, the overhaul’s critics have strong new allies, such as Rep. Frank Lucas, (R-Okla.), new chairman of the House Agriculture Committee.
The new rules would make it easier for farmers and ranchers to sue companies on antitrust grounds. This could fundamentally change the relationship between the nation's biggest meatpackers and the people who supply them with animals. In order to win a lawsuit now, they have to prove a company's actions harmed competition in the entire industry. Under the new rule, farmers and ranchers would need to prove only that they were personally harmed.
Lucas said he is not satisfied with the way the new rules are written and the US Department of Agriculture will have a fight on its hands if it tries to implement them. "The primary concern, and this is reflected in the conversations I have with both my colleagues and constituents, is about the potential adverse impact on producers," Lucas said.
Tom Vilsack, Agriculture Secretary, has said the reforms could help stimulate rural economies where just a few companies dominate livestock production, and his department has been working with the Justice Department on an investigation of antitrust violations in the industry.
Complaints have long been made by many farmers and ranchers about their lack of power. Chicken farmers say poultry companies force them to invest hundreds of thousands of dollars in industrial barns or face the loss of their contracts. They say taking on such debt makes it hard for them to make money. Ranchers say there are so few meatpackers buying cattle that they can discriminate against those they don't like.
Both practices would be banned under the new law, which meatpackers say would add to their costs and result in layoffs in an industry with historically thin profit margins.
The new rules will upend decades of evolution in the industry, said the American Meat Institute. Instead of buying animals in an opening bidding process, meatpackers now sign deals with ranchers to produce just the kind of beef that consumers want. The new rules would limit the terms of those contracts and make meatpackers the target of litigation by unhappy ranchers, AMI added.