Republicans oppose meatpacking industry reforms
ST. LOUIS — The Obama administration's effort to overhaul antitrust rules for the meatpacking industry with the toughest regulations since the Packers and Stockyards Act was passed 90 years ago has run into strong opposition from Republicans.
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, but with Republicans in control of the House of Representatives after the November election, critics of the overhaul have powerful new allies, including the new chairman of the House Agriculture Committee.
The rules could fundamentally change the relationship between the nation's biggest meatpackers and the people who supply them with animals, in part by making it easier for farmers and ranchers to sue companies on antitrust grounds. 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.
Rep. Frank Lucas, R-Okla., the new Agriculture Committee head, said he is not satisfied with the way the new rules are written and the U.S. 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 in an e-mail after a spokeswoman said he would not be able to discuss the issue on the phone.
A U.S. Department of Agriculture spokesman said officials weren't available to comment on the proposed rules. Agriculture Secretary Tom Vilsack 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.
Many farmers and ranchers have long complained about their lack of power. Chicken farmers, for example, 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 American Meat Institute, which represents meatpackers, said the new rules will upend decades of evolution in the industry. 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 said.
While Democrats still control the Senate, opposition is mounting among Republicans there as well. Sens. Pat Roberts, R-Kan., and Saxby Chambliss, R-Ga., sent a letter to the head of the Office of Management and Budget in late January, identifying the reforms as part of a series of "burdensome and ineffective" regulations that could hurt meat producers and should be dropped.
The USDA doesn't need Congress to approve the new rules since, technically, they don't create a new law but simply define and clarify terms in the Packers and Stockyards Act of 1921. But Congress has ways of fighting agency rules members don't like.
Lawmakers could refuse to provide funding for enforcement, reject the changes under congressional review procedures, or "effectively overturn the regulation with additional legislation," Chambliss spokeswoman Bronwyn Lance-Chester said.
Chicken farmer Bill Harvill, 51, said he's a political conservative who's usually opposed to more government regulations. But, he's hoping the USDA's antitrust division, called the Packers and Stockyards Administration, puts the new rules in place and he's offended by Republican opposition to them.
"It needs to be of great concern to the Republican party as to how farmers are treated out here in the real world by corporations," Harvill said
In a typical arrangement, Harvill has about $1 million invested in a set of eight large chicken houses near Monett in southwest Missouri, where he raises birds on contract for Tyson Foods Inc. He said he has little bargaining power with the company over how much he gets paid.
The new rules "would be more like giving the grower a voice with the company that they would at least have to listen to," Harvill said.
Bill Bullard, chief executive of R-CALF USA, which represents ranchers and supports the new rule, suggested corporate influence is behind much of the opposition. Campaign finance disclosure forms reviewed by R-CALF showed the 115 lawmakers who signed a letter to the USDA expressing concern about the rule received a combined $48.6 million from donors with ties to agribusiness. The 69 Republicans who signed the letter received $28.4 million, while the 46 Democrats who signed it received $20.2 million, according to R-CALF's tally, which tracked donations over lawmakers' entire careers.
Bullard said a peculiarity of the modern meat industry allows lawmakers and others to oppose the bill and still say they support "producers." Traditionally, ranchers and farmers produced meat, and packers bought and processed it. But since World War II, corporations such as Tyson Foods and JBS SA have gotten into the business of raising animals as well as slaughtering, processing and selling them.
"You have to distinguish between the corporate-owned and controlled producers, versus the independent family farmers and ranchers who are not bound by contracts with the packers," Bullard said.
He and others who support tighter antitrust rules worry they will be delayed or even killed by opposition in Congress.
The Packers and Stockyards Administration is reviewing 61,000 public comments and conducting an economic analysis of the rules' potential impact. Spokesman Jim Brownlee said no date has been set for the rules to be published, or put into effect.
Lucas said Congress will look at ways to affect how the rules are implemented, although he wasn't specific.
"I would hesitate to predict the future, but it's not unreasonable to imagine that either Congress, or the courts for that matter, may weigh in before everything is said and done," he wrote in an e-mail.