USDA Has New Rules on Livestock Competition

July 31, 2000

USDA's Grain Inspection, Packers, and Stockyards Administration (GIPSA) will issue new rules to designed to ensure fair competition in the livestock, poultry, and meat packing industries. "Our goal is to ensure there is fair competition in the marketplace and to help small farmers and ranchers compete more effectively," Agriculture Secretary Dan Glickman said.

Specifically, the new regulations are intended to

--mandate disclosure of basic contract terms, ensuring that production contracts are easy to understand;

--prohibit restrictions on disclosure of contract terms, preventing packers from imposing restrictions that may limit the ability of producers to obtain legal or financial advice and can constitute an unfair trade practice;

--clarify record keeping requirements for packers, specifying the form and content of records that must be maintained to describe livestock procurement transactions to ensure more complete and accurate information;

--prohibit conditional purchases in which the purchase of animals from one seller is tied to the purchase of animals from another seller, requiring each lot of livestock to be purchased or offered on its own merits, and

--require that packers specify the basis on which they pay different prices for like quality cattle.

The National Cattlemen’s Beef Association said the proposal "could increase market transparency and lead to greater profitability by making more market information available to cattle producers. Combined with mandatory price reporting, additional market information will help producers better evaluate marketing alternatives and make decisions that work best for them."

USDA said the proposed regulations, which are based on suggestions from small farmers and ranchers and farm groups, are expected to be published in the Federal Register this fall then be open for public comment for a period of time before final regulations are issued.

Glickman also announced that USDA will hold public forums in September to solicit dialogue and input on issues pertaining to captive supplies, including the petition of Western Organization of Resource Councils (WORC) which seeks to restrict packer use of forward contracting and packer feeding of cattle.

Lynn Cornwell, NCBA president-elect, said the proposed rule "could be a positive step as cattle producers work to compete in a global beef economy. Even as calves and feeder cattle are currently being sold at record price levels, there always are such things as the threat of drought or other weather-related disasters or changing market prices for grain that could impact the market at any time. NCBA opposes any restriction of private business practices and new marketing methods that are helping producers to remain competitive."