Tester: House farm bill threatens cattle market fairness

Montana ranchers may not be able to get a fair price for their cattle if changes aren’t made to the next farm bill, U.S. Sen. Jon Tester cautioned Wednesday.

At issue, said Tester, is farm bill language limiting the federal Grain Inspection and Packers and Stockyards Administration from policing deceptive, fraudulent and anti-competitive conduct in the highly concentrated livestock industry.

Four companies control 80 percent of the beef slaughtered in the United States and consequently set the price for American cattle.

“Not only are the ranchers impacted, but the consumers are impacted too,” Tester said.

Ranchers supporting Tester say supermarket beef prices have nearly doubled in recent years, while profit margins for ranchers haven’t. As a result, some producers say they lack the nest egg necessary to weather unexpected costs, like drought.

Tester is joined in his effort by Sen. Chuck Grassley, R-Iowa.

“We’re so grateful to Sen. Tester and Sen. Grassley for championing this issue and pointing out that this is harmful to open competition,” said Bill Bullard, of the Billings-based Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America.

The fight over fairness in the livestock markets has been at a high pitch since 2008, when the last farm bill mandated new regulations to ensure fair livestock markets. GIPSA heeded the farm bill mandate and authored reforms, but House lawmakers from regions with strong meatpacking economies prevented the changes from being carried out at least temporarily. Now language in the 2013 farm bill would permanently prevent the reforms from being made.

“This is really important,” Tester said. “If I was on the conference committee, I would be dug in pretty hard on this issue. If we’re going to have an economy based on free markets and competition, then I think this is really important. I can’t emphasize this enough.”

The GIPSA issue has divided agriculture groups more along business interests than political ones. House and Senate versions of the 2013 farm bill went to conference committee Wednesday to be reconciled. Farm groups both liberal and conservative spoke out against repealing GIPSA reforms.

“This is especially harmful to the poultry industry,” cautioned Bob Stallman, president of the Republican-leaning American Farm Bureau Federation. Because poultry farmers raise chickens under contract with a particular company, with no chance of shopping around for another buyer, market fairness regulation is considered crucial.

The Democratic-leaning National Farmers Union expressed similar concerns.

The National Cattlemen’s Beef Association, which traditionally aligns with the meatpacking industry, calls the GIPSA reforms a “trial lawyers’ bonanza that will hurt livestock producers.” The NCBA argues that GIPSA reforms will discourage private marketing arrangements between buyers and ranchers that reward producers with premiums for producing higher-quality beef products.