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CONTACT: Geoff Greenwood, Communications Director
515-281-6699, geoff.greenwood@iowa.gov
FOR IMMEDIATE RELEASE, November 22, 2010

Miller Comments to USDA on Proposed Packers & Stockyards Act Regulations

(DES MOINES, Iowa)  Attorney General Tom Miller encouraged the USDA to adopt proposed regulations that would enhance and clarify the Packers and Stockyards Act.

In a joint letter to the USDA, Miller joined attorneys general from Minnesota and Montana in urging adoption of specific proposals that were set forth in the June 22, 2010 Federal Register Notice issued by the Grain Inspection, Packers and Stockyards Administration (GIPSA).

The proposals include recommendations of new rules to clarify legal interpretations and applications of the Packers and Stockyards Act, which Congress created and passed in 1921.  The Act addressed concerns that market concentration in the meatpacking industry was affecting competition defrauding producers and negatively affecting consumers.  The Act leveled the playing field between our nation’s farmers and ranchers, and the packers, stockyards, marketing agents and dealers.

Today, the packing industry has changed dramatically from what it was when the Packers and Stockyards Act was created and passed, and is even more concentrated.  Because of how some, including some circuit courts of appeals, have interpreted some facets of the Packers and Stockyards Act, Miller recommends that new GIPSA rules could bring a new clarity, direction and application of the Act in the rapidly changing livestock production and meat processing industries.

Miller’s recommendations include clarifying how the Act spells out unlawful practices.  Specifically, Miller recommends that the USDA establish that a finding of competitive injury is not necessary to establish a violation of the Act’s rules of unlawful practices.  This recommendation should help eliminate the burden of a plaintiff being forced to prove harm or the likelihood of harm to competition.

Miller also recommends that the USDA incorporate regulations to address the vertically integrated poultry and swine industries.  This vertical integration contractually favors integrators over producers.  Miller’s proposals help level the playing field:

  • Provide defined prohibited acts which have in the past been utilized to take advantage of the integrator’s dominant position.

  • Create transparency in the market by allowing growers to determine whether other growers are receiving similar contract terms.

  • Require live poultry dealers pay the same base pay to growers that are raising the same types of birds, prohibit growing arrangements below the base pay amount, and require integrators to rank growers in groups with other growers with similar facility types.

  • Prohibit the arbitrary or unreasonable suspension of delivery of birds.

  • Provide criteria to be considered in determining whether a particular capital investment requirement is unfair.

  • Require that a production contract be of sufficient length to allow poultry and swine growers the ability to recoup 80% of capital investment costs.

  • Provide legal protections for growers by creating standards for a breach of contract process which includes notice, an opportunity to rebut and a reasonable time period in which to remedy a breach.

  • Provide criteria for the Secretary of Agriculture to determine whether an arbitration clause in a contract provides a meaningful opportunity for the grower to participate fully.  Require that the grower be informed in conspicuous print that he/she has the right to decline arbitration.

“These proposals will help protect Iowa farmers and ranchers in a way that that won’t hurt the profitability of the industry,” said Miller.  “There has been a sea change in the livestock and poultry industries since the Packers and Stockyards Act first passed.  These proposed changes should help address the rapidly changing livestock production and meat processing industries.”

 

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