Feedstuffs Magazine / February 21, 2000 / By STEVE MARBERY
Delegates at last month's IPPA meeting (previous item) also targeted packers and price discrimination as key issues for further discussion at next month's Pork Forum. Judging from impassioned floor debate, many producers have not recovered from burns suffered in the historic hog market scalding of 1998-99.
Passage of price reporting legislation and formation of a national pork cooperative were designed to heal the wounds. While market hog prices are bound to rise this year, as packers scramble for hogs, the upswing may be short-lived. Producers know history often repeats itself.
An analysis published in December by the General Accounting Office concluded that the hog market plunge was due mainly to a shortage of shackle space and cold storage capacity, among other economic factors. Many farmers are not buying that argument. Rather, they argue that laws are not being enforced.
Michael Stumo, attorney for the Organization for Competitive Markets, told the U.S. Senate Agriculture Committee recently that the Packers & Stockyards Act is designed to prevent marketplace problems "in their incipiency," before discrimination can be documented.
"Packer-owned livestock inherently is discriminatory as to other producers," he said. "Contracted livestock allows more conscious and persistent discrimination between producers than does the open market."
The Office of General Counsel (OGC) that supervises enforcement and interprets the law has ignored the incipiency theory of regulation, he said. "Rather, OGC has adopted an incorrect position that past harm must be proven before the secretary of agriculture's authority is triggered. The horse is out of the barn. OGC also has failed to define specific circumstances in which it believes the secretary's authority is triggered. The result is USDA abandonment of farmers," Stumo said.
Iowa pitches a change-up
At their annual meeting last month, Iowa producers did not allude specifically to the theory of incipiency (prior item). However, they referred to it indirectly by adopting a resolution that demands federal legislation to establish "clear and convincing" authority for aggressive enforcement of the Packers & Stockyards Act by the secretary of agriculture to prohibit discriminatory practices. Essentially, Iowa producers said they were tired of waiting for Agriculture Secretary Dan Glickman to get off the fence.
Producers increasingly have expressed doubts that USDA's Agricultural Marketing Service or DOJ will enforce vague regulations against price discrimination. Skepticism is based on the presumption that government officials are buying time until the integration process is completed, or they are afraid packers will sue them.
Iowa delegates also agreed to urge legislators to strengthen the state ban on packer ownership with a resolution that would "prohibit direct or indirect packer ownership of livestock." Some packer producers have bypassed the prohibition through ownership transfers before and after finishing. On a related note, producers advocated national legislation that would ban packers from owning hogs for more than 14 days prior to slaughter, with an exemption for producer-owned cooperatives. Sponsors of the resolution said packer hog ownership "skews the competitive market and price discovery and will limit accuracy of mandatory price reporting."
Another resolution urges NPPC to back an 18-month ban on agricultural mergers involving firms with more than $100 million in assets and revenues.
Finally, delegates resolved to promote repeal of the state law that exempts cooperatives from owning or feeding livestock in Iowa. The resolution does not apply to producer cooperatives unless they process hogs.:
