Commentary by Bill Bullard, CEO, R-CALF USA
The Packers and Stockyards Act of 1921 is a statute that regulates the conduct of beef packers. It does not regulate cattle farmers and ranchers. But, by regulating the conduct of packers, the Packers and Stockyards Act preserves for cattle farmers and ranchers an open and competitive market for their cattle.
In essence, the Packers and Stockyards Act rebalances market power between the highly concentrated beef packers and the nation’s independent cattle farmers and ranchers.
That there is a tremendous imbalance between the market power of beef packers and the market power of independent cattle producers is obvious. Until the recent widespread drought that caused massive cattle liquidations that then reduced our U.S. herd size to the smallest level in over seven decades, beef packers were reporting record profits while independent cattle producers were suffering depressed cattle prices. The herd liquidation, of course, caused a shortage of supplies that triggered higher cattle prices, but that external shock did not change the structure of the marketplace. The market structure today is essentially the same as it was when cattle prices collapsed beginning in 2015 and remained depressed for the next five years while beef demand remained incredibly strong and retail beef prices were skyrocketing.
Now, rising beef prices and falling cattle prices is clear evidence of market failure. Had it not been for the drought that triggered higher cattle prices from late 2020 through present, the number of independent beef cattle operations that exited the industry during the past five years would have been much greater than the actual loss of 107,000 cattle operations reported by the 2022 census.
This isn’t a Republican versus Democrat or liberal versus conservative issue. The market is currently structured to benefit global corporations at the expense of independent cattle farmers and ranchers and all the rural communities they support.
So what reforms are needed to the structure of the market to effectively rebalance the disparate market power between independent cattle producers and global beef packers?
The answer is reforms that prevent the beef packers from interfering with an open and competitive market.
And that’s what the Packers and Stockyards Act does, but the Department of Agriculture (USDA) needs to write the rules to enforce the provisions of the Act that prohibit unfair, deceptive, or unjustly discriminatory conduct by beef packers; the granting of any undue preference or advantage to some cattle producers while depriving others; or subjecting any producer to any undue or unreasonable prejudice or disadvantage.
You see, these are the acts and practices that beef packers can engage in to interfere with the integrity and competitiveness of the market, and they must be stopped if we are to reverse the ongoing decline in the number of U.S. cattle producers.
Right now, as we approach our upcoming presidential election, the USDA is writing rules to achieve the critical market reforms needed to restore an open, competitive market for independent cattle producers.
The fact is that it is the Biden Administration that has undertaken the task of writing these critical rules. It is equally factual that a change in administrations could derail these critical rules.
We must not let this happen! Regardless of who is elected as the next President, these rules are absolutely critical for our nation’s independent cattle producers.
Since it is the Biden Administration that initiated these rules, if Biden is re-elected he will likely implement them.
It’s not so clear whether a Trump Administration would ensure the implementation of these rules, but it should.
So here’s where R-CALF USA, a bipartisan, nonprofit organization, will call upon both Democratic and Republican cattle producers to urge them to ensure our broken cattle markets get fixed.
If you’re a Biden supporter, call your members of Congress and tell them you want the Packers and Stockyards Act rules to be implemented and enforced even after the election.
If you’re a Trump supporter, call you members of Congress and tell them you want the Packers and Stockyards Act rules to be implemented and enforced even after the election.
Yes, the message is the same for both parties and for both presidential candidates. The Packers and Stockyards Act rules are vitally important to the future of the U.S. cattle industry and to America’s rural communities and it’s up to you to ensure that both parties and both presidential candidates understand that.
If you are involved in the development of the platform for either the Democratic or Republican Party, be sure to include support for the Packers and Stockyards rules in your respective party’s platform. This is the best way to impress upon all Senate and House candidates and presidential candidates just how important these rules are to America.
