000781 Group Responds to USDA’s “Captive Supplies” Issue

Following is a statement by Shane Kolb, Chairman of the Agriculture Issue Team of the Western Organization of Resource Councils. He ranches in Meadow, South Dakota. He is responding to WORC’s “Petition for Rulemaking on Captive Cattle Supplies”.

“Secretary Glickman has taken one small step to restore fair competition in livestock markets, and one big step sideways. The five rules Secretary Glickman announced move in the right direction, but they must be toughened up considerably as they are developed if they are to provide real help to livestock producers.

“Secretary Glickman’s decision to gather more evidence on WORC’s proposed market reforms is well-meaning but a classic case of too little, too late. We appreciate the Secretary’s continued interest in hearing about the problems facing livestock producers, but we do not believe he needs any more evidence, studies or hearings before adopting the cattle market reforms proposed in our petition for rulemaking.

In the nearly four years since we presented our petition for rulemaking to Secretary Glickman, the size of the problem has doubled. The average level of captive supplies in the major cattle-feeding states now regularly exceeds 40% of total slaughter, according to the Agricultural Marketing Service. These increased levels of captive supplies have cost U.S. cattle producers approximately $4 billion since we submitted our proposal to Secretary Glickman.

“We agree that USDA needs to address price discrimination in market contracts through rulemaking under the Packers and Stockyards Act. We believe the most effective, fair, and enforceable method of preventing discrimination is to require packers to procure such contracts in open, public markets, as we proposed in our petition.

“The prohibition on conditional purchases is also laudable, but should be strengthened by requiring that each bid contain a firm price offer, also as proposed in our petition. The other rules proposed provide useful protections for producers entering into livestock market contracts and for improving packer record-keeping.

“However, the announcement falls short of what is needed to restore a competitive market in the cattle industry. We have presented USDA with the legal analysis, economic evidence and public support the agency needed to adopt our proposals. During the comment period in 1997, support flowed in from in from agriculture and consumer groups representing hundreds of thousands of individuals. Our proposal has the support of a bipartisan group of members of Congress and other public officials, led by the Congressional delegations and state officials in our region. We thank all of these supporters for their the letters of endorsement, phone calls, and other efforts on behalf of America’s independent livestock producers. If the cattle market was dysfunctional in 1997 when commenters supported it by a margin of 33 to 1, today we can consider it non-existent. The Packers and Stockyards Act gives Secretary Glickman the authority and the responsibility, to stop anti-competitive practices before they ruin our livestock markets. If, as the announcement indicates, he is not prepared to adopt our proposals after four years of studying them, he must strengthen the rules proposed dramatically in order to live up to that responsibility. He cannot do it by holding more hearings, however well- intentioned.

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