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Issues Divert Focus – for Aug. 9, 2010

Prime Cuts

Outsiders might be excused for believing that some U. S. cattle producers have a death wish. Some of these producers disparage the safety of U. S. beef, notably in relation to BSE. Others battle over the future of the beef checkoff, which funds marketing and research efforts. Still more producers continue to believe that the cattle market is unfair to them and is dominated by packers.

These issues are distracting the industry from what should be its top priority, rebuilding beef demand so that the market can provide more consistent profits to all in the beef-production chain, from rancher to packer. Shrinking cattle numbers in North America are the most serious structural issue facing the U. S. industry. The decline affects livestock markets and dealers, feedlots and packers. Yet issues that should have been laid to rest years ago are dominating industry leaders’ time and focus.

By far the most serious issue is USDA’s proposed rule on so-called “fairness” in the marketing of livestock and poultry. The rule, from the agency’s Grain Inspection, Packers and Stockyards Administration, is the result of a request put into the 2008 Farm Bill. The bill asked GIPSA to address five or six topics, nearly all of which related to the poultry industry. Therein lies the rub. GIPSA and administrator Dudley Butler went far beyond the scope of the Farm Bill mandate. The rule proposes sweeping restrictions of long-established livestock marketing practices. If implemented, the new rules could wreak havoc on the value-based marketing of livestock in the U. S.

How could this happen? Consider this. Butler reportedly wrote much of the rule himself. He was a long-time trial lawyer who spent part of his career arguing poultry arbitration cases against processors on behalf of growers. When appointed head of GIPSA, he was a member of R-CALF USA and a founding member of the Organization for Competitive Markets. Both groups have spent years complaining about the markets, packers and GIPSA.

I can’t imagine GIPSA sought any input from mainstream livestock or poultry groups. They all would have told USDA there was ample legal protection for producers and growers, and that the marketing practices that GIPSA is looking to restrict or prohibit have been widely used for years. GIPSA justified its proposed sweeping restrictions by citing several unsubstantiated concerns about standard marketing practices. I’ve never seen a weaker justification for a federal government agency to restrict how an industry does business. If USDA had listened to economic, not just coffee shop talk, it would have had no justification to publish its proposed rule.

The battle over the checkoff program has spilled out of plans by the National Cattlemen’s Beef Association to revamp its governance structure. But the battle reveals that the deep wounds inflicted over the merger in 1996 of the National Cattlemen’s Association and the National Live Stock and Meat Board never really healed. These wounds re-opened in an unsuccessful bid to declare the checkoff unconstitutional. NCBA has now inadvertently rubbed further salt into the wounds with its governance plan.

Polls indicate that a majority of U. S. producers consistently support the checkoff. But quite a few are unhappy that NCBA, as the largest producer group, is too close to the bodies that administer the checkoff and decide how the money is spent. NCBA at the end of June suspended its plans to go forward with changes to its governance structure. But that in no way resolves the dispute over whether there should be more separation between NCBA and the checkoff. In the meantime, GIPSA’s proposed rule could put the cattle industry back 30 years.

Cattle Buyers Weekly covers the North American meat and livestock industry. For subscription information, contact Steve Kay at P. O. Box 2533, Petaluma, CA 94953, or at 707-765-1725, or go


ANorth American viewofthe meatindustry. SteveKayis publisherand editorof

CattleBuyers Weekly


These issues are distracting the industry from what should be its top priority, rebuilding beef demand so that the market can provide more consistent profits to all in the beef production chain, from rancher to packer

About the author


A North American view of the meat industry. Steve Kay is publisher and editor of Cattle Buyers Weekly.

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