LINCOLN, Neb. (DTN) -- As the debate rages on about what can be done to improve livestock markets, a letter sent to U.S. Secretary of Agriculture Tom Vilsack by 16 state attorneys general at the end of 2021 outlines the problems producers face and presses Vilsack to help find solutions.
In short, the lead law enforcement officials from those states told Vilsack they have the ability to have "significant impact" on agriculture market concentration but need financial resources.
"To that end, USDA should consider using funds appropriated through the American Rescue Plan Act of 2021 to establish a grant that state antitrust enforcers could avail themselves of for the purpose of investigating and bringing actions in agricultural markets," the letter said.
"Meanwhile, Congress has appropriated $4 billion to USDA, part of which is to be used to make loans and grants and provide other assistance to maintain and improve food and agricultural supply chain resiliency. Aggressive antitrust enforcement is essential for improving food and agriculture supply chain resiliency, and grants from the USDA to states interested in investigating agriculture markets will bolster those efforts."
In October, the House Agriculture Committee held a hearing to review the state of the cattle markets.
In November, a group of U.S. senators introduced the so-called "Cattle Price Discovery and Transparency Act," which is supported by several agriculture groups, including Iowa Cattlemen's Association, Iowa Farm Bureau, American Farm Bureau, U.S. Cattlemen's Association, National Farmers Union and National Grange.
On Wednesday, Iowa Republican Sen. Charles Grassley said he had a discussion with the White House on Tuesday about working together on potential market reforms.
In the letter to Vilsack on Dec. 21, the attorneys general called on the Biden administration to step up enforcement of the Packers and Stockyards Act, something the administration has said it would do.
"For over a century, the Packers and Stockyards Act has served as an important tool to ensure fairness in livestock and poultry markets and protect the integrity of these markets," the AGs said.
"Structural changes in these markets, including increased concentration and changes in sales and marketing practices, have threatened producer viability, resulting in attrition, and reducing the number of producers participating in the livestock markets. We hope that with increased enforcement and government oversight, the promise of the Packers and Stockyards Act can be fulfilled and return competition to these vital American markets."
The letter was signed by attorneys general from a wide geographical swath, including Idaho, South Dakota, Minnesota, Wyoming, Iowa, California, Delaware, Hawaii, Illinois, Maryland, Nevada, New Mexico, North Dakota, Oregon, Rhode Island and Utah.
The attorneys general said that because there are few new entrants into the market and current market participants are expanding output, it shows the livestock markets are in "poor" health.
"Neither new entrants, nor existing participants have expanded output, including during periods in which demand for meat products is growing," the AGs said.
In addition, the attorneys general asked USDA to consider investigating whether alternative marketing arrangements and vertical integration in livestock markets "distorts price discovery" and other market conditions.
"AMAs may appear beneficial to producers because, at least initially, they provide a premium, or 'bump,' over cash markets, but they do not provide a fixed price nor are they made publicly available for bidding by interested producers," the AGs said in the letter.
"Instead, they are exclusive offers to specific producers and tie directly to prices discovered through regional cash markets or other price indices, such as those provided by third-party data services that the packers and processors can influence, and even manipulate with coordinated efforts. This creates a problem for all producers."
The attorneys general said while there is a need for market reforms, there is no "substitute for maintaining a vibrant and open spot market," especially to the extent the AMAs tie pricing to a cash market.
"Numerous regulators have a role to play in ensuring that agricultural markets are fair and competitive," the AGs said.
"The DOJ (Department of Justice), FTC (Federal Trade Commission), and state attorneys general have enforcement authority under the nation's antitrust laws, which due to the market concentration issues described above, are as important as ever. In addition to protecting competition in these markets, it is also important to ensure that the markets operate with integrity and are fair and equitable."
Read the letter here: https://www.r-calfusa.com/….
Read more on DTN:
"Congress Looking Again at Cattle Markets, Comprehensively," https://www.dtnpf.com/…
Todd Neeley can be reached at todd.neeley@dtn.com
Follow him on Twitter @DTNeeley
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