by Gary Deering
South Dakota Stockgrowers Association
Gary Deering is the president of the South Dakota Stockgrowers Association. He ranches with his wife Jessica and their three young sons on their family ranch near Hereford in western South Dakota.
Over my years of serving as a director of the South Dakota Stockgrowers Association one topic that has called attention to itself again and a again is regulations authored by the Grain Inspection, Packers and Stockyards Administration (GIPSA). I believe the recent decision made by Secretary Perdue by withdrawing the Farmer Fair Practice Rules from GIPSA, was an unfortunate one. It is my hope that the secretary did so out of a need for more clarity. I have considered the arguments on both sides of the GIPSA debate, and find it interesting and at times humorous, that on this issue both sides have screamed conspiracy theories to the other’s arguments. Through this fog of rhetoric I find myself searching for the truth of the matter.
It is a fact that the Packers and Stockyards Act went into effect in 1921. Even if Congress was more efficient, in 1921, than it is today, we can safely say that the issue of packers taking advantage of the producers has been an issue of discussion for well over 100 years. Like so many issues we face in agriculture, these issues of packer concentration and control are never resolved, only postponed.
In the 1920’s processing facilities were less centralized and the concentration of the big packer was not as great. Producers wrote about “the big five” in 1921 and from the early 1890’s controlled almost half of U.S. domestic market. Fast forward to today and four packers slaughter over 85 percent of the beef in the US. Greater concentration in our cull cow markets exists, and it is safe to say that the potential threat for packers to exercise undue influence is greater today than ever before. Since 1921, real commodity prices have moved very little, and after taking inflation into account, producers’ profit margins are slimmer than ever. Across the board, agricultural producers are hurting, and the bleeding must stop.
Senators Chuck Grassley (R-IA) and Jon Tester (D-MT), wrote in a letter to Secretary of Agriculture Sonny Purdue that, “The lack of economic opportunities in rural America creates real challenges for growth and economic development, for the economy in rural America to prosper, people who live, work, and invest there must be able to survive and thrive so they can reinvest earnings into their communities. That is the most effective way to create additional jobs and lasting opportunities for the next generation.” In the letter the senators go on to write, “That is why Congress intentionally instructed the Secretary of Agriculture to promulgate rules in the 2008 Farm Bill to ensure a better functioning marketplace for farmers and ranchers in the livestock and poultry industry.” Senator Grassley, has seen his share of consolidation, within the agricultural sector, over the past 40 years he’s been in Congress. Tester, likewise has also recognized what has happened, and is happening, to the cattle market due in part to the consolidation of the industry through vertical integration.
Both should be praised for their courage of standing up to big agribusiness, by not only working on GIPSA rules, but this letter they most recently wrote to Secretary Perdue. For the Stockgrowers across South Dakota, we can only hope to see the names of Senators Rounds and Thune on a similar letter as well.
Producers are in a unique position, we are all considered price takers when we enter the markets. Everything we do to improve the quality of our products may or may not be paid for when we market our products. While, I realize there are many factors which affect that price, consumer demand and supply, there is no other mechanism for producers to negotiate what they need to live on. The GIPSA rules aimed to give producers a tool to use in the event they had been treated unfairly.
I’m trying not to discount the argument that giving producers the ability for lawsuits, without proving harm to the entire industry, creates a potential opportunity for more lawsuits. However, that does not negate the fact that producers need a tool to dispute injuries incurred. What is the answer when producers can’t find relief through one of the three branches our founders gave us? What is their next option to avoid going out of business? We need protection in place to not only insure fair markets today, but insure that we don’t witness what many South Dakota hog producers went through in the early 1990’s, and what the chicken producers went through before that. The South Dakota Stockgrowers worked very hard to get GIPSA rules implemented, and will work hard with this and future Administrations to get the rules that producers deserve.
I can acknowledge that it is very complicated having a conversation on the packing, and or retail, industry. They are, and have been for some time, a very concentrated industry. Whether we like it or not, some of our success depends on theirs. However, it does not hurt to be skeptical, especially from what we have witnessed in the past. Even the strongest opponents of GIPSA, and those that believe that there is nothing at all wrong with our markets, must acknowledge the potential is certainly there now, and we are set up for possible corruption in the future.
I implore Secretary Perdue to consider ways to work with us to protect our family ranchers and farmers. The South Dakota Stockgrowers, stands ready to work with Congress, and the Administration to find solutions that will insure our future independence as producers, and financial viability.