Article

by Carey Gillam

• Calling for tighter U.S. rules on meatpackers
• Targeting cattle, poultry companies
• Threatening lawsuit over misuse of beef checkoff funds

OMAHA, Neb., Aug 10 (Reuters) - A grass-roots group of U.S. farmers and ranchers on Tuesday called for tighter government oversight of beef and poultry companies, charging that corporate monopolies are unfairly squeezing independent producers.

The outcry is aimed at rallying support for the Agriculture Department’s Grain Inspection, Packers and Stockyards Administration (GIPSA), which is completing a new rule aimed at promoting fairness in the marketing of livestock and poultry. GIPSA published the rule in June and a comment period expires Nov 22.

Competition in the U.S. meat industry is also getting the attention of the U.S. Department of Justice which is holding a forum on industry antitrust concerns in Colorado on Aug. 27.

The group of farmers and ranchers meeting in Omaha this week are working to rally support for the GIPSA rule and to beat back an intense lobbying effort by the corporate meat companies and organizations working to weaken regulation.

Supporters of tighter regulations said unfair and anti-competitive actions by corporate meat companies are hurting producers while boosting profits for meat packers.

They say despite rising demand for beef, independent producers are struggling with declining profitability as more of their share of the prices consumers pay for beef shifts to meatpackers.

“All we want is a fair deal for the farmers ... to be fair and competitive,” said Fred Stokes, executive director of the Organization for Competitive Markets, which made meat industry regulation the key topic of its food and agricultural conference in Omaha this week.

“The answer is enforcement of our antitrust laws. Right now the market is rigged,” he said.

The Ranchers-Cattlemen Action Legal Fund-United Stockgrowers of America (R-CALF USA) and the National Farmers Union are among the organizations supporting the GIPSA rule-making, which was called for in the 2008 Farm Bill.

On the other side are the American Meat Institute, the National Cattlemen’s Beef Association, the National Pork Producers Council and other livestock and poultry industry groups who say the new regulations will be costly and burdensome to business.

Tyson (TSN.N) CEO Donnie Smith said the current market system encourages and rewards farmers who are progressive, innovative, and efficient. He said the new rules would hurt those farmers and favor less effective farmers.

“This would take money out of the pockets of our most progressive, most efficient producers and put it in the pockets of the least progressive growers. It doesn’t seem to me that is fair,” said Smith in an interview with Reuters.

Tyson has about 6,000 contracted poultry growers and works with an estimated 20,000 independent livestock producers.

“We just think that what this rule would do is, it is going to add more regulation and more cost without adding any more value,” Smith said.

Several U.S. lawmakers have expressed opposition to the proposed GIPSA rule and more than a dozen farm-state senators have written to Agriculture Secretary Tom Vilsack with concerns.

But RCALF CEO Bill Bullard said the U.S. live cattle industry is “under siege” as a shrinking percentage of live cattle are sold on the cash market — the basis for transparent price discovery — and more are sold through contracts to packers.

“You have just a few meatpackers who act as gatekeepers who then decide who will and who will not have timely access to the marketplace. The alarm sirens couldn’t be wailing any louder.”

Separately, OCM’s Stokes said his organization was also putting together litigation over misuse of checkoff funds by the National Cattlemen’s Beef Association identified in a recent independent audit. NCBA officials have said they are working to correct any mistakes.

(Reporting by Carey Gillam; additional Reporting by Bob Burgdorfer in Chicago; editing by Jim Marshall)