Grassley Stands Up for Family Farmers

Iowa Senator Seeks Effective Enforcement, Competitive Environment

? Sen. Chuck Grassley today took action based on a new report that shows the U.S. Department of Agriculture has not effectively used its power to stop anti-competitive practices in the livestock and meatpacking industries.

"The family farmer and independent producer deserve a USDA that aggressively and skillfully looks out for their interests against unfair competition," Grassley said. "Today's report proves that the administration has failed to protect independent producers by ensuring competition in the livestock industry, despite official warnings and recommendations made in 1991 and 1997."

As a result, Grassley is promoting legislation to require USDA to implement the reforms suggested in a report released today by the General Accounting Office. He said Congressional action is necessary because "while USDA has acknowledged the need to make changes in the past, the agency's never gotten the job done. I want to make sure the agency works for family farmers. Today's GAO report provides the blueprint fixing the problems."

In the new report, the independent GAO said that USDA has broad authority to take investigative, enforcement and regulatory action under the Packers and Stockyards Act. The GAO also said that USDA's responsibilities to address unfair practices are based upon and go further than the Sherman Act, which is enforced by the Justice Department to address unfair practices.

Grassley first requested the GAO report in August 1999. Today, he will introduce the Packers and Stockyards Enforcement Improvement Act of 2000, which will require USDA to:

*implement the recommendations of the new GAO report within one year and in consultation with the Justice Department and the Federal Trade Commission.

*work with the DoJ and FTC to identify and investigate complaints of anti-competitive activity and to enforce the Packers and Stockyards Act during this interim one-year period.

*develop and implement a training program for competition investigations within one year.

*provide an annual report to Congress on the state of the cattle and hog industries, identifying business activities that represent possible violations of the Packers and Stockyards Act.

*report to Congress within one year on actions taken to comply with the Packers and Stockyards Enforcement Improvement Act.

The 1921 Packers and Stockyards Act established within USDA an office called GIPSA ? the Grain Inspection, Packers and Stockyards Administration ? and gave the agency considerable authority to investigate and take enforcement action to protect the buyers and sellers of livestock.

The GAO report released today found that two major factors have impacted GIPSA's capability to investigate and enforce allegations of anti-competitive practices in the cattle and hog markets. "The bottom line is, GIPSA has been ineffective at addressing growing concerns about competition in the livestock market and because of the agency's shortcomings, potential violations may not have been pursued," Grassley said.

The GAO specifically identified that GIPSA had non-existent and inadequate investigation and case methods, practices and processes to deal with competition-related cases, and GIPSA staff was comprised primarily of economists, rather than the lawyers needed to investigate and develop cases. The GAO also said that lawyers needed to be at the lead of the investigation, as is done at the DoJ and FTC.

"USDA has mis-allocated resources provided to this enforcement agency. Headquarters have been restructured and specialists have been hired, but the critical mission of investigating allegations of anti-competitive practices has not been made a top priority. The proper guidance and procedures haven't been set-up, and it looks like it will take legislative action to focus the work of this agency," Grassley said. Congress has increased funding levels for GIPSA almost every year since 1991.

Today's government report is not the first time USDA has been told of the need to make major improvements within GIPSA.

In 1991, a separate GAO report said USDA's monitoring and analysis of anti-competitive practices had not kept pace with industry changes and were not sufficient to identify anti-competitive practices like price manipulation or the apportionment of territory. The report found that GIPSA placed primary emphasis on ensuring prompt and accurate payment to livestock sellers. The report recommended that the Secretary of Agriculture determine a feasible approach for monitoring activity in regional livestock markets. At the time, GIPSA said it was planning to reevaluate and update its regulations.

In 1997, an internal USDA Inspector General report found that GIPSA needed to make extensive improvements to accomplish its duties with respect to anti-competitive practices. The report found that GIPSA could not perform effective competition investigations because it was not properly organized, operated or staffed. It recommended that GIPSA employ an approach similar to that used by the Justice Department and the FTC by integrating attorneys and economists from the beginning of the investigative process.

Grassley said that actions taken by USDA during the last two months in anticipation of the release of the report's critical findings reflect the strong nature of the new GAO report. "Attempts to distract the farm community and members of Congress from GIPSA's failings are a disservice to the family farmers for whom the agency is to be a watchdog. USDA cannot simply pass the buck to Congress and ask for more authority when it's failed to meet its existing responsibilities. I want to strengthen USDA's hand, but taking action for family farmers must first become a top priority for GIPSA," Grassley said.

In late July, Agriculture Secretary Glickman announced that USDA would issue new regulations to help ensure fair competition in the livestock and meatpacking industries by increasing transparency of market transactions. In addition, USDA has recently scheduled public forums to solicit input on issues pertaining to captive supplies, including the Western Organization of Resource Councils petition, which seeks to restrict packer use of forward contracting and packer feeding of cattle. The first such forum was scheduled for today, the same day the GAO report was presented publicly.

As part of Grassley's effort to address the impact of on the little guy's ability to compete amid dramatic consolidation among corporate players in agribusiness, he has sought to further empower USDA.

Last March, he introduced landmark legislation ? S.2252, the Agriculture Competition Enhancement Act of 2000 ? that would require the USDA to review large agribusiness mergers for their impact on family farmers. Grassley's bill would give the Agriculture Department the ability to challenge a merger in a similar fashion to the Justice Department, and it would grant USDA expanded authority to prohibit anti-competitive practices in agribusiness beyond the livestock industry. The bill also gives USDA additional funding for antitrust attorneys to accomplish their competition mission.

Grassley also won Budget Committee approval in February of a resolution he offered to make sure the federal government has the necessary resources to enforce the antitrust laws and gives special attention to corporate transactions and anti-competitive practices in agriculture.

"I want to give USDA enhanced authority to take action for farmers hurt by mega-mergers in agriculture, but USDA first needs to effectively use all the power it's been given to counter unfair practices that negatively effect producers. USDA must make a commitment to standing up for family farmers in an environment dominated by corporate alliances and full-scale mergers. So far, the agency has failed to do so," Grassley said.

The Iowa senator has planned a hearing for next Monday afternoon, September 25, to fully review the new GAO report. Grassley will conduct hearing as chairman of the Judiciary Subcommittee on Administrative Oversight and the Courts. It will begin at 1 p.m. (ET) in Dirksen 226, and feature testimony by GAO analysts. The GAO is the investigative arm of Congress.