Executive Order Strengthens the Century Old Packers and Stockyards Act

(KNSI) – Cattle farmers asking for a fair shake when it comes to market share are getting a boost from the federal government due to a new executive order.

As part of strengthening the enforcement of the 100 year old Packers and Stockyards Act, Minnesota Democratic Senator Tina Smith and Republican Senator Mike Rounds from South Dakota contacted the United States Justice Department and asked them to look into whether large meat processors are violating anti-trust laws and principles of fair competition. Smith says that four large meat processors control roughly 80% of beef processing in the country. That means most farmers make pennies on the dollar for their beef and consumers are left holding the bag paying higher prices for beef products at the store.

The order invests money from the American Rescue Plan Act for the United States Department of Agriculture to create new rules to make it easier for farmers to fight back against big processors.

One rule, among other things, provides better clarity to strengthen enforcement of unfair and deceptive practices like stiffer regulations on the Made in the USA label. Under the old rule, animals can be reared overseas, processed minimally in the U.S., and still get the label. Senator Smith applauded the move and called it an important step, saying, “We need to make it clear that if a product is labled ‘product of the USA’, that consumers know what that means. That they know where their food is coming from. That way, consumers can make the best decisions about what kind of meat they want to buy.”

Smith says the new rules will benefit smaller producers and help them grow. She says what she hears from smaller processors is that they’re overwhelmed with demand for processing because during COVID if one thing went wrong at one of the large processing facilities and they had to shut down, it created a massive backlog. It got so bad, particularly in the pork industry, where farmers had to euthanize their hogs because there was no place to take them.

Another rule makes it so farmers, ranchers, and producers don’t need to “demonstrate harm to competition” before filing a complaint against a processor. Opponents like the North American Meat Institute say that will create problems by opening the door for misleading lawsuits. Smith says they only speak to the interests of big processing companies who have shifted market power into their corner.

“Over the last five years, farmer share of the beef price has dropped by more than a quarter, and at the same time beef prices have risen, so clearly, the principles of competition are not playing out here in a way that creates a fair shot for family cattle ranchers. That’s what we’re trying to get to the bottom of.”

Given that Minnesota is home to large meat processors such as Hormel, which is the parent company of Jennie-O. The state has branches of JBS USA and Gold’n Plump. Smith says she had conversations to make sure that “agriculture works up and down the spectrum, but especially that agriculture works for family farmers and they have a chance to make a living and take care of their families,” adding that “the more diversity and more range we have in agriculture, the better off we’re all going to be.”

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