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Agricultural News

R-Calf Member Defends Dudley Butler and GIPSAs Proposed Livestock Marketing Rules

Fri, 30 Jul 2010 6:04:41 CDT

R-Calf Member Defends Dudley Butler and GIPSAs Proposed Livestock Marketing Rules The R-Calf organization is fully supportive of the USDA proposed Rules that will change livestock marketing in the United States by regulation. The organization opposed the extension of the comment period that others said was needed to fully review the rule and all of its consequences. One of their members has written a rebuttal to a column written by one of the most respected cattle industry reporters in this country, Steve Kay. Kay has his own weekly newsletter- and also does some other media work- such as writting a regular column for Beef Magazine and their electronic publications. The writer taking on Kay is Jay Platt is the previous Region IV director for R-CALF USA. He is a third-generation cow/calf producer with ranches in Arizona and New Mexico.

Here is his editorial- and these are his views (and since it was sent under the banner of a R-Calf News Release- we assume the views of R-Calf as well)

In Steve Kay's column in the Beef Cow-Calf News Report of July 23rd that appeared in the daily e-bulletin of BEEF Cow-Calf Weekly, he questions J. Dudley Butler’s impartiality as head of USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA), citing Butler’s work as an attorney who handled arbitration cases for chicken growers, his status as a former R-CALF USA member, as well as being a founding member of the Organization for Competitive Markets.

Kay is editor and publisher of Cattle Buyers Weekly whose Web site informs clients that include “major meat companies in North America, Japan and Australia." Click here for the column that thge R-Calf organization is upset with.

As an apologist for his meat processing and packing clients, Kay overlooks the fact that the Packers and Stockyards Act (PSA) was designed to protect producers and cowboys, not processors and packers. Kay asserts that the proposed competition rule issued by GIPSA under the PSA “threatens to damage the livelihoods of tens of thousands of cattle and hog producers,” that superior grading cattle will end up being sold “on the average,” that niche marketers will be compelled to “give away their trade secrets,” and that consumers will be offered a lower “beef quality.”

Wow—quite a house of horrors! Kay never uses the language of the rule to show how this is so and, instead, makes a straw man of Butler.

But what does the rule actually say? Does it prohibit formula cattle, force cattle to be sold on the average and disgorge niche marketers of their trade secrets?

First, it provides that a “packer…must maintain written records that provide justification for differential pricing…” Secondly, premiums and discounts require documentation of “the reason(s) and substantiating the revenue and cost justification associated with the premium or discount…” Third, addressing the issues of undue or unreasonable preferences as set forth in the PSA, the rule provides that the Agriculture Secretary may consider whether i) “contract terms based on number, volume or other condition, or contracts with price determined in whole or in part by the volume of livestock sold are made available to all…livestock producers…who individually or collectively meet the conditions set by the contract,” and ii) “the price premiums based on standards for product quality, time of delivery and production methods are offered in a manner that does not discriminate against a producer or group of producers that can meet the same standards.”

Summarizing, packers can indeed continue to forward contract, use formulas and buy on a grid. They may pay premiums and give discounts. They must, however, document the reasons for the premiums and discounts and treat all sellers of the same type and quality of cattle equally.

Back to Kay’s straw man of impartiality. What about Rep. David Scott, D-Ga., who chairs the House Agriculture Subcommittee which recently held a hearing on the rule? What do we make of the Chairman’s pompous lecturing and threatening of Butler and the rule he proposes to issue?

The Federal Election Commission’s (FEC’s) Web site reveals that from 2007 to date, Chairman Scott received $39,500 from the following PACs: $10,000 from the National Chicken Council; $7,500 from the National Pork Producers Council; $3,500 from Pilgrims Pride; $2,500 each from Cargill and Tyson; $1,500 from JBS, the largest meatpacker in the world; $4,500 from the American Meat Institute; and $7,500 from the National Cattlemen’s Beef Association (NCBA).

Given the stakes at issue, $39,500 was a cheap price for the display put on by Chairman Scott at the July 21 hearing. Mr. Kay would taint Dudley Butler by reason of his former membership with R-CALF USA but Chairman Scott’s campaign receipts merit no discussion.

Chairman Scott received no contribution from R-CALF USA..



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