WASHINGTON – An amendment to the Packers and Stockyards Act of 1921 is under consideration by the U.S. Senate and House after being dropped from the final draft of the 2002 farm bill.
The bills call for a ban on any relationship in which the packer owns or feeds directly, through a subsidiary or any arrangement taking power from the producer and transferring it to the packer, according to Rodney Holcomb, Oklahoma State University agricultural economist.
The proposed timeframe in which such arrangements can exist is seven days before slaughter, excluding Saturday and Sunday, Holcomb said.
Several versions. Since the beginning of 2003, both the Senate and House have seen versions of the Johnson Amendment brought to the floor as bills and referred to the respective agricultural committees.
The Johnson Amendment was proposed in the Senate version of the 2002 farm bill, causing the concept of a packer ownership ban to be debated throughout the livestock and meat industry.
Sen. Tim Johnson’s amendment, which was eventually dropped from the final version of the 2002 farm bill, proposed to change the Packers and Stockyards Act of 1921 by making it unlawful for any packer, packer subsidiary or agents of packers to have “control” of livestock for more than 14 days prior to slaughter, leading many in the industry to argue that “control” could be widely interpreted.
Exemptions. Some exceptions are allowed in the bills, Holcomb said.
“Exemptions were made for packers owned or majority-controlled by a cooperative of producers, packers representing less than 2 percent of the slaughter of a given livestock species, any packer not required to report to the secretary of agriculture on each reporting day or any packer owning one plant,” he said.
If passed in its current form, packers involved in the ownership or other form of livestock control would have 180 days from the bill’s enactment to dissolve any non-complying arrangements or ownership.
An exception for swine is made, allowing an 18-month phase-out period.
In control. As expected, the wording of these bills provides a better definition of control than the Johnson Amendment.
The bills propose the use of marketing contracts and other producer-packer contractual relationships to remain as viable means of procurement.
Unanswered questions. Two important questions must be answered before the final wording and potential passing of this legislation takes place, Holcomb said.
“Questions must be answered to see if any versions of these bills would have the desired impacts on the livestock/meat industry, as well as how fresh-meat consumers will be impacted by the legislation,” he said.
“Each of these questions bears considerable weight, and it is doubtful any legislation will pass until Congress can be relatively assured no industry or market will be adversely affected to the point of market duress.”
Biggest impact. The poultry and pork industries have the potential to be impacted the most if any form of the legislation is enacted, since the greatest degree of vertical integration has been apparent in these sectors.
The beef sector is more uncertain, given the widespread use of marketing contracts and the lack of vertical integration apparent in poultry and pork.
More uncertainty exists related to further processing, where the issue of the proposed ban’s impact on the consistency of quantity, quality and price of meat shipments to further processors is of importance, Holcomb said.
“Whether or not the ban will result in more imported meats being used by processors needs to be determined before decisions are made,” he said.
“As groups lobby Congress on the pros and cons of the proposed legislation, only time and analysis will tell which arguments are viewed as most convincing by legislators.”
Call for more study. Some efforts are under way to take an objective and comprehensive view on the subject, including a recent request by Sen. Chuck Hagel, R-Neb., for the USDA to form a “Council on Competition” to oversee livestock marketing, packer ownership and industry competition.
If established, the suggested council structure will include USDA experts, livestock producers, university researchers and industry representatives in an effort to seek consensus on these issues.
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