Trade Groups Play Consumer Card

— Trade groups are sticking the consumer smack in the middle of a debate between the U.S. Department of Agriculture and the meat industry.

Opinions differ strongly on the USDA’s proposed rule changes as part of the Grain Inspection Packers and Stockyard Agency’s mandate from the 2008 Farm Bill.

Both sides of the GIPSA argument are playing the “consumer” card to further their point of view, and consumers will pay more for meat whether the regulations take effect or not.

AT A GLANCE

Rising Retail Meat Prices

Oct. 19 prices, compared to one year ago

Turkey breast, up 47.2 percent

U.S. choice beef, up 16.5 percent

Boneless chicken breast, up 14.5 percent

Pork, up 13.6 percent

Chicken legs, up 11.6 percent

Source: Stephens Inc.

Meat trade groups claim the expanded regulations will cost 104,000 jobs, rob the national economy of $14 billion and raise meat and poultry prices for consumers.

Family farm advocates and the Agriculture Department disagree. They say GIPSA oversight is necessary to protect small farmers against a larger consolidated meat industry and to ensure consumers have ample choices at fair prices.

“It’s not unusual for trade groups on the both sides of policy debate to advocate their position using the noble consumer. After all, helping the consumer deflects the emphasis off the actual policy and one’s own agenda,” said Michael Thomsen, associate agriculture economist at the University of Arkansas.

The American Meat Institute represents the nation’s largest meat packers, including Tyson Foods. The trade group commissioned a report from New York-based John Dunham & Associates to identify the economic impact from GIPSA rules.

The recent report finds that Arkansas consumers spend about $571.8 million annually on meat and poultry. The group predicts consumers will face a 3.3 percent increase in meat and chicken prices if the rules remain. These will be costs passed to the consumer by processors, who claim it will cost them more to operate.

The entire study is a scare tactic to spook consumers, said Bill Bullard, CEO with R-CALF, United Stockgrowers of America, a trade group for cattlemen in 47 states, including Arkansas.

“USDA has the responsibility to look out for all of our farmers and make sure that the playing field is as level as it can possibly be so that farmers and ranchers of all sizes get a fair shake, which is what the proposed rules are all about. There are 2.2 million farm families across the country. Recent reports showing that some farmers are doing very well is great news, but we also need to watch out for the vast majority of farmers in small or medium size operations who are struggling,” USDA press secretary Caleb Weaver wrote in an e-mail.

Other interest groups don’t deny consumers will be asked to pay more for groceries in the coming year.

“Prices are going up either way. Packers, processors and retailers are all to blame for price inflation and are willing to pass blame where they can,” said Patrick Woodall, research director for Food and Water Watch.

Woodall supports GIPSA oversight because he says meat industry consolidation has allowed a few large companies to put a “stranglehold on the marketplace.”

In the meantime, Woodall said consumers have fewer choices in the meat case and are asked to pay more.

Travis Justice, beef council director for the Arkansas Farm Bureau, said the policy debate is far from over.

“I would like to see more discussion before the rules are set in stone,” he said.

More than 100 members of Congress recently asked the USDA to conduct an economic analysis of any potential impact and make those results public.

“There is room for improvement in the GIPSA and Packers and Stockyards Act framework to better protect contract growers in the poultry industry. At the same time, this regulation exceeds the mandate of the 2008 Farm Bill, and I am somewhat concerned about the scope of the proposed rule and how it will impact Arkansas’ agriculture industry,” 3rd District Rep. John Boozman, R-Rogers, wrote in an e-mail. Boozman supports an economic analysis prior to rule finalization.

U.S. Agriculture Secretary Tom Vilsack recently declined Congress’ request, saying the government will wait until the public comment period concludes Nov. 22 before determining if further economic analysis is warranted.

More than 12,000 public comments have been received by the Agriculture Department, according the government website.

Sen. Blanche Lincoln, D-Ark. and chairwoman of the Senate Agriculture Committee, wrote in an e-mail that she has heard from many growers about the financial burdens they are facing creating concerns about their ability to stay in business.

She added all segments of the industry have been suffering because of high input costs and artificial international trade barriers.

“The new GIPSA rules will have a tremendous impact on the state’s poultry growers, rural communities and the economy as a whole. Therefore, it is only appropriate to allow adequate time for all stakeholders to have an opportunity to review and comment on proposed changes that will directly impact how they do business,” Lincoln said.

Boozman and Lincoln are seeking the same Senate seat in the Nov. 2 election.

“We know there are strong feelings on both sides of this issue, and once all comments have been received, we will try to come up with as good a rule as we can,” Weaver said.

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