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November/ December 2012 Obama’s Game of Chicken

The untold story of how the administration tried to stand up to big agricultural companies on behalf of independent farmers, and lost.

By Lina Khan

During the course of the hearings, the USDA also began to address Congress’s 2008 Farm Bill instruction that the department revise and update elements of the Packers and Stockyards Act. By midsummer, the USDA had rolled out a series of far-reaching revisions, addressing many of the farmers’ concerns. One of the proposed changes would have specifically banned company retaliation against farmers who tried to negotiate the terms of a contract. Another would have required any company that forced farmers to make capital investments to offer contracts long enough for the farmers to recoup some minimum amount of that investment. This series of proposed updates and revisions to the Packers and Stockyards Act later came to be known collectively as the “GIPSA rules.”

While updating an old law might not sound like a big deal, farmers widely regarded the proposed GIPSA rules as serious game changers. “Before, they would throw us a little bone once in a while,” Watts said. “But with these rules we knew they meant business.”

Because the USDA has the legal authority to revise the rules under the Packers and Stockyards Act, Congress didn’t actually have to formally vote on the new rules. Congress has the right to discuss them and request additional information, but it has no direct authority over them. In the Senate, Tom Harkin, Chuck Grassley, and Tim Johnson, longtime advocates of reform in the agriculture industry, voiced their support for the proposed updates. Many House members, however, began to attack the rules, especially once the processing companies came out strongly against them.

In July 2010, less than a month after the USDA published its proposed rules, the House Agriculture Committee, which was led by Michigan Minnesota Democrat Collin Peterson, called a hearing to question USDA officials on the revisions. At the hearing a group of mostly Republican lawmakers, joined by Jim Costa of California and a few other Democrats, assailed the proposed rules for their wide-reaching impact. They accused the USDA of ignoring the concerns of industry groups like the National Cattlemen’s Beef Association and the National Chicken Council, which represent processing companies like Cargill and Tyson. After the House hearing, the USDA agreed to extend the period for public comments on the proposed rules from the regular sixty days to a total of 150.

Then, in October, House members—led by Peterson, Agriculture Committee Ranking Member Frank Lucas (Republican from Oklahoma) and Livestock, Dairy, and Poultry Subcommittee Chairman David Scott (Democrat from Georgia) and Ranking Member Randy Neugebauer (Republican from Texas)—delivered a letter to Vilsack. The letter argued that the USDA, despite nationwide hearings and dozens of investigations, interviews, and fact-finding missions, had not sufficiently justified the need for some of the new farmer protections, and urged the agency to subject the rules to more thorough economic analysis. The letter was signed by sixty-eight
Republicans and forty-seven Democrats.

In the November 2010 midterm elections, a surge of successful Tea Party candidates handed Republicans control of the House. In the aftermath of the election, the administration continued its reform efforts. If anything, by the last of the five hearings in December the tone of the reformers had become more radical, centering on the political and moral nature of what many American farmers now suffer. “We’ve got to be looking at power,” explained Bert Foer, head of the American Antitrust Institute, at the hearing. “We’ve got to be looking at the negotiating realities that occur in the marketplace and not simply what the effect on the consumer price is going to be.”

But in the new year, a new political reality set in. In January 2011, Obama appointed Bill Daley, former commerce secretary and top executive at JPMorgan Chase, as his chief of staff. Part of a wider post-election shake-up at the White House, Daley’s appointment signaled that the administration was now intent on compromising with Republicans, especially on economic issues. Many Republicans, though, viewed the election as a mandate for even more radical obstruction.

In February 2011, the House Agriculture Committee again pushed Vilsack on the economic analysis of the proposed Packers and Stockyards rules, and over the next few months various subcommittees orchestrated hearings for trade groups to voice their objections. According to one industry report, paid for by the National Meat Association, the proposed USDA rules would levy a $1.64, billion blow to the meat industry and lead to 22,800 job losses. The report also claimed that the rules would, over time, decrease beef, pork, and poultry production across the board.

In May 2011, Costa, the Californian Democrat, Reid Ribble, a House Republican from Wisconsin, and Lucas, now the chairman of the Agriculture Committee, circulated a letter asking Vilsack to withdraw all proposed rule changes entirely. “[W]e are confident that any such rule will not be looked upon favorably by Congress,” the congressmen wrote. Though their letter was signed by 147 members—more than a third of the House, including twenty-five Democrats and thirty Tea Party Republicans—the USDA didn’t accede to the request. But officials did begin to water down the proposed rules.

The next month, in June 2011, the House Appropriations Committee included a crucial rider in its funding bill. The rider was designed to strip the USDA of the funds it needed to finalize and implement the strongest of the proposed rules. Farmers and activists tried to fight the rider, which was backed by corporate livestock and poultry lobbies. Advocacy groups flew in farmers from around the country to meet with members of Congress, and 6,000 people called in to the White House to express their support. During a debate over the rider, Ohio Democrat Marcy Kaptur, the only representative to come out strongly in favor of the rules, slammed the House for “standing with the few big meatpackers and against the many thousands and thousands of producers.” Even the American Farm Bureau, a group that often champions policies favorable to agribusiness, wrote an open letter to Congress opposing the rider.

But the farmers and activists found that they were now largely alone. By late 2011, the administration was in full retreat. “The White House and USDA became very timid and really didn’t do much to disabuse the critics spreading untruths about the reforms,” said Patrick Woodall, research director with Food & Water Watch, which organized some of the efforts in support of the proposed rules. “They all fell silent.”

The Senate supported the Packers and Stockyards revisions in its appropriations bill in September 2011. But the House, as Woodall put it, “went on a full-out offensive,” holding hostage everything from food stamps to food-safety measures. “Nobody wants to have to defend a policy position where the victims are low-income kids, and that’s where the balance ultimately was,” Woodall said. Even Senators Harkin and Johnson, who only a month earlier had strongly voiced their support for the GIPSA rules, backed down.

By November 2011, it was clear that the reformers had lost. The rider had passed. The rules as they had been intended were dead. The most ambitious, far-reaching campaign to reform the agricultural industry in forty years was over, less than two years after it had begun.

Lina Khan is a reporter and policy analyst with the Markets, Enterprise and Resiliency Initiative at the New America Foundation.

Comments

  • DC M on November 14, 2012 10:55 PM:

    Too many people for the planet requires terrible crowded factory farming. Churches and corporations need new consumers to grow. How it fix and how to make changes in a bad economy when many are on foodstamps or less and cant afford organics and free range ?
    As it is, people like me on fixed incomes often have deficiencies and if forced to live on high priced organics and happy chickens we wouldn't last long.

  • Florence Dezeix on November 16, 2012 7:43 PM:

    Thank you for writing this article. It is good to know the facts. Fear of scarcity plays in the hands of agribusiness. It would be interesting to compare what percentage of their income a family in America spends in food. People in Europe spends a higher percentagd on real food, not juices, power bars, vitamins. i appreciate the time and effort spent in writing this article,
    Sincerely,

  • Holly on November 17, 2012 11:53 AM:

    Good history. But is the story really over?
    I hope that in Obama's second term, we can return to efforts to protect independent farmers from exploitation by big processing companies and abuses by large agribusiness.

  • Melissa on November 18, 2012 7:31 AM:

    Fear of scarcity and concerns over end prices to consumers are an issue linked to the (I believe erroneous ) perception that we need animal protein in every meal. Cheaper sources of protein are available in legumes for example and it might help put a lot of things in perspective to look at things from this angle. Ie potential allies in this fight, strategies to help counter the meat packers power etc..

  • Joanne on November 18, 2012 11:05 AM:

    Good article and information.
    Somebody or something is paying for all the cheap meat being produced by the corporate ag system. Our culture needs to be more mindful and conservative in our eating habits (and living habits) many have gotten use to an over-consumtive way of life as being the norm. Education on these issues is important.
    Support local small farms and grow your own. Support, in some way, local businesses, community associations, non-profits that are working for good change. It is happening everywhere. Help it grow - "be the change"!.

  • DG on November 20, 2012 4:20 PM:

    Well-researched and well-written article, thank you. We need to circulate petitions to the White House to get the President back on track with these issues, which are complex, but not that complex that they cannot be solved. Thank you for this information.

  • Heaterman on November 20, 2012 11:22 PM:

    One of the biggest road blocks to "local" production/consumption is the enormous burden placed on slaughter houses and packing operations by USDA. It is against the law to process and sell meat which has been butchered in anything but a USDA inspected facility. We need to get some of the ludicrous rules regarding meat processing thrown out so competition can come in under the big packing operations or things will only continue to get worse.
    This is a good example.......Farmer Jones has a cow that breaks her leg and needs to go to the slaughter house. Since the "mad cow" tempest in a teapot, USDA has decreed that any animal has to be able to walk in under its own power. Obviously, there is nothing wrong with the broken legged cow or the meat it will provide but because USDA says it has to walk, all that can be done with it out on the farm is to be killed and buried. What a waste!!! People all over the world are starving, even people right here in the country. Why can't USDA regulate with a little common sense?

  • Name Withheld on November 26, 2012 8:19 PM:

    Great article. The only problem was the faint left-leaning political bias that was unproductive. It was the corporate interests that killed this agricultural markets reform. Not a Republican conspiracy. That needed to be made more clear.

  • Anonymous on November 26, 2012 8:34 PM:

    We all get to vote 3 times a day. Buy organic and non-GMO foods. Many organic products are only 10% more expensive than their pesticide-laden counterparts. Organic bananas usually only cost a couple cents more per pound than regular bananas, for example. Shop at Whole Foods, Trader Joe's, your Saturday farmer's market, and online. If you're concerned about the extra cost, buy in bulk and cut back on some of the frivolous purchases. Right now, organic foods are only 5% of the market. But if we keep buying them, they will grow and grow.

  • Jeanne Rohl on February 21, 2013 12:38 PM:

    If you think that this systematic destrucion of agriculture is do any paricular politcal party you folks need to do more research and stay totaly unbiased. This is a good article and very informative for those who don't know what has been going on since the turn of the last century. Even before that if you want to get really technical. The powers that be, want the land. They will get it just as they did from the First Nations people. We farmers and ranchers have only been the pawns. I used to counsel poultry farmers and hog farmers who were caught in these traps. They(the government, the multi nationals, the trade entities and the processors know exactly what they're doing. Who controls the food supply controls the people. Good reading for anyone who actually wants to educate themselves on this issue. I recommend the NORM Primer (National Organization for Raw Materials Economics, FOODOPOLY and Dollar Harvest for starters. Read the policies of the Committee For Economic Development. This all has been carefully planned and implemented. Don't know if there is much we can do about it now. No one would believe it or labeled us "conspiracy quacks". The jokes on the non farm consumer and the packman theory of pushing your neighbor out(because YOU are the BETTER farmer don't cha know)by the Bank lenders. LOL We got us a "cheap food policy" while all said groups above have reaped billons of stolen profits off the backs of a few.