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By Christopher Leonard,  AP Agribusiness Writer

St. Louis (AP) - The Obama administration has proposed new
antitrust rules for meat companies that reflect a willingness by
the USDA to shift the balance of power between farmers and
processors, and to regulate an industry long dominated by a handful
of corporate giants.


      The rules would place the sharpest limits on meat companies
since the Great Depression, drastically lowering the bar that
farmers and ranchers must meet to sue companies whom they accuse of
demanding unfairly low prices.


      The rules would dictate how meatpackers buy cattle on the open
market, and prohibit them from showing preference to big feedlots
by offering them special incentives not available to smaller
producers.


      They would also limit the control chicken companies have over
the farmers who raise birds for them. The companies couldn't
require farmers to take on debt to invest in chicken houses, for
example, unless farmers were guaranteed to recoup 80 percent of the
cost.


      The law would also make it easier to file suits under the
Depression-era Packers and Stockyards Act by stating that farmers
don't need to prove industrywide anticompetitive behavior to file a
lawsuit under the act.


      "I think it's fair to say that what we're proposing is
aggressive," Secretary of Agriculture Tom Vilsack said in an
interview with The Associated Press. "The reality is, the Packers
and Stockyards Act has not kept pace with the marketplace ... Our
job is to make sure the playing field is level for producers."


      Vilsack said increasing consolidation has strengthened the
bargaining power that big companies have over farmers, giving
producers an ever decreasing share of the money consumers spend at
the grocery store. 


As a result, farms are failing, with the number
of hog farms dropping from 660,000 in 1980 to 71,000 now. The
number of cattle farms has fallen from 1.6 million in 1980 to
950,000.


      "The genesis of all of this starts with recognition that folks
generally in rural America are struggling," Vilsack said.
"Livestock producers in particular are no strangers to that
struggle."

      Farmers and meat company lobbyists expressed surprise at the
scope of the rules, and prominent meat industry trade groups
immediately criticized it.

      "They're basically trying to roll back time," said Mark Dopp,
policy director for the American Meat Institute. "This rule
attempts on many levels to undercut all the progress that's been
made" in the meat industry.

      Dopp said he needed to read the new regulations before saying
how the institute would respond.


      The National Chicken Council, which represents poultry companies
like Tyson Foods and Pilgrim's Pride, said in a statement the rules
were "one-sided, unrealistic, and not in accordance with court
rulings."


      Perhaps the most significant provision in the new rules is one
that makes it easier for farmers to file suits under the Packers
and Stockyards Act, said Peter Carstensen, a law professor at the
University of Wisconsin who has studied agriculture competition law
for decades.


      Farmers who now sue under the act must show a company has not
only harmed them but that it has hurt competition in the overall
meat industry, Carstensen said.

      The new law would change that, making it clear that the law only
requires a farmer to show a company has engaged in "unfair" or
"discriminatory" acts against the farmer. That sole provision
could unleash a wave of litigation, and prompt courts to overturn
earlier rulings, Carstensen said.


      "They're inviting the courts to reconsider their previous
decisions," he said.

      Dopp said the provision would open the door for a "swarm of
litigation." He said it also directly contradicts several federal
appeals court decisions that found competitive harm must be shown
for a Packers and Stockyards case.


      "It's a regulatory end-run. And frankly, I don't think that's
an appropriate role for the agency to play," Dopp said.


      Vilsack said the courts made their rulings in the face of
ambiguous rules from the USDA, and that the new rules would clarify
the agency's stance. In essence, courts set the bar too high for
farmers, he said.

      "That's tantamount to having your car stolen, but before the
police investigate ... you have to prove that that theft impacts
not just you, but all of your neighbors. Well, that just doesn't
make sense to us," he said.


      For farmers and ranchers, the new rule will reinvigorate a
Packers and Stockyards Act that many have come to see as toothless,
said Bill Bullard, chief executive officer of R-Calf USA, a rancher
advocacy group.


      "That is a huge development," Bullard said. "That repositions
the PSA as the tool to protect producers against unfair and
deceptive practices."

      The American Farm Bureau Federation endorsed the rule, saying it
offered overdue protections for farmers who have lost power and
profits because of industry consolidation.
     


 Farmers and meat companies have until Aug. 23 to submit comments
on the rules. Vilsack said there is no set date for implementing
them after that deadline. Congress can comment on the rule but does
not have authority to shape the final language.

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The Obama administration has proposed new
antitrust rules for meat companies that reflect a willingness by
the USDA to shift the balance of power between farmers and
processors, and to regulate an industry long dominated by a handful
of corporate giants.

USDA announces tighter antitrust rules for meat industry

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