MONOPOLY MATTERS

Trump Administration Guts Office Designed to Protect Farmers from Ag Monopolies

by Claire Kelloway

Almost a century ago, in 1921, Congress passed the Packers & Stockyards Act to protect America’s farmers and ranchers from meat packing monopolies. Last week the Department of Agriculture quietly eliminated the independent office tasked with enforcing that law, the Grain Inspection, Packers, and Stockyards Administration (GIPSA). The change was the single biggest in agricultural antitrust regulation since Congress passed the original Act.

The task of protecting America’s farmers will now fall to the USDA’s Agricultural Marketing Service (AMS), an agency better known for running the “checkoff tax” marketing programs that funnel millions of dollars to giant agribusiness concerns each year.

The action is the latest in a series of decisions by the Trump administration that favor big business over independent family farms. This includes the approval of two giant mergers – Bayer’s takeover of Monsanto and a Dow-DuPont tie up designed in no small part to combine their agricultural chemical and seed businesses – and the rolling back of the Farmer Fair Practices Rules.

“This … is really going absolutely in the wrong direction,” says Roger Johnson, President of the National Farmers Union, an organization that helped pass the Packers & Stockyards Act in 1921. “I think it sends a really troubling signal to farmers that think they might be treated unfairly.”

USDA announced GIPSA’s demotion to a program within AMS in September 2017. At the time, the Department said that GIPSA and AMS duties align because both agencies “carry out grading activities and work to ensure fair trade practices.” But the USDA gave little explanation of how AMS will enforce the Packers and Stockyards Act, other than that the program will be “included in the Fair Trade Practices program area” of AMS.

The USDA also withdrew the Farmer Fair Practices Interim Final Rules in October 2017. These reforms were the end result of a review process that started with a mandate from the 2008 Farm Bill to better define aspects of the Packers and Stockyards Act. Though watered down from an original slate of reforms, the 2016 Farmer Fair Practices Rules gave farmers greater grounds and protections to fight unfair, retaliatory, and abusive practices.

“We call this a double whammy,” says Joe Maxwell, Executive Director of the Organization for Competitive Markets, and an independent farmer. USDA Secretary “Sonny Perdue in very quick order withdrew the rules that would clarify our rights and then did away with our agency.”

Demoting GIPSA from an independent agency to a USDA program undermines both the autonomy and power of the office. As a part of AMS, GIPSA must seek approval from the AMS administrator for its funding, hiring, actions, and more.

When you transfer [GIPSA] into a marketing agency, you’re saying you don’t want GIPSA to do its job,” says J. Dudley Butler, who served as GIPSA administrator in the early years of the Obama administration. “It sure seems like there’s a lot of different layers that you have to get clearance from to go after somebody.”

“AMS is set up to work with packers. GIPSA is set up to oversee packers and poultry companies,” Butler notes. “They’re headed in different directions.”

Indeed, AMS has come under repeated criticism for its management of the federal checkoff tax programs, which misdirect funds meant to promote agricultural products generally to instead bolster agribusiness interests. Some checkoff programs refuse to reveal how they spend their funds.

The Agricultural Marketing Service, in my opinion, is the most corrupt and compromised agency in Washington,” says T. Fred Stokes, Mississippi rancher and co-founder of the Organization for Competitive Markets. “There’s a revolving door between the Agricultural Marketing Service and agencies that are tied to the meat packers.” In fact, in the past three years, at least two deputy AMS administrators have gone on to work for the National Pork Board and the North American Meat Institute, respectively. Both organizations are directly or indirectly tied to corporate meat packer lobbying.

On a conference call with European reporters in October 2017, Secretary Perdue talked about USDA’s GIPSA decisions and protecting independent farmers from unfair practices by meat packers. Secretary Perdue said, “I believe these are moral actions that I don’t know or believe that regulations and litigation actually solve.”

Maxwell says that American farmers cannot rely on personal relationships and social norms to limit the predatory actions of Big Ag. “Corporations have one purpose and that is to make money for their shareholders,” argues Maxwell. “If the government allows them to use predatory, retaliatory, or discriminatory practices in the market and that makes them money, you cannot fault them, for corporations do not act upon moral behavior, for they have no ass to kick or soul to save.”