New antitrust rules to be released for the US meat sector

 

 

Federal regulators in the US are set to release the most sweeping anti-trust rules covering the meat industry in decades, potentially altering the balance of power between meat companies and the farmers who raise their animals.

 

Activists, farmers and meat industry officials have been awaiting the new rules, which will be released this spring for public comment and are set to take effect this summer.

 

At issue is how much power farmers have as they produce cattle, hogs and chickens for large companies such as JBS SA, Smithfield Farms and Tyson Foods. The new rules will govern how meatpackers buy their cattle on an open market and what demands poultry companies can make on the independent contractors who raise their chickens.

 

The 2008 Farm Bill required updated rules but left the specifics to the USDA. Farm state lawmakers such as Senator Tom Harkin, D-Iowa, had long been concerned a lack of competition among meat companies was driving down prices farmers were paid for their cattle and poultry.

 

Just four companies buy and slaughter 80% of all US beef, limiting competition in the meat industry. Meanwhile, big poultry companies dictate chicken prices and can demand farmers take on debt to upgrade their chicken houses for the companies' benefit.

 

Farmers such as Weaver, who has met with Agriculture Secretary Tom Vilsack, think the new leaders in the USDA's antitrust division will push for tougher and more far-reaching regulations than previous administrations. Some believe the new rules could be the strongest antitrust protections imposed since the Great Depression.

 

Meanwhile, the new rules could pose as a risk to drive up the cost of meat, eating into meatpackers' profits or pushing up prices at grocery stores if companies pass on the expense.

 

The USDA would not say when its proposed rules will be released, but the Farm Bill requires new regulations be in place by this summer. The bill lays out a broad outline of what the rules must address, but the all-important details would be known until a proposal becomes public.

 

The regulations come at a time when the Obama administration has begun a series of meetings across the country to examine competition in agriculture. Among issues expected to be addressed in the new rules is when it's illegal for companies to choose one producer's cattle or hogs over another's.

 

Ranchers have complained that meatpackers make their choices with an aim toward keeping prices low. For example, meatpackers might pass by independent ranchers to buy cattle raised under contracts that guarantee processors a lower price.

 

Additionally, the new rules also would determine when poultry companies could require farmers to take out additional loans and improve chicken houses by adding new equipment.

 

However, farmers resist the investments although they might earn more money after the upgrades, but the extra income does not offset the extra debt and cost of operating the houses.