October 22, 2010

Meat lobbyists call to USDA to withdraw antitrust rule

A meat industry lobbying group is asking the USDA to withdraw a proposed antitrust rule that it claims will raise meat prices and destroy jobs.

The rule would bar meatpackers from discriminating between cattle producers when purchasing product. It also would limit the amount of personal investment that poultry companies require their farmers to make. Some ranchers and chicken farmers say the rule is needed to give them more bargaining power with meat companies.

Poultry companies, for example, can require farmers to invest hundreds of thousands of dollars in the industrial-sized barns where they raise birds-taking on hefty debt in the process. Many farmers say the companies benefit from the investment, and should share the cost.

The American Meat Institute, which represents companies such as Tyson Foods Inc., JBS SA and Smithfield Foods Inc., commissioned an economic impact study of the rule. It says the study shows retail meat prices could rise by 3.33% if the rule is passed. According to the study, passing the rule would also destroy 104,000 jobs.

"As the analysis shows, these are not just jobs in meat packing or livestock production, but in nearly every sector of the American economy. This is, quite simply, reckless regulation," AMI President and CEO Patrick Boyle said in a statement.

The AMI paid John Dunham and Associates to evaluate the rule's economic impact. The study makes broad assumptions about what would happen of the USDA law passes. For example, it assumes that the average price of all meat-from lamb to beef and chicken-will become more volatile.

An USDA analysis of the proposed rule found the economic impact to be far more limited. It says imposing the rules will create economic benefits for farmers that largely outweigh costs that are born by meatpackers and poultry companies.