Don Teske, a rancher in Pottawatomie County and president of the Kansas Farmers Union, is frustrated with what the USDA is presenting in its proposed changes to the Packers and Stockyards Act of 1921. But, he is glad the government is once again reviewing the law.

The act was enacted to break up unfair and anti-competitive practices in the meat-packing industry. Since the mid-1920s, the act has had amendments.

The P&S Act was implemented to provide fair competition, payment protection, guard against deceptive and fraudulent trade practices and protect consumers and the livestock industry.

Last week, the USDA proposed criteria it said would ensure fair and competitive markets for the livestock, meat and poultry industries. It is inviting public comment on the proposed criteria.

According to the USDA, the P&S Act states it is unlawful for a packer, swine contractor or live poultry dealer to make or give any undue or unreasonable preference or advantage to a seller or grower of livestock or poultry. An unreasonable preference or advantage, the USDA said, is an action that creates excessively favorable conditions for one or more persons, reducing opportunities for optimal pricing.

Under the proposed rule, the USDA would consider whether a preference or advantage meets one or more of the following criteria:

• Cannot be justified on the basis of a cost savings related to dealing with different producers, sellers or growers.

• Cannot be justified on the basis of meeting a competitor’s prices.

• Cannot be justified on the basis of meeting other terms offered by a competitor.

• Cannot be justified as a reasonable business decision that would be customary in the industry.

The USDA states they would not be limited to considering only these four criteria. The agency could take factors into consideration on a case-by-case basis.

“The act prevents undue and unreasonable preferences,” said Aaron Popelka, vice president of legal and governmental affairs at the Kansas Livestock Association. But, he added, a bulk discount or a premium for a larger lot would be allowed.

The Organization for Competitive Markets in Nebraska said the USDA fails to set out which actions are unfair, unjustly discriminatory or deceptive by meatpackers and processors, saying this act is both an anti-trust law and a producer protection law.

“The USDA leaves farmers, ranchers and poultry contract growers under the threat of retaliation for speaking out against any wrongdoing of the packer or processor,” said Angela Huffman, executive director of OCM. “That farmer had to prove competitive harm to the entire sector. That’s way too high of a hurdle for an individual farmer to prove. It means the small farmer has no standing to bring a claim.”

In 2016, the proposed rule would have allowed individual farmers and ranchers to hold meatpackers accountable by taking out the requirement to demonstrate competitive injury. What the USDA has published in 2020, according to Popelka, is what is currently in the law.

“The past Obama administration rule would have limited or restricted the marketing agreement that our members have had in place that have grown the industry,” Popelka said. “They were (2016 proposal) withdrawn by the Trump administration because of the fact that they exceeded the agency’s authority under the act. The courts have said there has to be harm to competition, not just the individual.”

Teske is not surprised by the amendment. He said it’s nice to see the USDA is trying, but he added, it’s not nearly enough.

“This is a controlled market,” he said. “It’s allowed three companies to control 85% of the beef industry. Vertical integration limits markets.”

The Kansas Livestock Association and other organizations in Kansas are looking at the legal implications and ramifications of the proposed changes to the Act and will inform their members, ask for feedback and respond by March 13.

Comments may be submitted to state and federal agricultural organizations or to the USDA by March 13 at http://www.regulations.gov.