On January 18, the U.S. Department of Agriculture’s Office of the Inspector General (OIG) released publicly its report probing the performance of the Grain Inspection Packers and Stockyards Administration (GIPSA). The report was made public about three weeks after GIPSA Deputy Administrator JoAnn Waterfield resigned her position without comment. USDA
officials received the report one month before it was made public.

The OIG report summarizes a months-long investigation after Senator Tom Harkin (D-IA), at the urging of the Organization for Competitive Markets (OCM) requested it.

GIPSA oversees the movement and storage of grain and is charged with enforcement of the 1921 Packers and Stockyards Act. The Act is meant to ensure fair and competitive markets for producers selling livestock.

The OIG report demonstrates that GIPSA officials were effectively blocking investigations from being conducted by failing to approve investigations or by adopting policy or procedures that inhibited progress.

The report also shows GIPSA was not referring cases to the Office of General Counsel for prosecution. In fact, the report shows GIPSA brought just a single case to the General Counsel’s office in three years. Administrative actions have not been issued against any company since 1999 because of a lack of referrals from GIPSA.

In addition, the OIG said administrators blatantly ignored prior recommendations from the OIG and the Government Accountability Office (GAO) dating back to 1998, and failed to take action on 64 policy issues within the agency dealing with the way GIPSA would monitor day-to-day activities in the livestock industry or conduct investigations. Fifty-five of these potential regulations had been "under review" since 2004, with two of the proposals left to stagnate since 2000.

Chase Carter, OCM Executive Director, said the report is stunning confirmation of precisely what OCM members have suspected for some time. "The report demonstrates that GIPSA has failed to perform its function. In fact, the agency has blocked meaningful investigations while thousands of American producers have been erased, and our rural communities are languishing because of unchecked anti-competitive practices and unregulated concentration of the processing industry. We thank Senator Harkin for his diligence in pursuing this investigation. Now it’s time for sweeping reform at USDA."

Senator Harkin and Senator Ken Salazar (D-CO) have called for Senate Agriculture Committee hearings on the report.

USDA, Office of Inspector General Audit Report – In Brief

In April of 2005, Senator Tom Harkin of Iowa requested, at the behest of OCM, USDA’s office of Inspector General to determine whether meatpacker investigations were being actually conducted. The OIG came out January 10, 2006. It is available at www.usda.gov/
oig/webdocs/30601-01-hy.pdf. Here are some results in brief.

• USDA Packers and Stockyards Programs (P&SP) “tracking system could not be relied upon, competition and complex investigations were not being performed, and timely action was not being taken on issues that impact day-to-day activities.”
• P&SP’s “[investigation] tracking system counted all P&SP activities as ‘investigations’ because
  there was no policy to define investigations. These activities included monitoring publicly available data, sending routine letters…, and performing on site reviews of companies.”
• “According to P&SP data, the agency was tracking a total of 1,842 investigations as of June 30, 2005. The records, however, could not be used to identify the location of work performed….”
• “No competition and complex investigations were being completed.”
• “The Agency was not making decisions on policies and requests for guidance from P&SP staff.”
• “Action is not being taken on issues that impact the day-to-day business activities of producers and the entities P&SP regulates (e.g. packers, stockyards, and live poultry dealers).”
• “We found [an ineffective internal control structure] significantly contributed to the agency not being able to ensure open and competitive markets for livestock, meat, and poultry.”
• “The Deputy Administrator directed each Eastern Regional Office to devise a strategic plan to address the deficiency in the number of investigations…. The units committed to increasing the number of… investigations… by adding activities that were not previously included as investigations.”
• “All [investigation management] decisions need to be approved by the Deputy Administrator. Consequently, no competitive and complex investigations are being completed.”
• P&SP “has no internal structure for receiving, reviewing, and acting on policy questions.”
• P&SP “filed no administrative complaints against [meatpackers] for anti-competitive practices since 1999.”
• Deputy Administrator [now resigned] Joann Waterfield “is striving to have her managers, both in headquarters and in the regions, perform their functions in more of a ‘big picture’ view and to evaluate the repercussions that their decisions have on the agency in the livestock and poultry industries.”