ORGANIZATION FOR COMPETITIVE MARKETS

P.O. Box 6486

Lincoln, NE 68506

Web site: www.competitivemarkets.com

ocm@competitivemarkets.com

Date: June 25, 2001 For Immediate Release

Contact: Fred Stokes: 662-476-5568

Doug O’Brien: 860-379-6199

OCM: MISSOURI DISCRIMINATION LAW AT RISK

The Organization for Competitive Markets (OCM) raised grave concerns with the latest developments surrounding the Missouri law that prohibits some types of discrimination in the livestock market. The recent promulgation of regulations that may completely gut the law, as well as the lack of activity from the USDA Packers and Stockyards Administration undermine the law’s intention of providing a level playing field for all livestock producers.

An Eighth Circuit Court of Appeals ruling in May upheld a two-year old Missouri law prohibiting certain types of price discrimination in livestock markets. “The federal Packers & Stockyards Act prohibits price discrimination, but USDA enforcement has been nonexistent. Missouri has taken the lead in promoting competition and protecting their agriculture economy from abuse of private market power. They should serve as an example to other states.” said Michael Stumo, general counsel for OCM.

For the first time, a state law provides for treble damages to parties who suffer from discrimination in the marketplace. Meat packer interests fought the law in the legislature and the courts and lost both times. Since that time meatpackers have refused to utilize certain procurement practices or actively bid in certain markets. These meatpackers and their allies have attempted to excuse this retaliatory conduct by claiming that the price discrimination law was too vague.

The law, however, clearly delineates proper and improper market conduct for meat packers who buy livestock in Missouri. “They may pay different prices for hogs and cattle according to differences in quality, transportation, procurement costs, and special delivery times. Unfortunately, certain packers have feigned confusion as a pretext to discriminating against the whole State of Missouri when their actual reasons appear to be based on frustration arising from the American Meat Institute’s failed court challenge to the law,” said Stumo. “As some packers have shown in Missouri, if a firm chooses to be a law-abiding corporate citizen, it may remain active in all markets and abide by the new law.”

Retaliatory acts violate the federal Packers and Stockyards Act. Individual farmers and farm groups have requested that the Packers and Stockyards Administration investigate charges of retaliation in Missouri. “Since the court upheld the law, we’ve known that its possible if not likely, that packers would retaliate by not participating in certain markets,” said Keith Mudd, Missouri farmer and Vice President of OCM. “I just don’t understand why P&S has not been more active in stopping retaliatory behavior, or at least actively investigating the market.”

The Missouri Department of Agriculture recently promulgated new rules under the law. “The new rules appear to be confusing at best, and, at worst, may create loopholes that undercut the legislature’s intention of stemming discriminatory practices,” said Doug O’Brien, OCM’s associate counsel. For instance, the regulation allows for packers to discriminate “across different types of markets,” and defines a market as “the farm where livestock are fed.” “Some people may interpret the regulation as allowing packers to pay different prices for the same exact quality animals merely because the livestock originate from different farms. This result obviously turns this anti-discrimination law on its head,” added O’Brien.

The regulation also appears to allow discrimination on the basis of the size of the seller and on whether the livestock are sold under some type of contract. “The agency needs to reevaluate these regulations to ensure that they stay within the spirit of the antidiscrimination law.” said O’Brien.

The Organization for Competitive Markets is a multidisciplinary, nonprofit group of farmers, ranchers, academics, attorneys, and policy makers dedicated to reclaiming the agricultural marketplace for independent farmers, ranchers and rural communities.

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