ORGANIZATION FOR COMPETITIVE MARKETS

P.O. Box 6486

Lincoln, NE 68506

Date: June 4, 2001 For Immediate Release

Contact: Fred Stokes: 662-476-5568

Michael C. Stumo: 860-379-6199

GIPSA FAILS IN PROSECUTION OF FARMLAND NATIONAL BEEF

The Organization for Competitive Markets (OCM) labeled the recent settlement by USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) with Farmland National Beef Company, L.P. (Farmland) as a failure. The case was a market retaliation matter being prosecuted before a USDA Administrative Law Judge in Kansas City for several days prior to USDA settling the case. OCM asserts that this action by GIPSA confirms that the regulatory and enforcement system used to enforce the Packers & Stockyards Act is in need of an overhaul.

In July, 1999, GIPSA filed a complaint against Farmland alleging that it retaliated against Callicrate Feedyard of St. Francis, Kansas, in violation of the Packers & Stockyards Act (P&S Act). The complaint states that Farmland refused to deal with Callicrate Feedyard after a major livestock journal published a letter written by the manager of the feedyard that was critical of farmland. The case went to an evidentiary hearing in May before a USDA Administrative Law Judge. GIPSA settled with Farmland yesterday for $95,000 without achieving an admission of wrongdoing, without establishing any useful precedent and without compensating the injured feedyard.

“This case clearly demonstrates that the USDA is unable to enforce the Packers & Stockyards Act on behalf of producers,” said Fred Stokes, president of OCM. “Congress should seriously consider whether to transfer enforcement responsibilities to a more professional agency which has the willingness and ability to hold the packing industry accountable for illegal conduct. USDA is more interested in promoting concentration and agribusiness than enforcing the law.”

According to the USDA press release, the terms of the settlement were that:

1. Farmland is to comply with the P&S Act in the future;

2. Farmland is not required to visit, offer bids or buy cattle from any seller including Callicrate Feedyards;

3. Farmland recognizes that it benefited from the cost and expense incurred by GIPSA in conducting the investigation into the matter;

4. Farmland reimbursed GIPSA for its costs in the amount of $95,000; and

5. Farmland denies wrongdoing.

“One of the reasons that GIPSA gave for resolving the case was that vigorous pursuit would be costly and time consuming,” said Michael C. Stumo, OCM general counsel. “Nowhere in the statutes or regulations does it say that USDA should pursue violations unless it would take too much time or money to do so. Further, the consent agreement is of no value in setting precedent for future cases.”

Stumo recommended that the trade practices and competition responsibilities of GIPSA be transferred to the Department of Justice. “GIPSA is not equipped to handle major trade practices cases against well paid defense lawyers,” Stumo said. “I also believe that the USDA Administrative Law Judges lack the experience and the professionalism to make major decisions that are needed to facilitate proper market practices in the packing industry.”

“Callicrate Feedyards was injured due to market retaliation, but GIPSA merely grabbed some money and ran. The producer received nothing.” stated Keith Mudd, vice president of OCM. “If GIPSA has no ability to provide relief for economic harm to producers, Congress needs to change the law.”

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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