Organization for Competitive Markets

P.O. Box 6486

Lincoln, NE 68506

www.competitivemarkets.com

Date: March 22, 2005

FOR IMMEDIATE RELEASE

Contact: Michael Stumo, 860.379.6199

OCM: USDA's Economic Analysis a Spin Tool to Support Pre-Determined Outcome

Lincoln, NE ~ The Organization for Competitive Markets (OCM) is helping prepare an amicus brief supporting the preliminary injunction sought by R-CALF USA and ordered by a federal district court in Billings, Montana. OCM Economics Fellow, Dr. Robert Taylor, analyzed USDA's economic impact statement on the rule. Dr. Taylor concluded USDA has no basis to state consumers will benefit and that USDA engaged in deception by labeling meat packers as consumers. More on the Mad Economics of Mad Cow

"USDA's economic analysis claims significant benefits to consumers and almost equal losses to producers. But USDA's ´consumers´ are really meat packers," said Taylor, who is an agricultural economist at Auburn University. "The USDA rationale apparently is that meat packers consume cattle. But this mislabeling is deceptive and contrary to basic economics. Consumers are end-users of beef. They are individual people. Meat packers are mere economic intermediaries, not consumers. Producers are ranchers and feeders who grow the cattle."

"The government has no basis to predict any benefit to true consumers," continued Taylor. "The extreme concentration in the meat packing and retail supermarket sectors compels a conclusion end-use consumers are unlikely to benefit from the Minimal Risk Rule. USDA economists have admitted, in sworn court declarations, they have no basis to estimate whether end-use consumers will benefit."

"When the entire analysis is boiled down, the primary economic result is a transfer of wealth from cattle producers to meat packers," said Taylor. "There is no essentially benefit to society from a mere wealth transfer. The Office of Management and Budget Circular A-94, which sets standards for regulatory cost/benefit analysis, instructs agencies to exclude these transfer payments because there ´are no economic gains from a pure transfer payment because the benefits to those who receive such a transfer are matched by the costs borne by those who pay for it.´" USDA's own economic analysis showed a net benefit to society of only 5 cents per person annually.

"Therefore the only conclusion possible from the USDA economic impact statement on the border reopening rule is that a massive transfer of wealth from cattle producers to meat packers will occur. No benefit to end-use consumers was or can be shown," concluded Taylor.

The Organization for Competitive Markets (OCM) is an agricultural free market and competition think tank working for honesty, prosperity and economic liberty for farmers, ranchers and rural communities.