AMARILLO,TEXAS -- Around 30 percent of all fed beef that is consumed in the United States is raised in the Texas Panhandle.  Regulatory changes proposed in Washington, D.C. could have a big impact on every aspect of the beef industry, including those who eat it.

A recent article published by the Associated Press brought attention to claims by some cattle producers that there is little or any competition for their product, an opinion that the Texas Cattle Feeders Association disagrees with.

The Associated Press article primarily focused on cattle producer Bob Sears, who said the market for domestic meat has withered to point cattle producers often only get a single reasonable bid for their cattle.  The AP stated they talked to cattle producers in the nation's big ranching states who all reported having no choice but to sell the vast majority of their cattle to one buyer. 

In the article, Sears was quoted as saying "There's actually no market, you either give them to these guys, or you have no market."   The article also pointed out that the cash market for beef has been declining for years.   

The AP article stated that Sears, along with other cattle producers, suspect meatpackers are cooperating to keep prices low and believes that could eventually lead to consumers having to buy lesser quality beef.  However the AP said they found no evidence meatpackers have engaged in any backroom deals that are illegal under antitrust laws. The article said that experts say that without a competitive market, cattle producers could lose the motivation to raise high-quality meat. 

Now, the Obama Administration is proposing sweeping antitrust rules for meatpackers they say will restore competitiveness, the biggest changes to these regulations since the Great Depression.  TCFA, however, says the proposed changes would have the opposite effect.

One of the proposed changes deals with issue of "competitive injury," which is a legal standard that defines when lawsuits that allege collusion or price fixing can be filed.  According to a press release issued by TCFA, current law and several court opinions say that to make a claim of competitive injury a potential litigant must show the market has suffered harm before a lawsuit alleging illegal actions by a packer or processor can go forward.  TCFA said the proposed changes could lead to baseless lawsuits because the proposals dilute the standard to the point where a producer need only claim he or she was treated unfairly. Furthermore, TCFA said the proposals provide no definition of fairness.

Bo Kizziar, chairman of the Texas Cattle Feeders Association and manager of an independently-owned feedyard in Spearman, said claims that "the GIPSA rule" (the regulatory changes proposed by the Grain Inspection, Packers and Stockyards Administration) will restore fairness to the livestock market are completely false. 

Kizziar was quoted as saying " I believe it will have the opposite effect. The language of the proposed rule is pretty vague, maybe intentionally so. This rule will encourage frivolous lawsuits.  And, if we let fear of litigation determine how cattle are marketed, that will most likely mean a return to the average pricing and lower quality beef of 30 years ago." 

Kizziar went on to say encouraging lawsuits and restricting the use of alternative marketing arrangements (AMAs) will lead to less competition.  He also argued that AMAs provide incentive for producers to develop and market premium cattle and that removing rewards for high quality beef would hurt all cattle producers, especially smaller operations.

The release issued by the TCFA then pinpointed arguments against claims made by some of the cattlemen in the AP article.

 The first deals with the claim of a lack of buyers to ensure fair prices.  TCFA points out there are five major packing plants in close proximity to Amarillo and that local feedyards are getting business from other packing companies, which they said ensures an adequate number of bidders.  They also said data collected by and on behalf of the federal government show cash transactions constitute the majority of all sales of finished cattle. 

As for the claim of a decline of feedyards throughout the nation, the TCFA acknowledged that but said the decline is not due to the number of packing companies buying cattle.  They believe there are three factors which have caused the decline, shortage of feeder cattle, the global recession and misguided government policies, specifically the federal ethanol subsidies that have driven corn prices to record highs in recent years.

Kizziar said the proposed GIPSA rule is another case of government overreach. 

"This proposed rule boils down to the government trying to interfere in the private market by telling producers when and how they can market their cattle.  And, whether you're involved in the cattle industry or not, you should be extremely concerned that a federal agency is trying to make law rather than implement the laws enacted by Congress and upheld, on numerous occasions, by the courts."

Congressman Mac Thornberry released this statement to Pronews 7:

"There has been a tremendous amount of controversy surrounding the proposed rule, and the USDA is still receiving comments before they issue a revised version. We need more options to market our cattle, not fewer, and the proposed rule appears to limit a producer's options, not increase them.   Whatever new regulations are proposed by the USDA, they need to be carefully examined by Congress to make sure they don't drive up costs to consumers, create increased liability to producers, and further consolidate the beef industry." 

The deadline to submit comments on the proposed changes is November 22nd.