January 19, 2006
WASHINGTON -- The Department of Agriculture has effectively blocked employees from pursuing complaints of anti-competitive behavior in the livestock industry and inflated the number of investigations it has conducted to make it appear it is vigorously upholding the law, the department's inspector general reported Wednesday.
At a time when the livestock industry is controlled by increasingly fewer companies, the USDA hasn't filed a formal complaint for anti-competitive behavior in the meat or poultry industry since 1999, the audit found. In addition, the arm of the department charged with ensuring competition in the livestock industry, the Packers and Stockyards Program, rarely has conducted complex investigations that would involve large amounts of resources or focus on a major firm, the audit said.
Meanwhile, the record keeping of the monitoring arm was so inadequate that the office of Inspector General Phyllis Fong could not track the progress of some investigations and couldn't figure out why others were started in the first place. Of the 1,842 investigations that were under way in June 2005, the records were incomplete in 973 of those cases.
The Packers and Stockyards Program's "tracking system could not be relied upon, competition and complex investigations were not being performed and timely action was not being taken," the report said.
The program, according to the report, had no formal definition for what constituted an investigation. As a result, employees counted routine correspondence to companies and the tracking of public data as full-fledged investigations.
In one instance, the deputy administrator reprimanded a regional office for logging too few investigations. To make up for the deficiency, the office began logging activities that previously had not counted.
"The region climbed from last to first among the three regions by reclassifying over 300 routine activities as investigations," the report said.
That deputy administrator, JoAnn Waterfield, urged her managers to "perform their functions in more of a `big picture' view and to evaluate the repercussions that their decisions have on the agency and the livestock and poultry industries," the report said.
Waterfield, who resigned last month, could not be located for comment.
In instances where employees initiated investigations about competition in the marketplace, the probes often languished in Washington waiting for approval, the report found. In August, 50 investigations were awaiting approval, some of them dating back two or three years.
Because USDA lawyers have received so few referrals for action from the Packers and Stockyards Program, they have not pursued an anti-competition complaint in the livestock industry since 1999, the report said.
The Packers and Stockyards Program has about 150 employees and an annual budget of about $20 million.
Latest in series of criticisms
The inspector general's audit is not the first time the Agriculture Department has been criticized for lackluster enforcement of competition in the livestock industry. The inspector general made similar remarks in 1997, as did the General Accounting Office in 2000. But according to the most recent report, USDA's actions to address the problems were insufficient.
James Link, who was hired as the administrator of the Grain Inspection, Packers and Stockyards Administration in October, said he agreed with the findings, and vowed to change the agency's culture to encourage vigorous enforcement.
"I don't think it's quite as ineffective as the report shows, but it can be a lot more effective," Link said. "Part of the problem was it was mired down in paperwork and a lack of communications between different portions of the administration, and we are trying to streamline that."
Link said he was also moving authority back to the regional offices to give them more autonomy to investigate complaints.
"We put the authority back out in the field and turned them loose to let them do the job," he said. " A lot of the people told us that they didn't feel like they had the freedom to do their job."
Harkin urges big changes
Sen. Tom Harkin (D-Iowa), who requested the audit, called for sweeping changes at the Agriculture Department, including creating an office of special counsel to oversee matters of competition in the marketplace.
"America's producers have faced an increasingly integrated and consolidated market, but in the past five years, USDA has made virtually no attempt to investigate or take action against unfair and anti-competitive market changes," Harkin said.
Family farm groups and rural advocates said the inspector general's report confirms their longtime contention that Agriculture is too cozy with agribusiness. Numerous top officials at USDA have been hired from agribusiness companies or trade groups representing the meat industry.
"USDA leadership defrauded farmers," said Michael Stumo, an attorney who represents the Organization for Competitive Markets in Lincoln, Neb., a not-for-profit group. "Farmers and ranchers complaining to USDA about unlawfulness of [meatpackers] had their complaints buried due to USDA cronyism."
The inspector general's report was released after years of intense consolidation in the livestock industry, both at the farm and processor level. Increasingly, farmers are raising pigs and chickens under contract with a livestock company, rather than owning them themselves, a trend that critics say has driven down prices and decreased the influence of spot markets.
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