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The Center for Rural Affairs, a private, non-profit organization, is working to strengthen small businesses, family farms and ranches, and rural communities. Permission to reprint items from this web log is hereby granted, on the condition that clear credit is given to the original source of the material. If the blog provides information for a story, please let us know by sending an email to johnc@cfra.org.

Thursday, March 09, 2006

Harkin Calls for Sweeping Changes at USDA

Harkin Calls for Sweeping Changes at USDA
to Remedy Failures in Protecting Livestock Producers

Senator Tom Harkin (D-IA) today called for broad and sweeping changes at the Department of Agriculture (USDA) to remedy failures to enforce laws designed to protect livestock and poultry producers from unfair, deceptive or anti-competitive market practices. Today, the Senate Committee on Agriculture, Nutrition and Forestry is considering a recent Harkin commissioned investigation by the USDA Inspector General that found widespread inaction and efforts to cover up this inaction at USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA). In response, Harkin has introduced legislation that would reorganize USDA to more aggressively pursue unfair, deceptive and anti-competitive market behavior.

“Failures to protect livestock producers reach all levels of USDA,” Harkin said. “For over five years, the Department essentially took no action against unfair market practices and high-level USDA officials let it happen. We need changes at USDA to better confront bad actors in livestock and poultry markets.”

Harkin’s bill would reorganize USDA to establish an Office of Special Counsel whose sole responsibility will be to investigate and prosecute violations of the Packers and Stockyards Act and similar laws which protect producers. Currently, the Administrator of GIPSA oversees the Packers and Stockyards program and has the responsibility of enforcing the Packers and Stockyards Act. GIPSA personnel responsible for investigating violations of the Packers and Stockyards Act would be transferred to The Office of Special Counsel. The Special Counsel would be appointed by the President and confirmed by the Senate. This position will also serve as a liaison between the Department of Justice and Federal Trade Commission.

Opening statement of Senator Tom Harkin, Ranking Democratic Member, to the Senate Agriculture Committee on USDA’s management and oversight of the Packers and Stockyards Act:

In 1921, Congress passed the Packers and Stockyards Act to protect livestock and poultry producers from unfair, unjustly discriminatory, or deceptive and anti-competitive practices in the marketplace. Since enactment of this important law, the livestock and poultry industry has changed dramatically—especially in the past 15 years. Packing companies have become larger and the industry more consolidated and vertically integrated, often leaving producers with just a handful of buyers for their livestock and poultry. This imbalance of economic power increases the potential for unfair or discriminatory practices in the market. That is why enforcement of the Packers and Stockyards Act is so critically important. Producers depend on this law to protect them. So I commend the Chairman for holding this hearing today to examine USDA’s authority and commitment to enforcing this important law.

I had heard from a lot of producers that USDA was failing to act on their complaints of unfair and anti-competitive practices by packers. I was also hearing that USDA was purposely misrepresenting its enforcement activities to give the appearance it was in fact enforcing the Packers and Stockyards Act when it was not. So I asked the Inspector General to investigate. The Inspector General found that USDA management was preventing employees from investigating complaints of anti-competitive conduct and even covering up its inaction by inflating the number of investigations listed in annual reports.

I’m sure USDA officials will promise today to do a better job of enforcing the Packers and Stockyards Act. And for the sake of America’s producers, I hope they do. But it is important to remember that USDA has a long history of agreeing to make changes but never following through with them. The Inspector General made recommendations to improve USDA’s ability to investigate violations of anti-competitive behavior in 1997, and the Government Accountability Office made similar recommendations again in 2000. I led efforts in Congress to provide funds to carry out GAO’s recommendations. It is now 2006, yet those recommendations were never implemented and the Grain Inspection, Packers and Stockyards Administration (GIPSA) is now in complete disarray.

It is also troubling that while GIPSA was failing to enforce the Packers and Stockyards Act, no one above the level of deputy administrator took corrective action. Where was the governmental oversight? Where was the GIPSA Administrator, the Under Secretary for Marketing and Regulatory programs or the Secretary of Agriculture? Most importantly, where was USDA’s Office of General Counsel (OGC). OGC has a history of inaction on enforcement of the Packers and Stockyards Act. Perhaps it comes as no surprise that OGC was not sending up red flags when GIPSA only referred two investigations of anti-competitive practices to them over the course of several years. Surely OGC has a responsibility to enforce the law.

Recently, I introduced with bipartisan backing the “Competitive and Fair Agricultural Markets Act of 2006" to spur USDA enforcement action and strengthen producer protections against anti-competitive practices. My legislation will create an office of special counsel for competition matters at USDA whose sole responsibility is to investigate and punish unfair, anti-competitive behavior in agricultural markets. This high-profile person will be appointed by the President and confirmed by the Senate to create new accountability for enforcing the Packers and Stockyards Act. The fact that the upper levels of USDA were unresponsive to the problems at GIPSA—despite the fact I was sending letters to the Secretary pointing out that such problems did exist–and the failure to implement past OIG and GAO recommendations, supports my assertion that a reorganization at USDA is badly needed.

USDA officials have a lot of explaining to do in this hearing. We need to hear pledges and specific plans to reconstruct this broken agency. I call on USDA to support the changes I have proposed in my bill to remove layers of bureaucracy and reverse USDA’s longstanding apathy toward enforcing the law. I look forward to working with the Chairman and members of the Committee to enact these needed reforms.

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