My View From The Country

Butler Resigns, Finalizing GIPSA Rule’s Demise

The proposed GIPSA rules were simply too radical of a departure from the free-market, free-enterprise principles that have long been part of this industry.

Last week’s announcement that Dudley Butler was leaving USDA was taken by both sides of the GIPSA debate as a watershed event. Essentially, it put an end to USDA’s attempts to radically transform the livestock industry.

It was interesting to read the varying reactions. Within the Washington Beltway, it was largely seen as the removal – going into an election year – of a political liability; that is, of an official who pushed a radical agenda that ultimately was thwarted. Those opposed to the proposed GIPSA rule saw it as a triumph for democracy and the free market; those who supported GIPSA saw it as a testament to the power of the conspiracy created by multinational packers. Neither view is entirely accurate.

Certainly Butler’s resignation is a vivid symbol of the failure of the proposed GIPSA rule and the populist agenda that he championed. But, from the beginning, it was simply too radical of a departure from the free-market, free-enterprise principles that have long been part of this industry. What’s striking to me about the whole struggle is that there was never a viable alternative or compromise offered. It was an abject failure of political strategy more than anything else.

While GIPSA proponents claim the defeat underscores the power of multinational packers, the packing industry actually had very little to do with the proposal’s demise. Rather, it was the cow-calf and feeding industries that lined up almost unanimously to oppose such a radical departure. It was a policy doomed for failure because it went so far that it was rejected even by the industry segments it was supposed to help.

It was a defeat of epic proportions for the populists who reject the free market and want government to be intimately involved in the outcomes of the marketplace. In Butler, these folks finally had their ultimate champion in place. But, they elected to pursue an all-or-nothing approach, and ultimately ended up with nothing

While most of the pundits interpreted the resignation as a testament to the failure of the proposed GIPSA rule, the reverberations of the Butler reign at USDA will be felt for a long time. It extends beyond the failures of the GIPSA rule, mandatory country of original labeling, and the politically motivated actions that created a situation that threatened the very survival of the checkoff.

Here are the lessons I glean from this episode:

  •  It is possible to appoint to positions of authority a few highly motivated activists who are willing to completely ignore the sentiments and values of an industry.
  • The biggest lesson isn’t that the policies failed, but that they actually came as close to enactment as they did.
  •  The industry will never again be so naive as to believe that issues involving the government and our industry will be driven exclusively by cattlemen. Issues involving the government will become politicized, and will be driven by outside political forces.

Discuss this Blog Entry 6

Dieter Harle (not verified)
on Jan 27, 2012

You write in other parts of the magazine: Opinion: U.S. Is Fertile Ground For Populist Arguments - this seems to be the same with other feedback opportunities like the Agricultural degree issue.

With the type of questioning - you will get the "popular" industry perspective but no help in making the causes any stronger - rather you weaken toward the opposition and give them actually more fodder.

Please ask people after surveys why they answer as they do - limiting in length but asking for points of why - how etc.

More creativity will get us away from this "line-breeding" (or in-breeding) of commentary and thinking.

Dieter Harle
Bettendorf, IA

Dieter Harle (not verified)
on Jan 27, 2012

You write in other parts of the magazine: Opinion: U.S. Is Fertile Ground For Populist Arguments - this seems to be the same with other feedback opportunities like the Agricultural degree issue.

With the type of questioning - you will get the "popular" industry perspective but no help in making the causes any stronger - rather you weaken toward the opposition and give them actually more fodder.

Please ask people after surveys why they answer as they do - limiting in length but asking for points of why - how etc.

More creativity will get us away from this "line-breeding" (or in-breeding) of commentary and thinking.

Dieter Harle
Bettendorf, IA

Dieter Harle (not verified)
on Jan 27, 2012

You write in other parts of the magazine: Opinion: U.S. Is Fertile Ground For Populist Arguments - this seems to be the same with other feedback opportunities like the Agricultural degree issue.

With the type of questioning - you will get the "popular" industry perspective but no help in making the causes any stronger - rather you weaken toward the opposition and give them actually more fodder.

Please ask people after surveys why they answer as they do - limiting in length but asking for points of why - how etc.

More creativity will get us away from this "line-breeding" (or in-breeding) of commentary and thinking.

Dieter Harle
Bettendorf, IA

Allan Sents (not verified)
on Jan 30, 2012

Comments like Troy's remind me of some fish stories I've heard. We’ve all heard or told tale of the big one that got away or of how that pan sized catch turned into a trophy mount over time. Perhaps, quite unintentionally, we really forgot what the original fish looked like. The recent trashing of the proposed GIPSA rule and Dudley Butler, the man who tried to make it happen is very similar to a “big fish” story.

Opponents to the rule, and the industry media they persuaded, never would recognize the target was the largest captive supply agreements that were started and continue to be about securing supply, not quality, from the marketplace. That supply gives the packers leverage in the market place. They could have chosen to use that old-fashioned competitive tool, outbid your competitor, but, instead in the name of efficiency (or easiest way out) they set aside that tool and opted for the tried and true concept that the guy with the “biggest stick” wins.

That concept is what Dudley Butler recognized as well as a slew of GIPSA investigators before him and an impartial jury in a court case. Instead, however, critics like Troy Marshall (Beef Magazine) and Steve Dittmer (Agribusiness Freedom Foundation) chose to carry the water for the packer and spread the outlandish claim that our legal system would be unable to distinguish between a producer trying to beat the system with poor quality cattle and one doing his or her best to provide consumer desired product. Troy even has the audacity to suggest it was rule proponents that were uncompromising when it was rule opponents that never offered any legitimate counter proposals. No, instead opponents relied on the packer sentiment that they would just quit paying for quality cattle and revert back to a one price fits all practice. The only problem with that thought is that packers have been known to lie and bully to get their way.

No one likes to talk about bullies; they tend to not like that. For example, a packer buyer tells a feedlot operator they would buy more finished cattle there if the feedlot bought more feeder cattle from him. Or, if you don’t like the way I (the packer) settle this grid, even though my own plant accountant, cattle buyer and supervisory buyer all agree with you that it is wrong, then just don’t use it. What about the packer that said, if you think you’re going to give first right of refusal to another packer just because I’m giving that preference to some of your competing feedlots, then I’ll just quit coming to your yard. And then they pull out for six months until their point is made! No, packer buyers, like the rest of humanity, have shown a tendency to be self-centered.

That innate self-centeredness is what created our great republic. Our forefathers recognized the “rule of law” had more staying power than even a true democracy that could revert to a “mob-ocracy” when the masses are persuaded with bias.

Someday, perhaps, industry leaders will look back and see that just maybe the decline in cattle numbers was, at least somewhat, influenced by the exodus of producers that could not or would not fit into the leverage game of our industry. Hopefully, those leaders will have the courage and work ethic to find solutions that control behavior to the point efficient producers are allowed to compete and those that tell the “biggest fish” stories have to accept reality and join them in a functioning, competitive market.

Rex Peterson (not verified)
on Jan 31, 2012

Alan,

I carefully read the draft GIPSA rules and found nothing that would prevent the abuses you cite above. I believe it is unconstitutional for the government to force you or the packer to do business with someone with whom you have a grudge or prior complaint. A wise lawyer once told me that the most important part of a contract is whom it is between. I have never seen a TV news clip of someone standing on the courthouse steps saying, "justice prevailed, I can now do business with that #$% so and so again."

The abuses and problemns you cite are beyond GIPSA;s abiltiy to solve. There are other existing solutions if you actually do have agreements and they are not being respected.

Allan Sents (not verified)
on Jan 31, 2012

Rex,
When the market has many buyers and sellers it does effectively police itself. As the power becomes more concentrated, however, the participants are forced to acquire leverage(get bigger,form non-competing alliances etc) to keep pace with those they deal with. The other alternative is for a "referee" to maintain rules of play. It might be non-governmental like CME or governmental agencies to fill that role. The question is do our rural economies benefit by having many, efficient producers spread over a large area or fewer concentrated entities that got bigger just to have marketing power? If you believe in efficiecies driving production then it becomes a legitiment role for government to play the referee. Again, what freedom do we enjoy that has not required some rules to see it is maintained?

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What's My View From The Country?

As a fulltime rancher, opinion contributor Troy Marshall brings a unique perspective on how consumer and political trends affect livestock production.

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Troy Marshall

Troy Marshall is a multi-generational rancher who grew up in Wheatland, WY, and obtained an Equine Science/Animal Science degree from Colorado State University where he competed on both the livestock...

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