Crooks, attorney at law: It is appropriate for USDA to clarify the Packers and Stockyards’ meaning
Editor’s note: This guest opinion is in response to “New year, new rules? Packers and Stockyards Act being evaluated” I wrote on Jan. 7, 2023. This opinion specifically addresses NCBA’s comments in the story.
Over 100 years ago, the U.S. passed its first law to protect farmers and ranchers from abusive monopoly power and unfair business practices by meatpackers. The law, called the Packers and Stockyards Act, prohibited several forms of anticompetitive conduct. The PSA also provided farmers a right to sue a packer that engages in any “unfair, unjustly discriminatory, or deceptive practice” or subjects a farmer to “any undue or unreasonable prejudice or disadvantage.”
Unfortunately, several federal courts have ruled that for a packer to be liable under these PSA provisions, the challenged practice must cause a “harm to competition” in the market as a whole, a standard imported from federal antitrust laws. This makes it almost impossible for farmers to fight back against packer abuses that harm farmers’ livelihoods, but that may not rise to the level of an industry-wide practice. It also distorts the meaning of the PSA, which was passed to address a host of industry practices and isn’t limited to fighting the negative effects of consolidation. As the House of Representatives put it when they passed the statute, the “primary purpose of this Act is to assure fair competition and fair trade practices.”
USDA is currently considering passing a rule to strengthen protection for farmers, including doing away with the “harm to competition” limitation with respect to the PSA’s unfair business practices provisions. I support this effort, as do farm advocacy groups such as Farm Action and R-CALF, because it will be critically helpful to farmers facing abusive conduct by the dominant meatpackers. Simply put, clarifying how farmers can use the PSA to protect themselves and their businesses is an important, long-overdue step.
Unsurprisingly, the meatpackers are fighting to prevent USDA from passing its rule—and they are doing so in part by misleading farmers and the public about the state of the law. Earlier this month, the president-elect of the National Cattlemen’s Beef Association claimed that the organization opposes USDA’s efforts to change the “harm to competition” standard, “[b]ecause we have an established Supreme Court opinion” saying that’s how the PSA must be interpreted. He went on to say again that the NCBA thinks USDA shouldn’t “change the Supreme Court’s interpretation of what harm is. That’s Congress’s job.”
The NCBA is simply wrong: The Supreme Court has never addressed the question of whether a farmer must show a “harm to competition” to prove that a packer’s unfair or discriminatory practice violates the PSA. It’s true that when the Court first interpreted the law, in a 1922 case called Stafford v. Wallace, it noted that monopolization of the meat industry was the “chief evil” that Congress hoped to combat when it passed the PSA. But that case wasn’t about what farmers need to prove to hold packers liable—the case was just about whether the PSA as a whole was constitutional. Moreover, the Court’s recognition that consolidation was the “chief evil” the PSA prohibits makes clear that the statute also prohibits other packer misconduct—as the Stafford Court put it, the law also “forbids them to engage in unfair, discriminatory, or deceptive practices.”
I’m confident that if the Supreme Court ever does face this question—whether a farmer can hold a packer liable for unfair trade practices even without showing an industry-wide “harm to competition”—it would side with farmers and hold that no such showing is necessary. But, contrary to what the NCBA is telling farmers and lawmakers, the Court has never addressed this question. Therefore, it’s entirely appropriate for USDA to clarify the PSA’s meaning. Those of us who represent family farmers and believe they should be given a fair shake fully support USDA’s efforts to reinvigorate this important law. USDA’s clarification of the Packers & Stockyards Act will help give farmers the legal tools they need to protect themselves and their businesses from abusive industry practices.
Jamie Crooks, Managing Partner