During the recent USDA/DOJ public workshop on competition in the livestock industry I spoke with Dr. Stephen Koontz, Associate Professor, Colorado State University. He has a degree in agricultural economics from University of Illinois.

Proposed new rules from the Grain Inspection, Packers and Stockyards Administration (GIPSA) was the main topic of conversation and Dr. Koontz has some concerns. He says these rules are an attempt to clarify vague language in the law that has been troubling, especially from a legal standpoint. However, when you look at the proposal he says it not only covers production contracts for the poultry and pork sectors but beef as well. It was disappointing to him to see the cattle industry “lumped in with everybody else.” This is because the cattle industry is very different than the other industries and in fact, so is the pork industry. To just treat them all as one is very troubling he says. Another thing that bothers him is how the proposed rules treat production contracts. He says that there is good research showing the benefit of these contracts to producers and consumers and the proposed rules “treat them in a very heavy handed way.” The rule basically says that if there is any preferential pricing in a contract that it has to be documented and justified. He says that opens the packing industry to the potential of having to explain every premium and discount and then it opens them up to legal action. It adds costs and risk which ultimately will be passed along to the cow/calf producer and then the consumer.

His take on the proposed rule is summed up by a friend of his at Oklahoma State University who says, “If you look closely at the rule it’s the simple, easy to understand, wrong answer.” He says it’s being pitched as “big vs. little” but he sees it more as targeting the good producer who is innovative, who is trying to do something different and now whatever they are trying to do has to become public knowledge and that “stomps pretty hard on creativity and innovation.” Interview With Dr. Stephen Koontz