Meat lobbyists: Rule may lift prices, destroy jobs

AP News
Posted: Oct 21, 2010 4:37 PM
Meat lobbyists: Rule may lift prices, destroy jobs

A meat industry lobbying group is asking the U.S. Department of Agriculture to withdraw a proposed antitrust rule that it claims will raise meat prices and destroy jobs.

The rule would bar meatpackers from discriminating between cattle producers when purchasing product. It also would limit the amount of personal investment that poultry companies require their farmers to make. Some ranchers and chicken farmers say the rule is needed to give them more bargaining power with meat companies.

Poultry companies, for example, can require farmers to invest hundreds of thousands of dollars in the industrial-sized barns where they raise birds _ taking on hefty debt in the process. Many farmers say the companies benefit from the investment, and should share the cost.

The American Meat Institute, which represents companies such as Tyson Foods Inc., JBS SA and Smithfield Foods Inc., commissioned an economic impact study of the rule. It says the study shows retail meat prices could rise by 3.33 percent if the rule is passed. Passing the rule would also destroy 104,000 jobs, according to the study.

"As the analysis shows, these are not just jobs in meat packing or livestock production, but in nearly every sector of the American economy. This is, quite simply, reckless regulation," AMI President and CEO Patrick Boyle said in a statement.

The AMI paid John Dunham and Associates to evaluate the rule's economic impact. The study makes broad assumptions about what would happen of the USDA law passes. For example, it assumes that the average price of all meat _ from lamb to beef and chicken _ will become more volatile. That would happen in part because companies would drop current purchasing contracts out of fear the contracts might invite litigation under the law.

A USDA analysis of the propsed rule found the economic impact to be far more limited. It says imposing the rules will create economic benefits for farmers that largely outweigh costs that are born by meatpackers and poultry companies.

"USDA has a responsibility to look out for all of our farmers and make sure that the playing field is as level as it can possibly be ..." USDA spokesman Caleb Weaver said in a statement.

The agency first proposed the new rules in June, and extended the public comment period for them until Nov. 22.