Release No. 0132.98
Backgrounder
                                
                      ACTIONS TO ADDRESS 
             CONCENTRATION AND PROMOTE COMPETITION

In further response to the recommendations of the Department of Agriculture
(USDA) Advisory Commission on Agricultural Concentration, Secretary Glickman
has announced additional actions to address concentration and promote
competition in livestock, poultry, and meat markets.

Restructure the Program Agency that Enforces the Packers and Stockyards Act
(P&S Act):

       The Grain Inspection, Packers and Stockyards Administration (GIPSA)
     will restructure its Packers and Stockyards (P&S) Programs to
     strengthen enforcement against anticompetitive practices and provide
     greater flexibility and efficiency in enforcing the trade practice and
     payment protection provisions of the P&S Act.  The principal purpose
     of the P&S Act is to assure the integrity of livestock, meat, and
     poultry markets.  This includes fostering fair and open competition
     and guarding against deceptive, discriminatory, and monopolistic
     practices that affect the movement or price of meat animals or their
     products.

       GIPSA will restructure the headquarters offices of P&S, consolidate
     field offices, and add staff with economic, statistical and legal
     expertise to work on investigations of 
     anticompetitive practices. 

       At headquarters, two operating divisions and six branches will be
     consolidated into one office with three branches.  A new Office of
     Policy and Litigation Support will be responsible for development of
     regulations, enforcement policies and procedures, and litigation
     support.  This office will include three branches: Competition Branch,
     Trade Practices Branch, and Financial Branch.  Headquarters also will
     include an Office of Field Operations and an Economic and Statistical
     Support Staff.  The Office of Field Operations will be responsible for
     managing delivery of all P&S activities and functions at the field
     level.  The Economic and Statistical Support Staff will provide
     economic advice and support on issues related to GIPSA's mission.

       P&S' regional offices carry out program activities under the
     provisions of the P&S Act within their assigned areas.  The 11
     existing field offices will be consolidated into 3 regional offices
     located in Denver, Colo.; Des Moines, Iowa; and Atlanta, Ga.  This
     will allow significantly larger staffs to be located in those regions
     with concentrations of beef, pork, and poultry production and
     slaughter.  As part of the restructuring, the three field offices will
     include staff with economic, statistical, and legal expertise to
     perform the full range of investigations of alleged anticompetitive
     practices and financial and trade practice violations in each region.  

       The Denver, Colo., office will handle all trade practice and
     financial protection issues in its geographic area (Arizona,
     California, Colorado, Idaho, Kansas, Montana, Nebraska, Nevada, New
     Mexico, Oklahoma, Oregon, Texas, Washington, Wyoming, Utah, Hawaii,
     and Alaska) and all major competition and industry issues in the
     United States relating to cattle and sheep.  

       The Des Moines, Iowa, office will handle all trade practice and
     financial protection issues in its geographic area (Illinois, Indiana,
     Iowa, Kentucky, Michigan, Minnesota, Missouri, North Dakota, South
     Dakota, Ohio, and Wisconsin) and all major competition and industry
     issues in the United States relating to hogs.  

       The Atlanta, Ga., office will handle all trade practice and
     financial protection issues in its geographic area (Alabama, Arkansas,
     Connecticut, Delaware, Florida, Georgia, Louisiana, Maine,
     Massachusetts, Maryland, Mississippi, New Hampshire, New Jersey, New
     York, North Carolina, Pennsylvania, Rhode Island, South Carolina,
     Tennessee, Vermont, Virginia, and West Virginia) and all major
     competition and industry issues in the United States relating to
     poultry. 

      In order to assure basic services are maintained across the nation,
     the reorganization plan includes resident agents who will either work
     out of their homes or three suboffices located in Sacramento, Calif.;
     Fort Worth, Texas; and Lancaster, Penna.   

       Congress appropriated an additional $800,000 for P&S in fiscal year
     1998 to pursue investigations of anticompetitive practices in the
     concentrated meat packing industry.  These funds are being used to
     recruit staff with economic, statistical, and legal expertise.

       Restructuring of field operations will require $3 million to cover
     the one time cost.  GIPSA FY 99 budget also includes increases of
     $800,000 to address competition issues in meatpacking and $750,000 for
     strengthening poultry compliance. 

     
USDA will also initiate regulatory actions in two areas to address concerns
of livestock and poultry producers:

       USDA is considering a proposed regulation that would make
     purchasing or selling livestock with the condition that the price not
     be reported a violation of the P&S Act.  To create a public forum for
     discussion of this issue, USDA will publish an Advance Notice of
     Proposed Rulemaking (ANPR) in the Federal Register seeking public
     comments.           

       A February 10, 1997, ANPR in the Federal Register sought comments
     on the need for additional rules to ensure that settlements under
     contract production of poultry are equitable.  Over 95 percent of the
     country's poultry and an increasing number of livestock, especially
     hogs, are produced under various forms of contractual arrangements. 
     Contract production has afforded small farmers a viable alternative to
     traditional feeding operations while lessening the risk associated
     with price fluctuations.  USDA recognizes the importance of the
     accuracy of feed weights in contract production and will publish a
     proposed rule that would require firms subject to the P&S Act to
     accurately weigh feed provided to contract growers when feed weights
     are used in determining producer compensation.

USDA will take the following additional actions to improve market
information for producers:

USDA will propose adding beef and pork to the weekly "U.S. Export Sales"
report.  The proposed rule, which will be published shortly for comment,
would require exporters to report weekly on the quantity, destination, and
the marketing period of their export sales of beef and pork.  This change
would provide the livestock industry with an early indication of export
sales, before export shipments actually occur.

USDA's GIPSA and Agricultural Marketing Service (AMS) will conduct a
comprehensive analysis of the relationship between prices reported to AMS
and prices that GIPSA has obtained during its investigation of major beef
packers in Texas.  Data from recent investigations will be used to evaluate
the statistical validity of current voluntary price reporting efforts.  All
future GIPSA investigations of competitive issues in the livestock industry
include an investigation of price reporting.  

Market Reporting Initiatives Resulting from Advisory Committee
Recommendations:

       Producer pork reporting -- USDA is expanding the Missouri pork
     producer price reporting pilot project.  Officials from USDA have met
     with the National Pork Producers Council to explore expanding the
     Missouri hog price reporting to three additional States -- Illinois,
     Iowa, and Wisconsin. 

       Expanded boxed beef reporting -- Beginning September 1996, USDA
     extended its coverage of boxed beef sale commitments to cover the
     upcoming 15 business days, rather than the previous coverage of 10
     business days.  Approximately 45 percent of volume traded is now
     reported, compared with 30-40 percent previously reported.

       Value-based reporting -- In October 1996, USDA initiated a weekly
     report of premiums and discounts being offered for cattle in the
     upcoming week by meat packers.  All major packers are participating
     and feedlots can verify information through the report.

       Livestock produced or traded under contract -- Beginning with the
     December 1996 Hogs and Pigs Report, USDA is reporting the numbers of
     hogs produced under contract by large hog producing operations. 
     Starting in October 1996, USDA also began issuing a weekly report
     indicating the number of cattle being produced under contract for
     delivery in future months.  For those contracts calling for settlement
     relative to a futures market price, the basis difference from a
     futures market contract is also reported.

       Regional beef quality and yield report -- In February 1997, USDA
     initiated a report of beef grading results on a regional basis, for
     four regions of the country, that will provide better geographic
     detail than contained in the current national report.

Programs & Customer Service:

USDA will continue to pursue initiatives to improve customer awareness of
its programs and services: 

       Under the Customer Service Initiative of the National Performance
     Review launched by the Clinton Administration, agencies are reviewing
     plans for outreach to their clientele, striving to target specific
     groups within the agricultural and rural communities to improve their
     awareness of how to access programs and services, as well as actions
     taken by agencies.
     
     USDA has increased efforts to provide more and better market
     information, and producer knowledge of and ability to use market
     information is crucial to marketing success.  In order to increase the
     capacity of cattle producers to use market information, USDA has
     participated with the land grant university system to develop a
     planning program for cattle producers called "Marketing for Today's
     Cattle Market and Beyond."  Twenty-nine livestock and farm management
     experts from 15 States have cooperated to produce a series of
     materials to aid producers in comprehensive planning.  To date,
     workshops have been conducted in over 12 States and notebooks of
     materials have been distributed.

     USDA also kicked off its Risk Management Education Initiative with a
     national forum in Kansas City in September 1997 with plans underway
     for a more comprehensive conference in early 1998 using an "expert
     team approach."  Since then, the 10 regional offices of USDA's Risk
     Management Agency (RMA) have been working with educational and
     extension partners to create expert teams to reach producers through
     conferences at the State and local level.  In early 1998, RMA will
     issue a Request for Proposals to award $3 million in grants to support
     the Risk Management Initiative.  Grants will focus in three areas:
     delivery of risk management programs, development of curricula, and
     research and decision aids.      

       To ensure that USDA's research helps provide opportunities for
     small-and medium-sized farming operations, the Research, Education,
     and Economics mission area has arranged for the National Academy of
     Sciences to conduct an independent review of USDA's research program
     and to make recommendations to USDA.   

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                                                 March 24, 1998