The Real Pork in the Defense Act
Updated: Oct 14, 2020
EPISODE 1 SHOW NOTES:
-(World)33,689,355 Confirmed Positive Cases -(World)1,008,618 Confirmed Deaths
-(US)7,376,177 Confirmed Positive Cases -(US)210,140 Confirmed Deaths
-(TX)777,165 Confirmed Positive Cases -(TX)15,923 Confirmed Deaths
-100,000,000 viral particles can fit on the head of a pin
-Started in Wuhan China(11+Million Population)
-Cases of a SARS like disease started being talked about locally in NOV 2019.
-Started officially 31 DEC 2019. Reported by Wuhan Municipal Health Commission as several cases of Pneumonia.
-11 JAN 2020 First reported death in China.
-17 JAN 2020 CDC begin airport screenings in the US
-21 JAN 2019 First reported case in US
-23 JAN 2020 Wuhan Locks down
-24 JAN 2020 First reported cases in Europe
-29 JAN 2020 195 US Citizens repatriated from China
-30 JAN 2020 WHO declares global health emergency/first person-person case in US
-31 JAN 2020 US declares public health emergency
-8 FEB 2020 First US death
-21 FEB 2020 CDC says pandemic likely
-26 FEB 2020 CDC declares community spread
-29 FEB 2020 FDA begins to open up testing
-2 MAR 2020 Panic buying starts in US(Toilet Paper, Cleaning Products, Canned Goods, Bottled Water, etc.)
-11 MAR 2020 US declares travel ban to Europe
-13 MAR 2020 Trump declares national emergency
-16 MAR 2020 Lockdowns start to “flatten the curve”
-17 MAR 2020 Trump invokes the Defense Production Act (A wartime authority that allows him to direct industry to produce critical equipment)
-19 MAR 2020 US surpasses 10,000 cases
-27 MAR 2020 Trump signs $2T stimulus
-Distribution starts being impacted. Food service supply chains were dumping milk because of lack of demand.
-Cornell Economist Christopher Wolf : ”If you have a factory that was set up to produce Sour Cream to sell at Mexican restaurants, you can’t just decide that tomorrow you’re gonna produce Ice Cream and send it to the grocery store.”
-Tyson foods temporarily ceases operations due to employees contracting COVID. Farmers forced to slaughter animals without having anywhere to sell the meat.
-3 APR 2020 CDC recommends use of face masks
-14 APR 2020 All 50 states report deaths
-27 APR 2020 TYSON FOODS Chairman warns of “meal shortages”
Defense Production Act of 1950
-Enacted on 8 SEP 1950 in response to the Korean War.
-Was part of a broad civil defense and war mobilization effort in the context of the Cold War.
-Implementing regulations are: Defense Priorities and Allocation System (DPAS)
Three Major Provisions:
-Authorizes the President to require businesses to accept and prioritize contracts for materials deemed necessary for national defense, regardless of a loss incurred on business. Also allows the President to designate materials to be prohibited from hoarding or price gouging.
-Authorizes President to establish mechanisms to allocate materials, services, and facilities to promote national defense.
-Authorizes the President to control the civilian economy so that scarce and critical materials necessary to the national defense effort are available for defense needs.
-2011 President Obama invoked the law to force telecommunications companies, under criminal penalties, to provide detailed information to the Commerce Department’s Bureau of Industry and Security on the use of foreign-manufactured hardware and software as part of efforts to combat Chinese cyberespionage.
-President Trump 27 MAR 2020 invoked DPA to require GM to accept and prioritize contracts for as many ventilators as Secretary Azar determined to be appropriate.
-President Trump 2 APR 2020 invoked DPA to require 3M, General Electric, and Medtronic to increase production of protective masks and ventilators.
-President Trump 28 APR 2020 invoked DPA to mandate that plants producing beef, pork, poultry, and eggs stay open. The order gave USDA extraordinary powers to have firms maintain production. The order did NOT allow companies to ignore safety rules. In SEP 2020, OSHA fined Smithfield and JBS for failing to take the necessary actions to prevent the spread of COVID in their facilities.
-Between 31 MAR and 27 APR over 20 meat processing facilites closed. Caused a greater than 30% reduction in capacity to convert animals into products sold in stores (steaks, roast, bacon, etc.)
-28 APR 2020 John Tyson took out full page ads in The New York Times, Washington Post, and Arkansas-Democratic-Gazette writing that: “The food supply chain is breaking. Meat supplies will be limited, millions of livestock will be euthanized.”
-Farmers can’t deliver livestock to facilities. There aren’t enough local processors to handle the load of these major companies.
For example Smithfield Foods, the largest pig and pork producer in the world:
-Owns over 500 farms in the US
-Contracts with another 2,000+ independent farms
-Tar Heel, NC processes 32,000 pigs/day
-Owned by WH Group of China
-20% of beef, pork, and chicken in the US
-Own Jimmy Dean, Hillshire Farm, Ballpark, etc.
-155K head of beef/week
-461,000 head of pig/week capacity
-155K head of beef/week
-Four biggest meat producers in USA: JBS, Smithfield, Cargill, Tyson. JBS(Brazilian) Smithfield(Chinese)
JBS - $27.8B/year
Smithfield - $14B/year
Cargill - $114.695B/year
Tyson - $42.4B/year
-2016 analysis by John Dunham and Associates: The US meat and poultry industry account for $1.02T in total economic output or 5.6% of GDP. Responsible for 5.4M jobs and $257B in wages.
-American men eat about 4.8 ounces of meat/day and women 3.13 ounces/day
Americans spend less on meat and poultry than any other developed country in the world.
-12 JUN 20 Propublica reports that thousands of emails they obtained showed Tyson wasn’t forthcoming with small town public health officials. They estimate 24,000 COVID cases associated with meat packing facilities, 87 deaths.
-Local shops have changed to pickup/delivery and can’t compete with big box stores. Many have closed for good.
How do we fix it?
-Bill Marler and Denis Stearns teach a Food Safety Litigation course at the University of Arkansas School of Law. They talk about “We don’t Rent Pigs” by Hayden L. Ballard.
Packers & Stockyards Act
-Enacted in 1921 and amended through the Reagan administration.
- World War I occurred and the cost of living rose, President Woodrow Wilson ordered the FTC to investigate the industry from the "hoof to the table" to determine any "manipulations, controls, trusts, combinations, or restraints out of harmony with the law or the public interest."
-The FTC found packers were manipulating markets, restricting flow of foods, controlling the price of dressed meat, defrauding producers and consumers of food and crushing competition. They even went as far as recommended governmental ownership of the stockyards and facilities.
-The purpose of the act was to: "regulate interstate and foreign commerce in livestock, live-stock produce, dairy products, poultry, poultry products, and eggs, and for other purposes."
-Stop unfair and deceptive practices, giving undue preferences to persons or localities, apportioning supply among packers in restraint of commerce, manipulating prices, creating a monopoly or conspiring to aid in unlawful acts.
-Made stockyards quasi-public utilities and required yard officers, agents and employees to register with the government. Stockyards were forbidden from dealing in the livestock they handled, and required them to maintain accurate weights and measures and pay shippers promptly.
-Today, the Act's scope has expanded to regulate the activity of livestock dealers, market agencies, live poultry dealers and swine contractors as well as meat packers.
-In 1996, a group of cattle feeders brought a class action lawsuit under the P&S Act against Iowa Beef
Packers for captive supply agreements. In 2004, a jury delivered a verdict for the plaintiffs, finding damages of $1.2 billion. The verdict was then thrown out by the United States Court of Appeals for the Eleventh Circuit in Pickett v. Tyson Fresh Meats Inc. (2005) because it found the meat packer had a legitimate business reason to limit competition.
-The P&S Act is administered by the Grain Inspection, Packers and Stockyards Administration (GIPSA) of the United States Department of Agriculture. In 2010, GIPSA Administrator J. Dudley Butler and United States Assistant Attorney General for Antitrust Christine A. Varney held a series of hearing on monopsony, market manipulation, and market concentration in agriculture.
- On 22 JUN 2010, GIPSA published a proposed rule that would have reduced the legal standard for anti-competitive practices, forbidden unfair practices and undue advantages even without harm to competition, and ensured producers had access to arbitration.
-Sought to combat price fixing by prohibiting packers from selling to other packers and preventing multiple packers from using a single buyer.
-The proposed rule was supported by the National Farmers Union and the U.S. Cattlemen's Association but opposed by the National Cattlemen's Beef Association and the National Chicken Council. The American Meat Institute estimated the rule would cost $14 billion.
-On 3 NOV 2011 GIPSA announced it would publish the final rule, but without the controversial price fixing measures.
-On 18 NOV 2011 Congress defunded USDA's implementation of most of the rest of the rule. Assistant AG Varney and Administrator Butler had both resigned by the end of January 2012.
-Congress continued defunding the rule in riders to the 2013, 2014.
-An amendment to permanently repeal the GIPSA rule in the Agricultural Act of 2014 failed after meatpackers' opposition. Congress continued defunding in 2015.