By Gary Jay Kushner
In Economics 101, we were taught that excess supplies of a product cause prices to fall, which generates increased interest in, and demand for, product on the part of buyers, causing a price increase, and so on and so forth.
This aspect of the nation's economy is cyclical, and the food and agricultural sectors are no different.
Agricultural commodities are used as the model to demonstrate the price fluctuations that occur as supply and demand change. Supply and demand, however, are not always the driving force in a public debate, particularly when the issue involves the "family farm."
There is an increasingly controversial public debate occurring about the prices meatpackers pay for livestock, and to what extent these prices are affected by industry structure.
Economic experts generally attribute the lower livestock prices that seem to epitomize today's market to record supplies, especially in the case of cattle.
Producer anxiety about lower prices, however, has led to charges that certain aspects of the meat industry are in some way attempting to control the market.
Election-year politics
Not surprisingly, as the election approaches, calls for increased scrutiny of the meat industry have caught the attention of members of Congress. The rhetoric has escalated to such a point that many of them have held hearings to "investigate" the issue. Legislation has been working its way through Congress and receiving increased attention over the past few months.
The leading bill-the Livestock Concentration Report Act of 1995-is being pushed by House and Senate members, and would establish a commission to study market factors affecting the beef and pork industries.
Study the study
Neither the issue of alleged packer concentration nor the producer complaints are new. Just like the market, this debate is cyclical.
USDA's Grain Inspection/Packers and Stockyards Administration (GIPSA) has spent the past five years studying livestock and meat prices and the numerous factors that affect them.
Although GIPSA has not made its findings public, livestock producers and several politicians apparently are convinced that they will be of little or no value.
Thus, they are already calling for and sponsoring legislation that would establish another commission, in effect, to "study the study."
(Editor's note: USDA was expected to make GIPSA's report public in February.)
The bill would establish a presidential commission that would study concentration and marketing issues in the livestock industry.
As a first step, this commission would study GIPSA's study and report to the president and Congress about how it is "flawed."
This is the presumption upon which the proposed legislation is based. The commission also would review current antitrust laws, and would be authorized to make recommendations as to whether the laws should be changed.
Interestingly, the bill was written and introduced so that the commission, which would be chaired by USDA Secretary Dan Glickman, would not include any representatives of the meat industry.
Apparently, the bills' drafters believed that including meatpackers on the commission would adversely affect its integrity.
Negotiations on Capitol Hill, however, resulted in an amendment to include meatpackers.
But the commission, as comprised in the bill that passed the Senate, could still exclude representatives from other sectors of the meat industry.
Adding to the confusion is speculation that Glickman might independently, and even without the benefit of this bill, appoint his own commission to accomplish the tasks provided for in the Livestock Concentration Report Act.
Ironically, this would involve the secretary appointing a commission whose function is partly to study a series of reports, prepared under the auspices of GIPSA-an agency within USDA and under the secretary's jurisdiction-that have yet to be released to the public and reviewed.
'Inside the beltway'
It is unclear whether these efforts are intended simply to serve politicians hoping to garner votes or to seriously examine industries that traditionally have gone through significant fluctuations in pricing because of fundamental principles of supply and demand.
Not surprisingly, when prices for cattle were $20 per hundredweight higher a few years ago than they are now, few complaints were heard about the industry's structure, which has changed little since then.
Now that prices have fallen considerably with record numbers of cattle and increasing competition from other protein sources, many people seem to be looking for a scapegoat or just another issue to assuage frustrated constituents.
The proposed legislation-and the commission it would establish-is a non-solution in search of a non-problem.
But that's what you can expect to find "inside the beltway" during an election year.
Editor's note: Mark D. Dopp, an attorney specializing in food and agricultural law, contributed to this column.
Gary Jay Kushner is a partner in the Washington, D.C., law firm of Hogan & Hartson where he specializes in food and agriculture