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Audit Accuses USDA of Blocking Investigations

posted on January 20, 2006

Hello, I'm Mark Pearson. Government reports this week were mixed in their assessment of the U.S. economy. ** According to the Commerce Department, consumer prices rose by 3.4 percent in 2005 and 40 percent of the increase is blamed on the largest increase in energy costs since 1990. **Construction of new single-family homes fell nearly nine percent in December, offering more evidence that the five-year housing boom is cooling off. **But, the number of U.S. workers making new claims for unemployment benefits fell unexpectedly last week to its lowest level in nearly six years, while continuing claims also declined significantly. While a strengthening labor market bodes well for the overall economy, rural Americans tend to assess the economy in different terms. In the livestock industry, for example, producer prices are the key factor. And in the past few years, America's farmers and ranchers have enjoyed some of the highest prices in history. But some producers claim anti-competitive practices by the packing industry are curtailing their profits. And this week, the Agriculture Department was accused of not enforcing rules designed to ensure competitiveness in the industry.

Audit Accuses USDA of Blocking Investigations

An audit by the USDA Inspector General's office says the department effectively blocked employees from pursuing complaints of anti-competitive behavior in the livestock industry. In addition, the audit said, the Ag Department inflated the number of investigations it conducted by having employees log routine letters and reviews of public data as investigations.

The audit was requested by Iowa Senator Tom Harkin, a senior Democrat on the Senate Agriculture Committee. In reaction to the audit findings, he called for sweeping changes at the Agriculture Department, including the creation of an office of special counsel to oversee matters of competition in the marketplace. He said, "America's producers have faced an increasingly integrated and consolidated market, but in the past five years, USDA has made virtually no attempt to investigate or take action against unfair and anticompetitive market behavior."

In instances when employees did initiate investigations about competition in the marketplace, the report said the probes often languished in Washington awaiting approval. In August, 50 investigations were awaiting approval.

The Department did say 104 financial or trade cases were referred to department lawyers from 2003-2005.

The USDA is mandated to investigate anticompetitive practices in the meatpacking, livestock and poultry trade under the 1921 Packers and Stockyards Act. The Packers and Stockyards Program has about 150 employees and an annual budget of about $20 (M) million dollars.

The new administrator of the Grain Inspection, Packers and Stockyards Administration (who was hired in October) said he agreed with the findings and vowed to implement changes.


Tags: agriculture government industry meat news USDA