Jolley: Five Minutes With Randy Stevenson, R-CALF USA

Let me start by saying Randy Stevenson isn’t your shy cowboy.  He’s got an opinion (or two) and he’s more than willing to share it in a variety of venues.  For instance, he’s an R-CALF regional director, chairman of their marketing committee and, on Thursday, he accepted an appointment as an R-CALF vice president. 

He also serves as vice-president of the Organization for Competitive Markets (OCM) board of directors and has spent some time as Chairman of the Platte County Republican Party in Wyoming.  Randy is a frequent guest on KGAB, a talk radio channel originating in Cheyenne, and Double S Livestock publishes a weekly column in the Wyoming Livestock Roundup and The Record Stockman.  On the side, he writes “The Stevenson Report,”

Got any questions about where he stands on critical issues?  Just a few weeks ago, he was quoted this way in the North Texas e-News "Canada is still not doing sufficient BSE testing to ascertain the magnitude of its problem with this disease.   Because we don't already have COOL, and because we are currently commingling Canadian cattle and beef with U.S. cattle and beef, this case will further complicate U.S. efforts to restore beef export markets lost since 2003."

So, any questions on where he stands on BSE and COOL?  I didn’t think so.

Politically, he sits on the right side of the aisle.  Let’s spend a few minutes with him and find out where he sits on a few other issues.

Randy, the cattle business isn't getting any easier. What's kept you in it?

Hope and addiction.

The addiction part is that I enjoy what I do. I have been in the cattle business all my life and wouldn't trade it for anything else.

The hope part is that I always look forward to things being better than they are. I am always reevaluating my program to make sure I am headed in the right direction. I also like thinking outside the box. Right now, the challenge of running two pairs to the acre on a Wyoming outfit keeps me looking ahead to the good results of doing it right.

What does the Stevenson family do when they've got a little time off the ranch?

My wife tells me there is no such thing as time off the ranch. Actually, my involvement in R-CALF takes up quite a bit of time. I am also the chairman of the county central committee for the Republican Party. I also am a member of the party's state central committee, and I have participated in the state convention. I am a full time dad and grandpa as well. My 10-year-old son Oakley likes to hunt coons or shoot pigeons, so we do that sometimes, too. But every great once in a while, I squeeze in a little time to go dancing with my wife. Usually that's at a family gathering of some sort.

As an active R-CALF member and Region II Director you’ve undoubtedly been close to the recent change in leadership.  It’s created a lot of discussion.  Can you shed some light on what happened and how the change will affect the future direction of R-CALF?

For quite some time, there was a difference of opinion on the board as to whether R-CALF should proceed using different tactics, with some wanting R-CALF to be kinder and gentler, and basing our progress on relationships and access instead of moving forward based on our strength of membership and rightness of our ideas. I don’t have a problem with folks on the board having different opinions, but when there is a difference of opinion, then we ought to carefully follow all of the proper procedures and when the dust is settled, the majority rules. The board itself is limited to what it can do by the policy resolutions voted on and passed by membership. The board doesn’t have the prerogative to violate those policies.

Let me also say that I think it is necessary for R-CALF, like any organization, to expect its directors and officers to follow the proper procedures and bylaws of the organization. When they don't, then there should be consequences. The president acted with a minority of board members outside the normal procedures and bylaws of the organization and the situation needed to be dealt with. The majority tried for quite some time to come to a solution short of removing the president from office. Those efforts were not successful. After the president was removed from office, he resigned from the board. A number of other resignations followed, but the board dealt only with the office of president, and only because the majority believed that it was in the best interest of R-CALF to do so.

I know the board has been criticized for not following the bylaws in removing the president. Unfortunately, many things that led up to that situation happened in executive session meetings and directors are precluded from divulging the proceedings of those sessions. I am a stickler for following the rules and I can assure you that the rules were followed.

From here R-CALF will stay on the course it always has. We will continue to address issues such as BSE, COOL, Animal ID, Checkoff reform, property rights, and competition issues, and we will do so just like our membership policy directs us to.

You seem to be a bit leery of GIPSA and its recent activities.  Can you outline what you see as its shortcomings and give me an idea of what needs to be done to fix the problem?

In order to understand GIPSA's current shortcomings, we have to take a look at some of its history. Before the Packers and Stockyards Act (PSA) passed Congress, the big five meatpackers entered into a consent decree with the court. They apparently did so expecting that they could then argue that the PSA was not necessary. The consent decree kept those particular packers in check. For over 60 years, the court – not the Packers and Stockyards Administration – intercepted issues dealing with anti-competitive behavior. When the consent decree was lifted in the early 1980s, the court no longer stood between the packers and GIPSA. For the first time in its history, GIPSA had to deal with anti-competitive behavior on the part of the packers. It took a while for these issues to develop, but GIPSA found itself without the background, without legal precedent, and without the expertise to address these things properly.

With the GAO review conducted in 2000 at the direction of Congress, GIPSA had some necessary improvement laid out for it. Based on the promises of then-Secretary of Agriculture Dan Glickman, Congress did not legislate the recommendations. They expected that GIPSA would implement them administratively. GIPSA did not. Instead, the agency deteriorated administratively, resulting in an investigation by the Office of Inspector General and the subsequent resignation of the agency administrator. Aside from the administrative issues, the OIG found a serious lack of implementation of the GAO's recommendations.

At the same time, various court rulings affected the interpretation of the PSA. With the consent decree in place, there were no questions of anti-competitive behavior that came up in court cases. When those cases finally did start coming to court, the judges looked to case law based on the Sherman Antitrust Act because there was nothing based on the PSA. That was a mistake of law because it is a universally applied principal that later legislation trumps earlier legislation, in terms of interpreting the application of law in court. Nevertheless, the introduction of principles of law based on the Sherman Antitrust Act has severely diluted the original intent and strength of the PSA.

GIPSA Administrator James Link participated in a panel discussion that I moderated at the R-CALF convention in January. He addressed the changes that he has instituted at GIPSA, and they make sense. However, even the most skilled administrator of the highest integrity cannot overcome the institutional atrophy brought on by years where anti-competitive behavior did not need to be addressed and by the limitations and questions left by recent court rulings that have essentially gutted the PSA.

What GIPSA lacks now is the strength of a revamped PSA behind it, marching orders to become aggressive and preemptive like the Securities and Exchange Commission (SEC), and a much greater reliance on legal rather than economic expertise in determining when a law regarding anti-competitive behavior has been broken. Because GIPSA has been institutionally weak on competition issues, there needs to be established an Office of Special Counsel whose sole responsibility will be to investigate and prosecute violations on competition matters. The Competitive and Fair Agricultural Markets Act introduced by Senator Harkin would accomplish these goals.

Let me quote you from late last year: “The USDA has endeavored to persuade the public and the courts that its decisions regarding cattle and beef imports from Canada have been based on sound science. But it seems that their sound science is a moving target despite the fact that no new studies have changed the underlying factual assumptions. “ The quote seems to succinctly outline R-CALF’s position on the matter. Let’s fill in some blanks, though. Exactly what are the underlying factual assumptions? And how has the USDA ‘moved the target’?

About two years ago, USDA established a minimal-risk region for BSE. The agency did so because Canada did not qualify under existing U.S. disease protection standards to be allowed to export to the United States. When the rule was implemented, Canada began shipping live cattle under 30 months of age (UTM) to the United States. USDA said the decision was based on sound science. R-CALF is still engaged in a legal battle challenging USDA’s contention that the minimal-risk region rule is supported by sound science. I fully approve  R-CALF’s position on the matter. But just for sake of this discussion, let’s assume that rule was science based. The rule put out by USDA says that in order to qualify as a minimal-risk region, a country must have “a ruminant-to-ruminant feed ban that is in place and is effectively enforced.” It further states that “cases of BSE found in animals born after the feed ban was implemented would suggest either that the feed ban was ineffective or that there were noncompliance issues,” and, “This factor distinguishes between regions with effective feed bans and those without them. In a region in which BSE has been detected, if an animal with BSE was born after a feed ban was implemented, it is a sign that the feed ban may not be effectively enforced.”

The underlying factual assumption is that if cattle born after a feed ban was instituted are found with BSE, then the feed ban is not effective. The original rule says there should be no evidence of significant noncompliance. With discovery in Canada of several cattle testing positive for BSE that were born years after the implementation of Canada’s feed ban, there is plenty of evidence of noncompliance. The recent discovery of a bull reportedly born three years after the feed ban was implemented literally shouts noncompliance. If we consider that the cow-to-bull population is roughly 20:1, and that bulls tend to be culled younger than cows, then finding a bull with BSE is like finding 20 cows with it.

There has been no scientific evidence to suggest that this scientific standard for determining feed ban compliance should be changed. It is clear then that Canada no longer qualifies as a minimal-risk region according to the original rule that USDA said was based on sound science. Since we’re still importing Canadian cattle and USDA hasn’t indicated it plans to stop, the so-called sound science must have moved.

I think USDA is very vulnerable on this point. It is notable that most of the recent discussion on the Canadian border issue has focused on the economic aspects of it. The phrase “sound science” is seldom heard anymore. That is the case because those who want to continue importing cattle and beef from Canada know that sound science won’t support their arguments.

In a letter to the Chairmen and Ranking members of the U.S. House and U.S. Senate Agriculture and Judiciary Committees, a coalition that includes R-CALF asked Congress to address the growing horizontal market consolidation that “effectively eliminates free market competition to the detriment of independent family farmers and consumers.” To address these problems, the coalition urged committee members to champion a strong, comprehensive Competition Title in the 2007 Farm Bill.  What would be the contents of that Title? 

The position of R-CALF is that a Competition Title should include five key elements:

The Competitive and Fair Agricultural Markets Act – This Act reorganizes USDA to streamline and improve enforcement of the Packers and Stockyards Act and Agricultural Fair Practices Act by establishing an Office of Special Counsel whose sole responsibility will be to investigate and prosecute violations on competition matters. It also simplifies the USDA's ability to enforce the Packers and Stockyards Act by legislating clarifications now necessary in the aftermath of recent court decisions.

The Captive Supply Reform Act – This Act only applies to packer purchases and requires all contracts to contain a firm base price that can be equated to a fixed dollar amount on the day the contract is signed. It also requires those contracts to be offered or bid in an open, public manner.

The Prohibition on Packer Owned Livestock – This key element would prohibit packers from owning livestock for more than seven days prior to slaughter.

Mandatory Price Reporting – We already have a mandatory price reporting law, but it needs some adjusting. There are too many loopholes in it as it is. Timeliness and accuracy of information have been continuous problems. And USDA rules implementing the reporting allow certain packers to withhold certain kinds of information.

Country-of-Origin Labeling – This legislation was passed in 2002, but it has not yet been implemented for meat. Congress needs to fund both implementation and enforcement this year.

A few organizations have said contracts freely entered into by two parties – cattlemen and packer processors – are inherently fair and some of what you suggest seems to inhibit those activities.  What’s your reaction?

That argument is based on the fallacious idea that if everyone is working for his own self-interest, that will automatically keep the market self-regulated and free for all participants. It is often true that someone acting in his own self-interest can damage the market as a whole.

A good illustration of this concept is a sporting event. It is pretty normal that during a football game or other sporting event that when something exciting is happening on the field, the people in the front row will stand up. When they stand up the people in the second row need to stand up as well just to be able to see anything. This process goes on until everybody is standing and nobody is really any better off than they were before except the ones in the front row. Except for the first ones to stand, nobody else really has any freedom of choice. They only act out of necessity. If the sports stadium situation were a matter of livelihood instead of just entertainment, it would make sense to have a rule that requires everybody to remain seated.

The cattle market and captive-supply arrangements are the same way. Some producers' voluntary decisions can inhibit other market participants' freedom and do damage to the market as a whole. There are some feeders whose voluntary preferential contracts place them in the front row.

Thousands of cattlemen read Cattlenetwork.com, What would you like to say to them?

One of my favorite statements is, “The economic equivalent of a dictatorship is a monopoly. The economic equivalent of an election is competition.”

I would also like to share some basic philosophy that explains why R-CALF stands where it does on issues like these. If we stick with this philosophy, we will enjoy the greatest economic liberty in which free markets can thrive. Below is an article that will help clarify that philosophy. Terry A. Stevenson is my brother.

Economic Liberty, Chaos, and the Rule of Law

By Terry A. Stevenson

December 2004

Free enterprise is an integral part of America. It is difficult to think of anything more American than free enterprise. Many other countries around the world have tried to emulate American free enterprise with varying degrees of success. Many have long regarded socialism as the primary enemy of free enterprise. Yet by narrowly focusing on one destructive element of a nation's economy, they have overlooked another.

Like freedom, free enterprise must be vigilantly guarded lest it be eroded away from within. Part of that erosion comes through the subtle redefinition of terms. The single word that has most effectively been redefined in the phrase "free enterprise" is the word "free." It is better to use the word "liberty" to understand the drift of definition that has overtaken our understanding of free enterprise. What we want to guard is economic liberty.

When the Soviet Union collapsed, its economic socialism crumbled quickly. However, economic liberty did not spring up spontaneously. A free market cannot operate in an environment of lawlessness. Only recently has Russia taken some effective steps toward creating economic liberty by introducing law into the marketplace. Liberty can flourish in an environment of properly designed law. Chaos reigns in its absence. The founders of our country recognized these principles as they crafted our founding documents.

Freedom cannot be defined as the right to do whatever we want. Neither can free enterprise be described as that situation where the government has a hands-off approach. Rather it is the government's duty to see that the greatest liberty is maintained for all. That is accomplished through law.

A simple example from daily life effectively illustrates this concept. In America we can travel where we wish. We have travel liberty. No one limits our choice of destination as we travel on our nation's roads. But traffic is highly regulated. We have to drive on the right side of the road. We have to follow varying speed limits in different jurisdictions. We have to be sober and attentive as we drive. Yet having highly regulated traffic allows us travel liberty.

In spite of the fact that traffic is highly regulated, we never hear anyone expressing fear that "travel restrictions are next," or suggesting, "Traffic regulations are just the government's foot in the door to eventually restrict our travel." We clearly understand the necessity of traffic regulation and the inherent and clear distinction between traffic and travel. We enjoy our travel liberty without fear of regulatory encroachment.

The marketplace needs to operate the same way in order to have economic liberty. The transactions of the market need regulated to provide liberty for the economy as a whole. Wall Street is designed this way. The SEC oversees the transactions of the market and highly regulates them. As a result, stock traders of every kind have economic liberty in the stock market. Yet the activities of marketplace regulation are not seen as creeping socialism.

In the agricultural marketplace, it is different. Fear mongers throw up the specter of socialism and economic control as the dangers to avoid. But avoiding one error can just lead to another. Just as dangerous to economic liberty is economic anarchy. We don't want to do away with speed limits and drunk driving laws in the name of travel liberty. Neither do we want to avoid marketplace regulation in the name of free enterprise.

The agricultural marketplace is greatly in need of the same kind of regulation Wall Street enjoys. Such a pattern would enhance economic liberty in the agricultural sector. Those who are arguing against such regulation are steering us toward the erosion of free enterprise. Vigilance and discernment are necessary to guard it. Free enterprise will not survive without the enforcement of law. Law and liberty are inseparable.

For this other similar articles see www.thestevensonreport.com, and check out the main page as well as the archives. The older articles in the archives are heavy on general philosophy.