“The Segregation Cost Arguments Do Not Hold Water”

By: J. Dudley Butler

Some opponents of COOL seem to use the term commingling as a synonym for segregation. Nothing could be further from the truth. Meat is commingled. Cattle are segregated. COOL does not deal with live animals. It deals with the sale of commodities such as beef and pork at the retail level.

The COOL statue does not allow commingling of covered retail products. The use of commingling is factually misleading, legally illegitimate, and rhetorically repulsive. Commingling breeds consumer confusion and deception. It only takes common sense to recognize that any commingling of meat that is required to be labeled by the COOL statute is an affront to the intent of the statute. The statute was designed to inform consumers about the origin of the animal from which the product comes. The terms “born”, “raised” and “slaughtered” are very significant to the intent of the COOL statute.Therefore the COOL Rule does not allow comingling so that the consumer is accurately informed of where the animal from which the retail product was derived was born, raised and slaughtered.

COOL does not compel the segregation of cattle. However, Canada and Mexico have continued to base their WTO arguments on the costs associated with segregation of cattle or the fact that sometimes prices paid for cattle of Canadian and Mexican origin are discounted. They do this with the hope that the WTO panel will buy into their charade and issue another ruling in their favor. They know they fooled them once so why not try it again?

However, any discounts are really marketplace issues brought on by the nuances of consumers or grow out of the concentrated power of meatpackers. Contrary to the previous arguments of the opponents of COOL, all cattle are not the same. So their statement “that cattle are cattle whether they are from Manitoba, Mazatlán or Montana” is not only ludicrous but down right slanderous to U. S. cattle producers. Cattle are different and this is one of the reasons that cattle have been segregated for years. Segregation of cattle did not start with the COOL statute. Neither the COOL statute nor the 2013 COOL regulation requires segregation of cattle.

Cattle are purchased by different methods. The majority (approximately 60%) of all cattle purchased by meatpackers that are required to report to the USDA Packers and Stockyards Program are purchased on a carcass basis and carcass-based purchases are the predominant method used by meatpackers to purchase hogs. Therefore, with or without COOL, meatpackers must continue segregating the majority of all their cattle purchases and hog purchases based on each animal’s (both cattle and hogs) owner in order to finalize the purchase transactions for those livestock.1

Segregation is also used for many other reasons. In fact, the segregation of cattle is a common practice in the industry. Cattle entering the U. S. from Canada are either branded or tattooed with a “CAN”. Cattle from Mexico are either branded or tattooed with an “M”. They are easily recognizable. Additionally, cattle are segregated for the following reasons:

Branded programs such as “All Natural”, “Organic” and “Certified Angus Beef”
- For export eligibility
- National School Lunch Program
- Department of Defense Prime Vendor Program
- Age and source verified programs
- USDA quality grading

For paying sellers that sell on grade and yield basis
- Illness
- Size
- Weight
- Breed vs. cross breed
- Brahman influence,
- Gainability
- Sex
Quarantine (Mexico) – to check for brucellosis, tuberculosis and spayedheifers.

Meatpackers already have very sophisticated and computerized tracking systems that allow them to track meat throughout their plants, freezers and shipping facilities. This is done to ensure proper payment, customer satisfaction, quality control and proper delivery of goods and services.1

There is no causal connection between the Final COOL Rule and any damages caused by the costs of segregation. Any claims of discrimination, irreparable harm and undue burdens dealing with discounts paid for Canadian cattle and Mexican cattle are not caused by COOL but are caused by several things. One cause can behistory of disease problems in certain countries.3

They can also be caused by consumer choices based on personal preferences, the breed of cattle, prior food sources, lower yield and lower beef quality just to name a few. They are also causedby corporate concentration and the inherent power of meatpackers in the marketplace accompanied by their greed.In other words, they have the power to do it so they do it.

The costs associated with COOL are less than one half cent per pound of beef produced. Therefore, any claims of undue burdens dealing with excessive costs required to comply with the 2013 COOL regulation are unfounded and lean toward speciousness.

Or as we would say down south “that dog just won’t hunt.”

1 The U.S. Department of Agriculture (“USDA”) explains:
In a “carcass-based” purchase, the price is quoted and the final payment is determined based on each animal’s hot weight, which is the weight of the carcass after it has been slaughtered and eviscerated. Carcass-based purchase methods often involve schedules of premiums or discounts based on animal quality and other features, such as time of delivery and number of animals in the transaction.
2012 Annual Report, Packers and Stockyards Program, U.S. Department of Agriculture Grain Inspection, Packers and Stockyards Administration, at 36, available at http://www.gipsa.usda.gov/Publications/psp/ar/2012_psp_annual_report.pdf.

2 Available technology now enables a meat hook to associate every carcass and resulting meat product with the live animal from which they are derived all the way to an individual packaged meat product, ready to be sold at a supermarket. Today’s plant can also record important information about each carcass, like its weight and grade, which can be tied to billing and sales systems. http://www.xerafy.com/blog/wheres-the-beef-rfid-tracking-within-slaughterhouses/

An amazing part of this story is the fact that every pound of beef can be tracked throughout the meatpacking plant, from steer to box and package. Implicit in this part of the story is the information system. Besides tracking the product throughout the facility, the plant IT manages the inventory management of every by-product from hides to bone. http://www.cisco-eagle.com/case-studies/Excel-Beef-Dodge-City-KS

3 Canada has a history of problems with Bovine Spongiform Encephalopathy (Mad Cow Disease) and Mexico has a history of problems with Bovine Tuberculosis and Brucellosis.

We need more Competition and the Courage to join forces and support each other.

“Competition and Courage” presentation by J. Dudley Butler at the 2013 Organization for Competitive Markets Convention

The independence of cattle farmers and ranchers is on life support. Once it is gone, we become serfs. The old plantation system is being reborn right before our eyes. We will be sharecroppers like in the days of old. We must then learn to kowtow. So you better start practicing your “yes sir boss” unless we muster up the courage and join forces to defeat “the man”. We must organize and generate power. We must be innovative. We must redefine the marketplace. We must create competition. This is the only way we can save our way of life for ourselves and our descendants.


People must prevail.

After watching the Republicans and the Democrats, I am also convinced that there is a clear choice for voters. Do we want our food supplied by multi-national corporations or independent American family farmers and ranchers?

Remember, corporations are not people.

They have no heart to break, no soul to save and no life to lose.

The United States is a country of the people that was built by the people for the people.

The people must prevail.

I will support the independent American family farmers and ranchers and vote for Barack Obama.

The deceptive tactics of NCBA are ‘chickenizing’ independent beef production

I am J. Dudley Butler. I am an independent family farmer, agricultural lawyer and former Admin. of the Grain Inspection Packer and Stockyard Administration at USDA.

Beware beef packers have clearly stated that their goal is to vertically integrate the beef industry and chickenize the independent family farmers and ranchers of our country.

As a former longtime active member of National Cattlemen’s Beef Association, I feel compelled to advise the hard working grass roots members of the NCBA that they should be aware of the actions of their leaders.

The past and current actions of these so called leaders are self-serving and exhibit loyalty to the beef packers and not the NCBA membership.

Please do not follow these Judas goats to the slaughter house of vertical integration.

Visit http://www.FarmandRanchLaw.com Today.

Stop the NCBA Beef Checkoff lies, the public deserves the truth

I am J. Dudley Butler. I am an independent family farmer, agricultural lawyer and former Admin. of the Grain Inspection Packer and Stockyard Administration at USDA.

I’ve experienced first-hand the vicious, slanderous personal attacks by the meat packers, their chosen media minions, and the puppets like the leaders at the National Cattlemen’s Beef Association.

These types of lies must stop. The public deserves better.

The lone plaintiff, Mike Callicrate, in the lawsuit filed against USDA seeks to save the Beef Checkoff Program, and restore it to its original intent, not destroy it.

I hope that Secretary Vilsack will exhibit the courage of a true statesman by suspending all current contracts with and deny all future contracts to NCBA.

The independent cattle of our country paying their hard earned dollars into the Checkoff deserve no less.

Visit http://www.FarmandRanchLaw.com Today.

Finalize the GIPSA Rule, unfairness is not acceptable

I am J. Dudley Butler. I am an independent family farmer, agricultural lawyer and former Admin. of the Grain Inspection Packer and Stockyard Administration at USDA.

The blatant actions of the following members of Congress, to eliminate the section of the GIPSA Rule dealing with unfairness, clearly show that they support the use of retaliation, bad faith, denial of due process and fraud against the farmers and ranchers of our country.

Sen. Roberts (Kansas)
Sen. Johanns (Nebraska)
Rep. Kingston (Georgia)
Rep. Conway (Texas)
Rep. Costa (California)
Rep. Scott (Georgia)

These members of Congress exemplify what Mark Twain meant when he said “Politicians are like diapers, they must be changed often and for the same reason.”

Letter to President Obama-Protecting Taxpayer Dollars

499 Breakwater Drive
Benton, MS 39039

June 29, 2012

United States President Barack Obama
The White House
1600 Pennsylvania Ave., NW
Washington, DC 20500

Re: Protecting Taxpayer Dollars

Dear Mr. President

After speaking to a group of farmers in Virginia, it has come to my attention that the Farm Service Agency (FSA) of the United States Department of Agriculture (USDA) and the Small Business Administration (SBA) are making direct loans and guaranteeing loans for contract poultry growers that put taxpayer’s dollars at a substantial risk.

These loans also create an unfair advantage for “live poultry dealers” (integrators) at the expense of cattle farmers and ranchers like myself. They not only violate the rule of common sense, but they also violate the intent of recently finalized Grain Inspection, Packers and Stockyards Administration regulation §201.216(f). Surely the FSA and the SBA are aware of the intent of this regulation.

These direct loans and loan guarantees, which total in the hundreds of millions of dollars, should be stopped immediately for the following reasons:

  • They put taxpayer dollars at great risk. The methods of repayment are funds generated from short term poultry growing contracts. The term of many of these contracts is three years or less. Although some contracts are for longer terms, they contain provisions that enable the integrator to terminate them at will. This makes it impossible for the poultry grower to repay the loan during the term of the contract. Therefore the poultry grower is at the mercy of the integrator.
  • The poultry grower is placed in a position of being a “sharecropper” on his or her own land. The growers must face abuses as evidenced by the testimonies of growers at the USDA/DOJ workshop previously held on the campus of Alabama A&M University in Normal Alabama. Often the direct loan or loan guaranteed by the government is subordinated by other loans thereby putting the taxpayer at greater risk. Did the poultry growers and the U. S. taxpayers not loose enough money in the Pilgrim’s Pride bankruptcy?
  • The integrators often entice young farmers to enter into poultry growing arrangements and build new poultry houses through the use of unrealistic prospectuses. These new growers replace older growers who still owe mortgages on their farms. These older farmers then have no way to repay these mortgages.
  • If these contracts are such a good deal for poultry growers, as professed by the integrators, why do they require a government guarantee? Would long term contracts with equitable terms for the poultry growers not afford the growers more protection and reduce the risks of the lending institution seeking the government guarantee? This could remove the government’s involvement thereby eliminating the risk to the taxpayer.
  • Integrators wrongfully manipulate and control poultry growers on an almost daily basis. This creates an unfair advantage in the marketplace and amounts to millions of dollars in benefits to the integrators. These actions allow integrators to have an unfair economic advantage over cattle farmers and ranchers like myself.

Mr. President, as an American taxpayer and farmer, I know that I cannot depend on Congress to do the right thing. Please right this wrong.


J. Dudley Butler, President

Letter to President Barack Obama – Competition in the Cattle Industry

499 Breakwater Drive
Benton, MS 39039

May 28, 2012

United States President Barack Obama
The White House
1600 Pennsylvania Ave., NW
Washington, DC 20500

Re: Competition in the Cattle Industry

Dear Mr. President

It was an honor to serve in your administration. However, I do regret never meeting you personally. While serving as Administrator of the Grain Inspection, Packers and Stockyards Administration my staff and I accomplished many goals. Like you, I believe that rural America is the backbone of America and that independent family farmers and ranchers are the backbone of rural America.

Now that I am back on my farm in Mississippi, I am writing to you as one of those independent family farmers, not as a representative of any organization or any other party.

However, while on a recent visit to North and South Dakota, ranchers often reminded me that during your campaign you made numerous promises about leveling the playing field to ensure the survival of rural America. Independent farmers and ranchers were excited for the first time in a long time. To date, most of these promises remain unfulfilled, and many of these same farmers and ranchers now feel abandoned by your administration.

You have shown me that you can make difficult decisions regardless of any political implication. Reverend Martin Luther King, Jr. once said “a genuine leader does not search for consensus, he molds consensus”.

Therefore, I am writing you on my 64th birthday with a request. I ask that you take swift and decisive action to protect independent farmers and ranchers as well as rural America by mandating increased livestock competition through the following actions.

  • Ensure final implementation of all the remaining provisions of the proposed GIPSA rule by enacting a final rule and vetoing any bill that includes a rider or any other provision that would infringe upon the power of the executive branch to do so. We must ensure transparency, fairness and eliminate unfair, discriminatory and deceptive practices. How can anyone support retaliation, bad faith, denial of due process and fraud?
  • Eliminate the National Cattlemen’s Beef Association’s strangle hold on the Beef Checkoff program. This Administration is well aware that the NCBA has misappropriated producer contributions and that the NCBA’s control over the Beef Checkoff Program has helped it and the meat packers defeat major policy reforms sought by independent producers.
  • Regulate price depressing and anti-competitive captive supply practices by the meat packers. GIPSA sent a proposed regulation well over a year ago to the Office of the Secretary dealing with this matter. Nothing has happened.
  • Ensure that farmers and ranchers are guaranteed payment for their livestock through an updated bonding regulation. Again, GIPSA sent a proposed regulation well over a year ago to the Office of the Secretary dealing with this matter. Nothing has happened.

I know that there are advisers in your administration who take the position that most farmers and ranchers are conservative by nature and consistently vote for Republican candidates. Therefore they believe that you should not go out on a limb to help them. Sometimes this may be the case but I know many of these people. They seek a genuine leader and a statesman. Not a politician. As you know, getting votes is not the proper scale to use. Doing what is right for America is.

Will Rogers and Mark Twain are two of my favorite humorists. They used humor to spread wisdom. I share with you two quotes.

“You’ve got to go out on a limb sometimes because that’s where the fruit is.”
- Will Rogers

“Always do right. This will gratify some people and astonish the rest.”
- Mark Twain

Mr. President, you have shown genuine leadership in the past. It is time to show it again. Rural America is depending on you.


J. Dudley Butler, President

President Barack Obama’s Campaign Promises vs. Results