Industry groups express mixed thoughts on GIPSA rule advancements

Meat and livestock groups remain opposed to the deal while Farmers Union and NSAC welcome attempts to offer more protections.

Following the U.S. Department of Agriculture’s decision to send an interim final Grain Inspection, Packers & Stockyards Administration (GIPSA) rule to the White House Office of Management & Budget, those on both sides of the debate offered their opinion in the final steps.

USDA said it plans to publish an interim final rule and two proposed rules this year that the agency said would help balance the relationships between producers and meat packers in the concentrated livestock and poultry industries. Mainstream livestock groups remain unconvinced that the rule can bring about any good, instead saying will bring additional costs and litigation threats to the industry. (Read more of our coverage on the full intent of USDA’s GIPSA rule proposal.)

The North American Meat Institute (NAMI) reiterated its concerns about the “remarkably flawed proposal, which research suggests could have a multibillion-dollar impact harming consumers, retailers, producers, meat packers and processors alike.”

NAMI president and chief executive officer Barry Carpenter said, “It is irresponsible for USDA to advance this stale, six-year-old rule-making. The interim final rule, as described, will open a floodgate of litigation, upend the established system for marketing cattle, pork and poultry in the U.S. and add costs at every step along the process, from producers to consumers.”

NAMI said the interim final rule is in direct defiance of the will of Congress expressed in multiple appropriations measures and signed by the President; it directly circumvents the rulings of eight separate federal appeals courts and is strongly opposed by the largest producer groups in the country.

USDA noted that marketing arrangements will be excluded from these rules. However, the National Cattlemen’s Beef Assn. (NCBA) said these provisions are outweighed by the competitive injury provisions of the GIPSA rule that do not require a showing of injury in order to claim a violation of the Packers & Stockyards Act.

“We know that regulation and legislation always come with unintended consequences,” NCBA president Tracy Brunner said. “We don’t see any changes that could be made to the competitive injury and undue preference provisions that wouldn’t diminish marketing opportunities for producers. The fact is that value-added programs have supported higher prices and premiums for producers, even when markets are weak. The GIPSA rules would jeopardize the future of these programs and add litigation costs. Absent a required showing of economic harm to claim preference, these rules disregard a central tenant of our legal system and set out a regulatory framework for harassment based solely on the subjective appearance of preference.”

National Chicken Council president Mike Brown said although it is unknown what USDA will include in the final version, the council's economic analysis of what has been on the table is that chicken producers will be hit with almost an additional $1.4 billion in the first five years of implementation. “Let’s call the recently rebranded ‘Farmer Fair Practices Rules’ what they really are: the ‘Gift to Trial Lawyers Rules’ that USDA is trying to get rammed through in the last weeks of this Administration, ignoring years of congressional intent in the process.”

NPPC said according to an analysis conducted by Informa Economics found the 2010 proposed rule would have cost the U.S. pork industry more than $330 million annually. An update of the analysis found that today it would cost the pork industry $420 million a year to comply with the rules.

Vilsack, in a letter sent this week to NPPC and to other agricultural organizations, said the interim final rule will “establish our interpretation of the [PSA] statute, which will then be entitled to judicial deference.”

NPPC said it’s fear is that the interpretation apparently will be that producers no longer will need to prove that a meat packer’s action injured or diminished competition in a “marketplace.” They only will need to show that a practice was “unfair” to them or that an “undue” or “unreasonable” preference or advantage was given to another producer or producers.

NAMI and NCBA both took stabs at the Administration, saying their members were engaged with USDA even while the implementation of the rules was defunded and that the latest rule advancement shows disregard for producer input. NCBA said, “USDA’s opportunity for future comment is a hollow offer when they should have engaged with the industry before moving forward.”

Some groups have welcomed the move. The National Sustainable Agriculture Coalition (NSAC), which has supported the poultry industry changes, said livestock and poultry farmers will finally have some of the basic protections in the workplace that most people take for granted.

NSAC policy director Ferd Hoefner said, "Once enacted, these commonsense rules will provide the first real protections in decades for farmers, ranchers and contract producers. These rules will shield thousands of American contract producers against the anticompetitive, retaliatory and abusive business practices, which they have toiled under for far too long."

In a letter to industry groups, USDA said it has given ample consideration to the previous 60,000-plus comments on the 2010 proposed rules and made it clear that it has crafted both the proposed rules and interim final rule with an eye toward creating a fair and balanced marketplace for farmers, contract producers and their industries.

NSAC said it hopes that the opponents of these rules will recognize this intention and acknowledge that USDA has addressed their concerns – many of which, as detailed in a recent letter and report sent to USDA by contract industry leaders, are based on outdated data and rules not currently being considered by GIPSA.

The National Farmers Union (NFU) also welcomed the move to finalize the rule. Earlier this year, NFU said it was appalled by the House Appropriations Committee's attempt to stall the progress USDA had made by adding a rider into the fiscal 2017 budget bill that would block final implementation of the rules. While the Senate Appropriations Committee did not include the provision in its own spending bill, NFU president Roger Johnson explained that NFU will be closely monitoring the development of the appropriations omnibus bill.

“Last year, Congress made the right decision to eliminate the GIPSA provision from the final budget bill, supporting family livestock and poultry farmers who have long waited for the protections of these rules. We urge Congress to take the same action this year and keep the GIPSA rider out of the omnibus bill,” Johnson concluded.

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