June 12, 2017
Monday was the closing date for the comment period for the Farmer Fair Practices interim final rule – commonly referred to as the Grain Inspection, Packers & Stockyards Administration (GIPSA) competitive injury rule.
The interim final rule solidifies, through regulation, the U.S. Department of Agriculture’s long-held interpretation that not all violations of the Packers & Stockyards Act must show harm or likely harm to competition.
Supporters of the rule say it brings clarification to the contract agriculture system by underscoring that farmers can seek and secure remediation if they have been made to suffer an injury or abuse by their employer.
Meanwhile, those opposed say the rule will harm the marketing programs the industry has spent years developing. They also argue that the interim final rule is GIPSA’s attempt to set aside decades' worth of settled law and accomplish via rule-making what it could not accomplish in the courts: eliminating the requirement to show a likelihood of competitive injury to establish a violation of sections 202(a) and (b) of the Packers & Stockyards Act.
Ahead of the midnight deadline, more than 1,000 comments had already been filed, including from major commodity groups. Comments were sought on whether to allow the interim final rule to become effective, suspend it indefinitely, delay the effective date of the interim final rule further or withdraw it.
In new comments submitted June 12, National Chicken Council (NCC) president Mike Brown noted, “Even by GIPSA’s own estimates, which we believe understate costs, the interim final rule promises to inflict approximately $1 billion in economic harm on the meat and poultry industries, with no quantifiable benefit. GIPSA has failed to provide a sufficient justification for imposing such burdensome, expensive changes to the poultry industry and does not explain the corresponding benefits this rule-making provides to counterbalance the billions of dollars of detrimental effects this rule will have on the U.S. economy.
“Moreover, the agency fails to consider the negative consequences this rule will have on consumers and competition," Brown added, noting that the interim final rule "would inflict this harm despite uniform and contradictory court precedent rejecting the interpretation of the Packers & Stockyards Act embodied in the interim final rule.”
The National Cattlemen’s Beef Assn. (NCBA) and National Pork Producers Council (NPPC) commented that the interim final rule should be withdrawn.
In its comments, NPPC said the rule “is illegal and in conflict with the clear direction of every federal circuit court of appeals that has reviewed the Packers & Stockyards Act, was improperly promulgated, is not supported by the Administrative Record and will have a destructive impact on the meat sector by harming the very farmers GIPSA is entrusted to protect.”
“Our extensive analysis of the (interim final rule) has determined that it will harm the marketing programs our industry has spent years developing,” NCBA president Craig Uden wrote in a letter on behalf of the cattle group. “We have been diligent in building alternative marketing arrangements to help provide opportunities for producers, and we will not tolerate government action that threatens our ability to market cattle the way we want.”
Other groups contend that the proposed changes would bring more fairness and equity to the contract agriculture system. “Currently, farmers seeking justice against abusive practices routinely have to prove that harm has been done to the whole industry in order to successfully argue that they have been harmed by the actions of an integrator or meat packer. This rule is needed to level the playing field and allow farmers to seek legal remediation for harms done against them by corporate packers and integrators,” the National Sustainable Agriculture Coalition said. “This is akin to having to prove that the entire housing market in your state was harmed by someone setting your house on fire in order to win a court case against the arsonist. Not only is this a ludicrous standard that no one should have to meet in order to see justice served; it is not written anywhere in the law.”
Organization for Competitive Markets president Mike Weaver explained that the “language contained in this rule captures the original intent of the (Packers & Stockyards Act) and USDA's long-standing interpretation that not all violations of the (Packers & Stockyards Act) require a showing of harm or likely harm to competition. Rather, individual family farmers can demonstrate, under certain circumstances, a violation of (Packers & Stockyards Act) by showing they have sustained the harm from certain actions or practices."
Weaver added that since passage of the Packers & Stockyards Act, "the federal courts have taken the liberty to water down the intent and the Executive Branch's interpretation of the ... act. A decision in a 2008 federal case resulted in denying farmers from having their claims of marketplace abuse from being redressed unless they can prove the abusive actions cause an adverse impact to competition. Interpreting the law in this manner effectively protects the companies and not farmers, as the law was intended."
R-CALF USA accused JBS and Cargill, the nation's second- and third-largest beef packers, respectively, of engaging in improper conduct that has harmed family farmers and ranchers and stated that "when two of the four packers that control 85% of the fed cattle market have histories of committing anticompetitive practices against (cattle producers), ... the necessity of empowering independent (cattle producers) to protect themselves against such despicable packer conduct immediately becomes self-evident. Therefore, the secretary should allow the (interim final rule) to become effective as quickly as possible."
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