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USDA says it will advance GIPSA rule changes

Vilsack moves forward to finalize three rules affecting relationships between producers and meat packers.

The U.S. Department of Agriculture has decided to send an interim final Grain Inspection, Packers & Stockyards Administration (GIPSA) rule to the White House Office of Management & Budget. The “GIPSA rule,” which had been stalled in recent years through congressional riders, has been widely controversial and generated concerns from many livestock groups.

In a letter to leaders of livestock groups, Agriculture Secretary Tom Vilsack said there are currently three separate rule-makings under development: the Farmer Fair Practices Rules, which include two proposed rules, and an interim final rule.

The proposed rules address the poultry tournament payment system and issues of undue preference, while the interim final rule clarifies that farmers need only prove they were treated unfairly by a company to secure legal remedy. Currently, farmers are required to prove not only harm to themselves and their businesses but also that the result of the harm affected competition industry-wide. The interim final rule will clarify and underscore the plain language of the Packers & Stockyards Act, which requires no proof of harm to competition from a complainant.

In his letter regarding the interim final rule, Vilsack said, “Given the significant level of interest in this provision, and in the interests of an open and transparent government, the agency will provide an additional opportunity for public comment. USDA will consider all comments received and intends to publish a document that will include a discussion of any comments and whether any amendments will be made to the rule.”

Major livestock groups — including the National Cattlemen’s Beef Assn., North American Meat Institute, National Pork Producers Council and National Chicken Council — have been opposed to advancing the GIPSA rule, saying it limits producers’ marketing options while adding layers of bureaucracy and opening the door to litigation. New markets have emerged, and there is enhanced competition for sourcing livestock for slaughter.

In September, the groups asked Vilsack if he was going to move forward on the rule, wanting to make sure they would be allowed to again comment on the proposed rule from 2010. They explained that the administrative record “has grown stale and does not include significant and substantial changes that have occurred within the livestock marketplace in the years since the rule-making docket was closed to comment.”

“USDA appreciates the concerns expressed regarding a meaningful opportunity for comment. Consistent with statements made before the Senate Agriculture Committee, USDA will not publish any rules without providing further opportunity to the public to review, understand and provide feedback,” Vilsack wrote.

Matt Herrick, communications director for Vilsack, added as the Secretary noted in testimony recently, USDA has worked hard over the last several months to update regulations previously proposed in 2010. 

“The Farmer Fair Practices Rules seek to help balance the relationships between livestock producers, swine production contract growers, and poultry growers, and the packers, swine contractors, and live poultry dealers with whom they interact,” Herrick said in a note to Feedstuffs. “They will provide needed clarification to stakeholders and will help ensure a fair marketplace and level playing field for honest, hardworking farming families across the country. The proposals will also provide clarity and certainty, which are important for the livestock industry to know what is and is not acceptable.”

In developing the rules, GIPSA looked extensively at past comments and worked closely with the USDA Office of the Chief Economist to consider any economic impacts, Herrick added.

Vilsack did say USDA is considering excluding several provisions that were proposed in 2010 from the current rule-making in order to “improve the regulation and reduce overall burden.” These provisions include: applicability to livestock production and marketing contracts, including formula and forward contracts; the requirement that packers, swine contractors or live poultry dealers maintain written records that provide justification for differential pricing or any deviation from standard price or contract terms; the requirement that packers refrain from entering into exclusive agreements with livestock dealers; prohibiting packers from purchasing livestock from other packers, and requirements that packers and live poultry dealers submit sample contracts to GIPSA for posting to the public.

For additional insight into how groups perceive the update, be sure to read our related story: Industry groups express mixed thoughts on GIPSA rule advancements.

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