National Meat Association questions GIPSA rule |

National Meat Association questions GIPSA rule

WASHINGTON (DTN) – The National Meat Association (NMA) wants USDA officials to explain why alleged complaints of market manipulation were used to write a proposed livestock marketing rule, but haven’t led to any actual enforcement actions against the packers.

The NMA, which represents meat packers, had requested the records from the Grain Inspection, Packers and Stockyards Administration through a Freedom of Information Act regarding the proposed GIPSA rule to change the 1921 Packers and Stockyards Act.

Under the proposed rule, GIPSA included a provision to ban packer-to-packer livestock sales. The controversial rule was first proposed last June in compliance with a 2008 farm bill provision requiring the agency to improve fairness in the marketing of livestock and poultry. The proposed rule prohibits packers from purchasing, acquiring or receiving livestock from other packers, and communicating prices to competitors.

While the Ranchers-Cattlemen Action Legal Fund-United Stockgrowers of America (R-CALF USA) and the National Farmers Union have praised the new rule, other livestock groups and packer organizations including NMA have said it will have negative impacts for both livestock producers and processors. Members of Congress also alleged last year that GIPSA was going beyond lawmakers’ intent with the proposed rule.

In reaction to the criticism, USDA lengthened the public comment period and is conducting an economic analysis of the proposed rule.

In a statement released to DTN, Rosemary Mucklow, a director emeritus for NMA, stated she asked GIPSA Administrator J. Dudley Butler last June to provide information supporting the agency’s assertion that “GIPSA has received complaints from market participants that packer-to-packer sales may have the intended and unintended effect of manipulating market prices.”

Mucklow said Butler responded to her letter on Aug. 10, but rather than providing documents, he “made new factual assertions” that “certain packers may be influencing negotiated hog prices through a separate procurement mechanism” and that “complaints regarding the practice of packer-to-packer sales continue to be received by GIPSA.”

On March 2, Joanne Peterson, GIPSA’s Freedom of Information Act officer, sent Mucklow 109 pages of heavily redacted documents. (DTN Correspondent Jerry Hagstrom received a copy of those documents.)

GIPSA asserts that the redacted information is exempt from FOIA disclosure for various reasons, including the protection of confidential business information, pre-decisional information, and information that could disclose secret law enforcement techniques and procedures.

But NMA says many of these exemption claims may not be valid because GIPSA did not explain why this information could not be disclosed if the names of the companies from which it was obtained was redacted.

NMA also said that GIPSA “did not explain why other information is pre-decisional or relates to law enforcement techniques, when the information was relied upon to form the basis of the proposed rule, and where apparently there have been no enforcement actions taken based on the information.”

Mucklow said her review of the documents revealed that all of them were related to hog pricing rather than packer-to-packer sales of cattle, and that “the large majority of the documents” are from 2007 or earlier and related to packer-reported purchases of hogs at high prices that distorted the markets.

She also said that there did not appear to be any complaints after 2007, “despite Mr. Butler’s earlier statement that GIPSA continues to receive complaints.”

Brett Schwemer, an attorney with Olsson Frank Weeda Law, a Washington firm that represents NMA, said that if the organization goes forward with its attempts to obtain the information, it would first ask Butler to release more documents, and if he continues to deny the request, an appeal would be made in a federal district court. Schwemer said he is still evaluating the legal aspects of filing an appeal.

Peterson, the GIPSA Freedom of Information officer, said last week that if NMA files an appeal, GIPSA will follow the normal appeals process and re-evaluate the documents.

Sally Donner, a policy adviser at Olsson Frank Weeda who is also a consultant to NMA, said the organization is urging the Agriculture Department to make its economic analysis available for public comment and peer review.

Asked at a Senate Agriculture Appropriations Committee hearing Thursday, March 10, whether USDA would put the economic analysis out for review, Agriculture Secretary Tom Vilsack said the agency has already received many public comments and is incorporating them into its analysis.

Schwemer said that a key issue is whether USDA concludes that the economic impact of the analysis would be under $100 million per year. If the impact is more than $100 million per year, that would trigger a much more rigorous economic analysis, Schwemer said. Industry groups have filed public comments that the impact would be much higher than $100 million per year, he added.

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