USDA sends GIPSA rule to White House
October 18, 2016
Agriculture Secretary Tom Vilsack told the meat industry Friday that USDA is moving forward with Grain Inspection, Packers and Stockyards Administration "Farmer Fair Practices Rules" to implement a 2008 farm bill provision "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."
The rule has been in development since 2010 but is highly controversial, with the meat industry opposed and the representatives of smaller farmers — particularly poultry growers — in favor of it. The House Appropriations Committee has included a rider in the fiscal year 2017 Agriculture appropriations bill to stop implementation of the rule, but the Senate Appropriations Committee did not include it.
Vilsack informed the industry in a letter, and the National Cattlemen's Beef Association posted it:
"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 said.
“The GIPSA rules, as they pertain to cattle producers, are extremely troubling to our industry at a time when we are already grappling with volatile futures markets and a fragile cash market. ... These rules were flatly rejected by cattle producers six years ago and a strong bipartisan majority in Congress expressed their continual disapproval through a half-decade of defunding.”Tracy Brunner, NCBA president
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"Regarding the rule clarifying the scope of Sections 202(a) and (b) of the Packers and Stockyards Act, USDA plans to issue an interim final rule to establish our interpretation of the statute, which will then be entitled to judicial deference.
"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."
NCBA President Tracy Brunner said, "The GIPSA rules, as they pertain to cattle producers, are extremely troubling to our industry at a time when we are already grappling with volatile futures markets and a fragile cash market."
"Rather than working to help ensure producers have accurate price information in a productive way, like ensuring mandatory price reporting is a critical government function, unaffected by future government shutdowns, USDA is expending time and resources to push forward outdated rules to regulate an industry that never requested their assistance," Brunner said.
"These rules were flatly rejected by cattle producers six years ago and a strong bipartisan majority in Congress expressed their continual disapproval through a half-decade of defunding."
The National Pork Producers Council also criticized the plans to move forward.
"Pork producers are concerned that, like the 2010 proposed rules, the ones sent to OMB would have a negative effect on the pork industry, from producers to packers and ultimately consumers," said NPPC CEO Neil Dierks.
"While the specifics of the actual rules are not yet clear, we're worried about their impact on the ability of producers to secure financing and to innovate and about them potentially leading to greater vertical integration without offering positive advantages to the industry and consumers."
Of particular concern, Dierks said, is the interim final rule on the "scope" of sections of the Packers and Stockyards Act related to meat packers using "unfair, unjustly discriminatory or deceptive practices" and giving "undue or unreasonable preferences or advantages" to producers.
"While NPPC has yet to see the language of that rule, the 2010 version was overly broad, and most of the cost of complying with the 2010 rules would have come from that regulation," NPPC said.
The National Farmers Union praised the USDA action, saying it would "provide needed contract protections for livestock producers and poultry growers."
"Livestock producers and poultry growers have been waiting too long for much needed protections against the fraudulent, anti-competitive practices they fall victim to in the marketplace. We applaud USDA for staying committed to publishing rules that seek to protect producers, growers, consumers and the industry alike," said NFU President Roger Johnson.
"We support USDA's approach to provide an interim final rule that will provide certainty for family livestock producers and poultry growers. We look forward to seeing these rules published following review by the Office of Management and Budget, and we look forward to an opportunity for the public to review, understand, and offer feedback," he added.
The National Sustainable Agriculture Coalition said that "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 not only prove harm to themselves and their businesses, but they must also prove that the result of the harm impacted competition industry-wide," NSAC said. "The interim final rule will clarify and underscore the plain language of the Packers and Stockyards Act, which requires no proof of harm to competition from a complainant."
"We applaud USDA and GIPSA for moving forward with the Farmer Fair Practices Rules today," said NSAC Policy Director Ferd Hoefner.
"Once enacted, these common-sense 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."
–The Hagstrom Report