This week the U.S. Department of Agriculture released its much-anticipated Grain Inspection, Packers and Stockyards Administration (GIPSA) regulations designed to protect livestock and poultry farmers from unfair marketing practices.
The Farmer Fair Practices Rules are comprised of an interim final rule and two proposed rules GIPSA sent to be published in the Federal Register. All will have 60 days for comments after publication, and the interim final rule will go into effect after those 60 days.
The interim final rule will affirmatively establish the Department’s long time position that it is not necessary to demonstrate that an unfair practice harms the entire market in order to prove a violation of the Packers and Stockyards Act (P&S Act). Agriculture Secretary Tom Vilsack said this interim rule is needed to remove the high burden for poultry growers to show that harm has been done. Such overly broad interpretations have put family farmers at a disadvantage for decades when pursuing their rights under the Act. The interim final rule addressing the scope of the P&S Act is essentially the same provision that was proposed in 2010, USDA said.
The proposed rule regarding unfair practices would clarify what GIPSA views as practices that clearly violate the Act and would establish criteria to protect the legal rights of farmers.
The third proposal would establish criteria that GIPSA would consider in determining whether a live poultry dealer has engaged in a pattern or practice to use a poultry grower ranking system unfairly. Many poultry growers through the contract system are paid out based on a tournament how they perform against their peers; the bigger and better their birds turn out relative to other growers, the more money they make. However, because the processors own the birds, the feed, and other inputs, they can unfairly disadvantage or preference one grower over another as a way of forcing the growers to do things against their will or shut down dissent.
Vilsack said it was his “hope and prayer” that these rules administer a measure of justice and consistency and are understandable.
However, it remains clear that many groups are divided on their views on the controversial regulations. (Read more here.)
The National Pork Producers Council put out a press release criticizing the politics behind the White House’s release of the controversial “GIPSA” rule.
“In an apparent attack on rural America for its role in helping elect Donald Trump as president, the Obama administration today issued a regulation that could restrict the buying and selling of livestock, lead to consolidation of the livestock industry – putting farmers out of business – and increase consumer prices for meat,” NPPC said in its opening paragraph.
Vilsack’s response to the statement: “Absurd!” Vilsack then went on to say it was unfortunate NPPC had decided to use “such rhetoric” in a rule that was designed to finish the work of the 2008 Farm Bill which passed during the George W. Bush Administration.
“This has nothing to do with the election and everything to do with what’s fair to producers,” Vilsack countered. “This secretary and this department are on the side of producers. If Congress hadn’t interfered, it would have been in place years ago.”
Congress included appropriations policy riders in fiscal years 2012, 2013, 2014 and 2015 to prohibit USDA from completing the rulemaking process. Congress removed the 'GIPSA rider' from USDA’s fiscal year 2016 appropriations measure, which allowed the Secretary to move forward.
The larger livestock groups all expressed criticism about the rule and that the Obama Administration made the move to release it during its final days in office.
Tracy Brunner, National Cattlemen's Beef Assn. president, said, “If USDA was interested in real solutions rather than increased government regulations, they wouldn't have rushed these rules out the door at the very close of the Administration's term, bypassing any input from industry. Cattlemen and women don't appreciate Secretary Vilsack throwing a grenade in the building as he abandons it."
National Chicken Council President Mike Brown noted in NCC’s press statement that the current GOP platform on which President-elect Trump ran clearly states that, “We oppose the policies pushed by special interest groups seeking to stop or make more expensive our current system of safe, efficient, and humane production of meat. Congress has repeatedly had to block the current Administration's draconian rules concerning the marketing of poultry and livestock. This regulatory impulse must be curbed, not on a case-by-case basis, but through a fundamental restructuring of the regulatory process.”
A recent update of a study conducted by Informa Economics of the proposed 2010 GIPSA Rule found that today it would cost the pork industry more than $420 million annually, with the majority of the costs related to PSA lawsuits brought under a “no competitive injury” provision.
“The bottom line,” said NPPC CEO Neil Dierks, “is that the White House picked trial lawyers and activists over farmers in forcing this regulation on rural America. We need to kill this illegitimate midnight rule.”
NPPC, NCBA and NCC all vowed to work with the new administration and Congress in seeing this rule overturned. Needless to say, this fight over GIPSA is far from over.