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3 reasons why revised GIPSA rule is shiny wrapped bombshell

The USDA claims the “Farmer Fair Practices Rules” will seek to help balance the relationship between livestock and poultry producers and packers. However, the three major animal proteins along with the North American Meat Institute says it is an unwanted present that keeps re-gifting itself over and over again.

Thirty-seven days before the presidential inauguration, the USDA presented livestock and poultry farmers with a controversial, highly criticized 6-year-old marketing rule – Farmer Fair Practices Rules. This updated rulemaking by the Grain Inspection and Packers and Stockyards Administration was received with mix emotions across the various agriculture organizations. When the rule was proposed in 2010, it had so many critics that Congress prohibited funding for its development and implementation. The prohibition expired this year providing an opening for the USDA’s GISPA to resurrect it without making changes to the proposed 6-year-old language.

The USDA claims the “Farmer Fair Practices Rules” will seek to help balance the relationship between livestock and poultry producers and packers. However, the three major animal proteins – beef, pork and chicken – along with the North American Meat Institute says it is an unwanted present that keeps re-gifting itself over and over again. Here is why:

  1. A gift for trial lawyers and animal rights activists.

The USDA picked trial lawyers and animal rights activists over farmers in its revision of the Packers and Stockyards Act, says leaders of all three major animal protein industries. The “Clarification of Scope” rule broadens the amplitude of the Packers and Stockyards Act of 1921 related to the use of “unfair, unjustly discriminatory or deceptive practices” and “undue or unreasonable preferences or advantages.” Basically, the new scope of the regulation would deem such actions, per se, violations of federal law even if they didn’t harm competition or cause competitive injury, prerequisites for winning PSA cases. Since these actions are currently settled in court on the state level, it will be open season for lawsuits. National Pork Producers Council CEO Neil Dierks firmly says, “The rule will be a boon to trial lawyers and a weapon activist groups will use to attack segments of the livestock industry,”

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.

Yet, the cost of ligation will not be isolated to the pork industry, as poultry and beef will also be open to a lawsuit. “Let’s call the recently rebranded ‘Farmer Fair Practices Rules’ what they really are – the ‘Gift to Trial Lawyers Rules’ that USDA is trying to get rammed through in the last weeks of this administration, ignoring years of congressional intent in the process,” responds National Chicken Council President Mike Brown.

Similarly, National Cattlemen’s Beef Association President Tracy Brunner says, “As we have consistently stated, if adopted, this rulemaking will drastically limit the way our producers can market cattle and open the floodgates to baseless litigation.”

  1. Raise meat prices for consumers

Leaders of the NPPC, NCC and NCBA all agree that these burdensome regulations will only drive the costs of doing business higher for livestock and poultry producers, and ultimately raise the price at the meat counter.

For the U.S. pig farmers, Dierks explains, “The inevitable costs of the regulation could lead to the further vertical integration of the pork industry, driving packers to produce more of their hogs. That will reduce innovation, quality and competition, with no benefit to consumers. Coupled with the current strong headwinds buffeting pork producers, the net effect of this destructive, unnecessary and illegitimate midnight rule would be a crushing blow to hog farmers of all sizes and to America’s rural economies.”

For poultry producers, the new provisions (re-proposed rules on poultry tournament systems) will have a detrimental impact on the welfare of the birds by eliminating competition and the incentive to provide the best care possible on the farm.

“These rules, however, could lead to rigid, one-size-fits-all requirements on chicken growing contracts that would stifle innovation, lead to higher costs for consumers, and cost jobs by forcing the best farmers out of the chicken business. The interim final rule on competitive injury would open the floodgates to frivolous lawsuits,” says Brown. “The performance-based contract structure of modern poultry production was instinctively designed to put the well-being of the birds as the top priority, as incentives are given to farmers who raise the healthiest birds, take risks and work hard. It incentivizes farmers to do their best, to compete, just like every other business in America or any other free market.”

Furthermore, Brunner says, “In a time of down cattle markets, the last thing USDA needs to do is limit opportunity. The fact of the matter is, we don’t trust the government to meddle in the marketplace.”

Summing it all up NAMI president and CEO Barry Carpenter says, “The practical effect of such a change will be to make it legally riskier to enter into marketing agreements, which in turn, will affect the supply of meat and poultry produced in ways consumers are seeking. This last-minute move to rush a rule out before an administration change will not only limit consumer choice, it is a kick in the teeth of innovative, consumer-focused livestock and poultry producers who rely on these agreements to help manage business risk.”

  1. No Congressional approval

As pointed out by the NAMI, this interim final rule is just a way to get around what the federal courts have time after time told USDA that is an attempt to rewrite the PSA without Congressional approval. House Agriculture Committee Chairman Michael Conaway, (R-Texas), criticized the rules and notes, “It is particularly troubling given Congressional disapproval with the overreach of these costly rules dating back to their original proposal in 2010.”

According to the USDA, the “Farmer Fair Practices Rules” reflect feedback received in over 60,000 comments and rigorous economic analysis conducted by GIPSA in collaboration with the USDA Office of the Chief Economist. GIPSA is providing an opportunity for additional comment on all of the rules for 60 days, which extends into the Trump administration. The NPPC and other animal agriculture organizations are calling on their members to submit a comment and work with the new administration to repeal the rule.

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