Red semi with livestock trailer backed up to hog barn loading chute. National Pork Board

USDA issues GIPSA rules; opposition comes swiftly

Legislative Preview runs down GIPSA rules and opposition; medium-sized farms decline; USDA preps for Census of Ag; Italy approved to export raw pork to U.S.; waiting on Trump's USDA nominee.

USDA’s Grain Inspection, Packers and Stockyards Administration released its “Farmer Fair Practices Rules” that according to USDA is to “target the most harmful practices hurting farmers” and “provide protection” to farmers under the Packers and Stockyards Act.

It includes two proposed rules and an interim final rule. The first proposed rule would 1) identify certain activities that are “unfair, unjustly discriminatory or deceptive practices or devices” by packers, swine contractors or live poultry dealers and 2) provide criteria when determining whether a packer, swine contractor or live poultry dealer engaged in conduct that provided undue or unreasonable preferences or advantages.

The second proposed rule would establish criteria affecting how a live poultry dealer uses poultry growing systems. The interim final rule establishes a new legal standard for proof of harm for violations of the PSA. Currently it has to be proved that an unfair practice harms the entire market in order to be a violation of the PSA. This new rule will allow an individual to only have to prove they were harmed. It overturns eight federal appeals courts rulings.

It is expected that lawsuits will be filed against packers once the rule goes into effect. The rule will go into effect after a 60-day comment period.

Negative reaction to USDA’s action was swift and very strong from producer groups and the meat industry. The National Pork Producers Council says, “I can’t imagine a more devastating regulation on an industry. This rule, which creates legal uncertainty, will destroy opportunities for many in the U.S. pork industry, with no positive effect on competition, the regulation’s supposed goal. This rule will be a boon to trial lawyers and a weapon activist groups will use to attack segments of the livestock industry. The inevitable costs of the regulation could lead to further vertical integration of the pork industry, driving packers to produce more of their own hogs.”

The North American Meat Institute says, “The interim final rule is a bureaucratic end-run not only around what the federal courts have repeatedly told USDA over the years, it also is an attempt to rewrite the PSA without Congressional approval. Congress amended the PSA less than three months ago on Oct. 7. When it did so, it affirmatively chose not to amend the section of the law this rule affects – even though GIPSA has been arguing for its interpretation, without success, for more than 20 years. 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.”

The National Cattlemen’s Beef Association says, “This rulemaking will drastically limit the way our producers can market cattle and open the floodgates to baseless litigation. USDA is going well beyond their statutory limitations, limiting marketing options for a product that America is demanding. The fact of the matter is, we don’t trust the government to meddle in the marketplace. Cattlemen and women don’t appreciate (USDA) Secretary (Tom) Vilsack throwing a grenade in the building as he abandons it.”

However, the National Farmers Union and American Farm Bureau Federation support the USDA package. NFU says, “For too long, family livestock producers and poultry growers have endured a heavily concentrated market with little protection against unfair, anti-competitive practices. We are glad that this important set of rules is finally moving forward. While the Farmer Fair Practice Rules do not fix all of the fraudulent practices in the livestock and poultry industries, these rules are certainly an important step in the right direction. Both producers and consumers benefit when the markets are competitive and the practices and process are transparent. We look forward to thoughtfully reviewing the published rules and providing feedback to ensure the final rules will work for family farmers. AFBF says, “These proposed rules will strengthen GIPSA’s ability to evaluate business practices in the poultry industry and better protect individual farmers from discriminatory treatment. America’s chicken farmers have long called for greater transparency and a level playing field in our industry, and we appreciate USDA’s efforts to hold companies accountable and give farmers a voice.”

Medium-sized farms decline by 5%

USDA’s latest Economic Research Service’s report shows medium-sized farms in the United States declined by 5% between 1992 and 2012 to approximately 125,000. Midsized farms are defined as those with a gross cash farm income of between $350,000 and $1 million. They account for 21% of total production and 6% of U.S. farms in 2014.

During the same time frame, the number of large farms doubled. Large farms have a gross cash farm income of at least $1 million. These farms represent 4% of all farms but account for nearly 57% of production. Small farms, with less than $350,000 in gross cash farm income, represent 90% of total farms but account for 22% of agricultural production.

USDA preparing for 2017 Census of Agriculture

Nearly one million farmers and ranchers will receive the National Agricultural Classification Survey this month to help USDA identify all active farms and ranches in the United States. The NACS will help determine who will receive a census of agriculture questionnaire next December. The census is conducted every five years by the USDA and is the only source of uniform, comprehensive and impartial data on agriculture for every county in the United States.

Italy approved to export pork to U.S.

USDA’s Food Safety and Inspection Service has approved Italy to export raw pork product to the United States after completing on-site verification audit of the country’s inspection system for these products.

The raw pork products must be from swine slaughtered on or after Dec. 1, 2016. Italy has not been allowed to export raw pork products to the United States since the 1990 outbreaks of classical swine fever and swine vesicular disease.

Still waiting on Trump to name secretary of agriculture

The agriculture community is getting anxious on who President-elect Trump will name as secretary of agriculture. Press reports indicate only former Georgia Gov. Sonny Perdue and Sen. Heidi Heitkamp (D-ND) have interviewed with Trump, but others are being considered.

There are only a few cabinet secretaries or cabinet-level positions left that Trump has not named – secretary of agriculture, secretary of veterans affairs, director of Office of Management and Budget and U.S. trade representative.

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