GIPSA decision pleases many, rages others

Senators disagree with GIPSA decision, Chairman Conaway praises decision

P. Scott Shearer, Vice President

October 20, 2017

5 Min Read
GIPSA decision pleases many, rages others
National Pork Board

USDA announced it was withdrawing the interim final rule (IFR), on “injury to competition,” and that it would take no further action on the proposed rule on “unfair practices and undue preferences.”  The Department’s Grain Inspection, Packers and Stockyards Administration (GIPSA) said it was withdrawing the interim final rule because of “serious legal and policy concern related to promulgation and implementation” of the rule.  The “Farmer Fair Practice Rules” was one of the last rules published in the final days of the Obama administration.  It would have broadened the scope of the Packer and Stockyard Act related to using “unfair, unjustly discriminatory or deceptive practices” and giving “undue or unreasonable preferences or advantages.” It would have over turned the rulings of eight federal appeals courts. 

The debate over the GIPSA rule has been going on since 2010 when it was first published.   The rule has been very controversial and divisive.   It will not be surprising if this issue is considered again next year during the Farm Bill debate. 

Industry reacts

The opponents of the GIPSA rule thanked the administration and Secretary of Agriculture Sonny Perdue for his decision.

The National Pork Producers Council said, “The regulations would have restricted the buying and selling of livestock, led to the consolidation of the livestock industry – putting farmers out of business – and increased consumer prices for meat.”

“Eliminating the need to prove injury to competition would have prompted an explosion in PSA lawsuits by turning every contract dispute into a federal case subject to triple damages.  The inevitable costs associated with that and the legal uncertainty it would have created likely would have caused further vertical integration of our industry and driven packers to own more of their own hogs.” 

The North American Meat Institute said, “The IFR attempted to renew a proposal rejected by Congress through four funding bills and directly circumvented the rulings of eight separate federal appeals courts.  The IFR would have greatly limited marketing agreements that allow the industry to meet consumer demand for various animal handling and production requirements, such as organic, grass-fed, raised without antibiotics and others, limiting the availability of these products for consumers.

“The Meat Institute has long argued the IFR was inconsistent with the existing statute, years of judicial precedent, and the will of Congress, with a price tag in the billions. The administration’s fresh look shows it’s time to move on from this irresponsible rule.”

The National Cattlemen’s Beef Association said, “This is a victory for America’s cattle and beef producers – and it’s a victory for America’s consumers. Agriculture Secretary Sonny Perdue deserves a lot of thanks and credit for this smart decision. The proposed rule would have crippled cattle producers’ ability to market their products through the value-added programs that help make American-produced beef the most delicious and nutritious in the world. This is a decision worthy of celebrating this evening with a top-quality steak.”

 The proponents of the rule were not pleased and very critical of the meat industry.

 R-CALF USA said, “Secretary Perdue just handed the entrenched, multinational trade associations and their high-dollar lobbyists a huge victory on the backs of hard-working U.S. farmers and ranchers.

“The Secretary’s decision to take no further action on the proposed rule that would have, after 95 years, finally implemented the Packers and Stockyards Act’s (P&S Act’s) prohibitions against unfair and anticompetitive buying practices is deeply troubling.

“His action effectively insulates multinational meatpackers, like the crime-ridden, Brazilian-owned JBS corporation, from any liability for engaging in unfair cattle-buying practices. Perdue is granting these multinational meatpackers a license to retaliate against individual producers and engage in such unfair practices as giving preferential contracts to their favorite, corporate-aligned feedlots while subjecting independent farmer feeders to a highly volatile, ultra-thin, and dysfunctional cash market.

“The Secretary’s action ensures the continuation of Washington’s agricultural swamp.”

National Farmers Union said, “It is deeply disappointing that USDA did not side with family farmers in the long-contested debate over rules for the Packers and Stockyards Act. The Farmer Fair Practices Rules offered a basic, yet important first step to addressing the unfair practice that family farmers and ranchers face in the extremely consolidated meatpacking industries.

“The withdrawal of the competitive injury rule is unjustified, given the long-held, plain language interpretation by the Department that growers do not need to prove harm to the entire industry when seeking relief from poultry companies for unfair contract practices. It is particularly egregious given the abuses that poultry growers face in the vertically integrated marketplace. 

“With this decision, USDA has given the green light to the few multinational meatpackers that dominate the market to discriminate against family farmers. As the administration has signaled its intent to side with the meat and poultry giants, NFU will pursue congressional action that addresses competition issues and protects family farmers and ranchers.”

The US Cattlemen’s Association said, “USCA is disappointed in today’s announcement. The proposed and interim rules sought to maintain competition in the marketplace; withdrawing the rule is a win for multi-national packers and fails to put U.S. cattle producers first.”

“USCA has been committed to seeing through necessary clarifications to the Packers and Stockyards Act, and a withdrawal of the rule does not solve the problems in today’s marketplace. Anti-competitive buying practices and the lack of true price discovery remain critical issues to our industry and ones that must be addressed.”

Senators disagree with GIPSA decision, Chairman Conaway praises decision

Senators Chuck Grassley (R-IA) and Jon Tester (D-MT) sent a letter to Secretary of Agriculture Sonny Perdue “vehemently” disagreeing with USDA’s decision to withdraw the GIPSA rules.  The Senators said, “Many of our constituents believe the current practices of multi-national livestock corporations, one of which is being investigated for unprecedented corruption, allow them to exploit farmers and ranchers.  The industry has consolidated for decades into its current structure that enables a handful of companies to have extraordinary market power.”   

However, House Agriculture Chairman Mike Conaway (R-TX) praised the decision by USDA.  He said, “After nearly a decade of battling partisan and contentious GIPSA reforms, America’s livestock, poultry and packing industries can breathe a sigh of relief. Today’s decision helps restore both Congressional intent and common sense by ensuring American producers have the freedom to market their products without the threat of frivolous lawsuits. I appreciate the Trump administration’s dedication to regulatory reform through the rollback of unnecessary and burdensome regulations like these.”

Ibach and Northey confirmations progress

The Senate Agriculture Committee by voice vote approved the nominations of Greg Ibach for Under Secretary of Marketing and Regulatory Affairs, and Bill Northey, Under Secretary for Farm Production and Conservation.  The Senate is expected to consider the nominations next week.


About the Author(s)

P. Scott Shearer

Vice President, Bockorny Group, Inc.

Scott Shearer is vice president of the Bockorny Group Inc., a leading bipartisan government affairs consulting firm in Washington, D.C. With more than 30 years experience in government and corporate relations in state and national arenas, he is recognized as a leader in agricultural trade issues, having served as co-chairman of the Agricultural Coalition for U.S.-China Trade and co-chairman of the Agricultural Coalition for Trade Promotion Authority. Scott was instrumental in the passage of China Permanent Normal Trade Relations and TPA. He is past chairman of the USDA-USTR Agricultural Technical Advisory Committee for Trade in Animals and Animal Products and was a member of the USAID Food Security Advisory Committee. Prior to joining the Bockorny Group, Scott served as director of national relations for Farmland Industries Inc., as well as USDA’s Deputy Assistant Secretary for Congressional Affairs (1993-96), serving as liaison for the Secretary of Agriculture and the USDA to Congress.

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