Livestock groups such as the National Cattlemen’s Beef Association, the National Pork Producers Council, the National Chicken Council and the North American Meat Institute may not support the proposed changes, but last week USDA forwarded a long pending update to the GIPSA Act onto the White House’s Office of Management and Budget for economic evaluation. The biggest change to the GIPSA Act is referred to as the “Farmers Fair Practices Rules,” which would effectively eliminate the need for producers to provide proof of competitive injury in order to file a complaint. The other two changes involve new rules regarding unfair practices and preference and the elimination of the poultry grower ranking systems.
A statement from NCBA on the subject states the new rules are “are another government solution in search of a problem. They will limit produce marketing options, compel buyers to offer lower bids across the board in order to avoid the appearance of preference and create an environment ripe for baseless legal challenge. We have always said that the GIPSA rules set out in a trial lawyers bonanza and that is as true today as it was in 2010.”
Debate over the revamp of GIPSA goes back to the 2008 farm bill which required Congress to update the act in order to bring it in line with developing marketing systems and technology. The original attempt was made back in 2010 but we quickly defunded by Congress after the proposed rules met opposition. However, US Ag Secretary Tom Vilsack says the 2016 rule changes have dropped some of the provisions that caused controversy in the past including rules that would have prevented meatpackers from buying livestock from other packers, banned packers from exclusive agreements, and a requirement that packers and live poultry dealers submit sample contracts to USDA for public review. An original study by Informa Economics back in 2010 stated proposed changes to the rule would cost the industry. No new study has been done at this point to provide an updated estimate.
Still, the rule is not without support. Longtime Republican Senator Chuck Grassley from the nation’s largest hog producing state of Iowa offered his support to the rule last week. In a speech last week, he said that the proposed rule would give family farmers more confidence in the markets by seeking to balance relationships between producers and the companies that purchase their animals.
The National Farmers Union also backs the rule, saying the Farmers Fair Practices Rule would provide needed contract protections for livestock and poultry growers. NFU President Roger Johnson said “Livestock Producers and poultry growers have been waiting too long for much needed protections against the fraudulent, anti competitive practices they fall victim too in the market place, we applaud USDA for staying committed to publishing rules that seek to protect producers, growers, consumers, and the industry alike.”
While Secretary Vilsacks says the proposed rules have been forwarded on for evaluation, he also wrote in a letter to livestock groups that USDA will provide additional opportunity for comment given the high level of interest in the changes.