The USDA has decided continue the rulemaking process on the 2010 Grain Inspection, Packers and Stockyards Act proposed rules, known as the “Farmer Fair Practices Rules.”  The USDA sent out a letter last week to leaders in the meat industry who had asked to reopen the comment on the rules, which were originally proposed in 2010. Several industry groups have responded to the letter.

From the North American Meat Institute:
Following the USDA decision to send an interim final Grain Inspection, Packers and Stockyards Administration (GIPSA) rule to the White House Office of Management and Budget (OMB), the North American Meat Institute reiterated its concerns about the remarkably flawed proposal which research suggests could have a multi-billion dollar impact harming consumers, retailers, producers, meat packers and processors alike.

“It is irresponsible for USDA to advance this stale six year old rulemaking,” said Meat Institute President and CEO Barry Carpenter. “The interim final rule as described will open a floodgate of litigation, up-end the established system for marketing cattle, pork, and poultry in the U.S., and add costs at every step along the process from producers to consumers.”

The interim final rule is in direct defiance of the will of Congress expressed in multiple appropriations measures and signed by the President, it directly circumvents the rulings of eight separate federal appeals courts and is strongly opposed by the largest producer groups in the country.

The Meat Institute and several producer groups had previously requested that USDA reopen the comment period on the 2010 proposed rules to permit additional, current comments based on today’s market conditions. The rules were originally published six years ago and in that time significant changes have occurred in the livestock, meat and poultry sector.  New markets have emerged and there is enhanced competition for sourcing livestock for slaughter.

Similarly, demands from retail and foodservice customers for very specific animal handling and production requirements such as organic, grass fed, raised without an antibiotics and others have created new marketing and business opportunities for poultry and livestock producers and their packer customers. If consistent with what was proposed in 2010, the interim rule undermines these marketing agreements and impacts the availability of these products for consumers.

“Despite the Administration’s promises of transparency, USDA is dusting off a six year old proposal that was rejected by Congress through four funding bills, and is foisting an interim final rule on the meat and poultry industry without any meaningful comment process or input from the industry most impacted.  This represents Washington, DC, bureaucracy at its worst,” said Carpenter.

From the National Cattleman’s Beef Association:
The proposed rulemaking was initially undertaken in 2010 and quickly defunded by Congress which recognized them as a flawed concept that limits producers’ marketing options while adding layers of bureaucracy and opening the door to litigation. NCBA President Tracy Brunner said these provisions were troubling in 2010 and remain a major concern six years later.

“The GIPSA rules, as they pertain to cattle producers, are extremely troubling to our industry at a time when we are already grappling with volatile futures markets and a fragile cash market,” said Brunner. “Rather than working to help ensure producers have accurate price information in a productive way, like ensuring Mandatory Price Reporting is a critical government function, unaffected by future government shutdowns; USDA is expending time and resources to push forward outdated rules to regulate an industry that never requested their assistance. These rules were flatly rejected by cattle producers six years ago and a strong bi-partisan majority in Congress expressed their continual disapproval through a half-decade of defunding.”

USDA has announced the GIPSA rules include an interim final rule on competitive injury and two proposed rules to address undue preference and the poultry grower ranking system. The agency has said they will provide additional opportunity for public comment on all the rules and will announce if any amendments will be made.

“NCBA and our members have been engaged with USDA, even while the implementation of these rules was defunded,” said Brunner. “Unfortunately, once again, this Administration has disregarded producer input and moved forward with regulations that would cause irreparable harm. USDA’s opportunity for future comment is a hollow offer when they should have engaged with the industry before moving forward.”

While USDA notes they will exclude marketing arrangements from these rules, these provisions are outweighed by the competitive injury provisions of the GIPSA rule that do not require a showing of injury in order to claim a violation of the Packers and Stockyards Act.

“We know that regulation and legislation always come with unintended consequences,” said Brunner. “We don’t see any changes that could be made to the competitive injury and undue preference provisions that wouldn’t diminish marketing opportunities for producers. The fact is that value-added programs have supported higher prices and premiums for producers even when markets are weak. The GIPSA rules would jeopardize the future of these programs and add litigation costs. Absent a required showing of economic harm to claim preference, these rules disregard a central tenant of our legal system and set out a regulatory framework for harassment based solely on the subjective appearance of preference.”

In 2010, NCBA submitted comments on the GIPSA rules citing concerns. These concerns remain as relevant today as they were six years ago.

“These rules are not about fairness, and to call them ‘Farmer Fair Practices Rules’ is nothing but political spin to disguise the real intent,” said Brunner. “These rules are another government solution in search of a problem. They will limit producer marketing options, compel buyers to offer lower bids across the board 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 a trial lawyer’s bonanza and that is as true today as it was in 2010.”

NCBA calls on USDA to immediately withdraw the GIPSA rules and work with the industry to address the Administration’s concerns with livestock marketing.

The letter from the USDA reads, in part, “The "Farmer Fair Practices Rules" will seek to help balance the relationships between livestock producers, swine production contract growers, and poultry growers and the packers, swine contractors, and live poultry dealers with whom they interact. GIPSA has worked extensively to examine the 2010 rulemakings and make adjustments where appropriate. Currently, three separate rulemakings are under development. These will include an interim final rule addressing the scope of Sections 202(a) and (b) of the Packers and Stockyards Act; a proposed rule to address unfair practices and undue preferences in violation of the Packers and Stockyards Act; and a proposed rule addressing poultry grower ranking systems.

“USDA appreciates the concerns expressed regarding a meaningful opportunity for comment. Consistent with statements made before the Senate Agriculture Committee, USDA will not publish any rules without providing further opportunity to the public to review, understand, and provide feedback.”