USDA files the final word on the GIPSA rule

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It’s hard to believe that it was the 2008 Farm Bill that began what would drag out to be a controversial and much-debated process, but USDA has just published the Final Rule implementing revised provisions within Grain Inspection, Packers and Stockyards Administration. Known as the GIPSA rule, the original objectives were to provide provisions that would boost protection of livestock producers and poultry growers operating under production and marketing contract arrangements.

USDA Secretary Tom Vilsack made the announcement regarding the step of publishing the final rule in the Federal Register on Dec. 8. The rule will go into effect 60 days later.

In the end, the GISPA provisions were modified from the June 22, 2010 proposed rule. Various agriculture sectors, as well as lawmakers, were severely at odds with the details and a series of USDA hearing followed, from which additional adjustments were made to the proposed provisions.

"NPPC is pleased that USDA took into consideration producers' concerns with the original proposal and issued a rule that deals only with the areas Congress, in the 2008 Farm Bill, asked it to address. We will review the 'new' GIPSA rule to ensure it doesn't present any problems for producers," National Pork Producers Council officials told Pork Network.

While not exclusive to the pork and poultry sectors, the GIPSA rule has the farthest reach there. What is left in the rule includes criteria that the USDA Secretary may consider when determining whether a live poultry dealer has provided reasonable notice to growers regarding any suspension of the delivery of birds. Proper notice also is required when determining whether a requirement of additional capital investments over the life of a poultry or swine production contract constitutes a violation of the Packers and Stockyards Act, as well as when determining if a packer, swine contractor or live poultry dealer has provided a reasonable period for a grower to remedy a breach of contract that could lead to termination of a production contract.

The rule also includes a section requiring contracts that require the use of arbitration to include language on the signature page that allows the producer or grower to decline arbitration and provides criteria that the Ag Secretary may consider when determining if the arbitration process provided in a contract provides a meaningful opportunity for growers and producers to participate fully in the arbitration process.

USDA intended to gather additional public comment on several other revised provisions from the 2010 proposed GIPSA rule, including changes to the tournament payment system for poultry growers, requirements to collect and post sample contracts, as well as to address the issue that producers would have to show competitive harm prior to asserting a PSA violation. Those steps came to a halt as Congress passed a Fiscal Year 2012 Agriculture Appropriations Bill, which included language prohibiting USDA from moving forward on those provisions.

USDA officials say, despite this setback, USDA and the Obama Administration remain committed to promoting a fair and transparent marketplace.

“As I travel throughout the countryside, I often hear from farmers and ranchers about their concerns with the marketplace becoming more concentrated,” Vilsack said. “While concentration certainly comes with some efficiencies, Congress recognized in the 2008 Farm Bill that additional protections for producers are warranted. Today’s rule will implement these targeted protections and help provide more fairness and transparency in the marketplace.”

“While the Final Rule is a good first step, it is certainly not a last step,” says Roger Johnson, National Farmers Union president. “In choosing to prevent the competitive injury portion of the rule from moving forward, Congress has clearly chosen to put the interests of large packers ahead of family farmers and ranchers.”

He indicated that NFU will “continue working with this administration and Congress to ensure that family farmers and ranchers are able to compete in a fair and open marketplace.”

A full review of the final rule is available here.


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