GIPSA concern grows on Capitol Hill

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A bi-partisan group of 147 congressmen want USDA Secretary Tom Vilsack to commit to a timeline to complete the long-overdue economic impact analysis of the proposed 2010 Grain Inspection, and Packers and Stockyards Administration rule. They also asked for a public comment period, following the analysis and “before a final or interim final rule is published.”

This week’s action follows action in October 2010, where 115 members of the U.S. House of Representatives wrote to Vilsack urging such an analysis, to which he agreed in late 2010 to conduct one, but nothing has developed.

The controversial rule was initiated under the 2008 Farm Bill, which authorized USDA to promulgate regulations under the Packers and Stockyards Act to address five specific areas related to livestock and poultry production and marketing contracts. However, the rule has quickly become one of the more controversial and onerous regulatory proposals that USDA has ever published, according to the American Meat Institute. Many argue that it fair exceeds the original lawmakers’ intent outlined in the farm bill.

In fact, the lawmakers sent a letter to Vilsack that urged him to withdraw the proposed rule and offer a new rule, once the economic analysis is complete, that is “more consistent with the intent of Congress outlined in the 2008 Farm Bill.” Specifically, the lawmakers wrote: “It is troubling that the Department appears to be using the rule-making process to accomplish objectives specifically rejected by Congress, and we are confident any such rule will not be looked upon favorably by Congress.”

As proposed, the rule would “fundamentally alter the relationships between meat and poultry processing companies and their livestock and poultry suppliers,” say AMI officials. “No detailed economic impact analysis was done by GIPSA when the proposed rule was first published because the agency claimed that the rule was not economically significant.”

However, three private analyses, including one commissioned by AMI, have found that the proposal far exceeds the threshold required for an economic analysis. AMI estimates the proposal’s cost at $14 billion.

“In writing the GIPSA rule, USDA went well beyond what Congress asked it to do,” said Doug Wolf, National Pork Producers Council president. “The regulation it came up with will cost the U.S. pork industry nearly $400 million annually, limit farmers’ ability to sell animals, dictate the terms of private contracts, make it harder to get farm financing, raise consumer prices and reduce choices, stifle innovation and lead to more vertical integration of the pork industry.”

 “The sheer number of signatories on this letter is a testament to the growing concern on Capitol Hill about the proposed GIPSA rule.  Congress is asking a fundamental and essential question:  when will USDA tell us the price tag on this rule?” says J. Patrick Boyle, AMI president and chief executive officer.  “We applaud the lawmakers, also, for reiterating that USDA exceeded its Congressional mandate in the proposed rule and that the proposal must be redrawn and re-written consistent with that mandate.”

USDA has not provided the livestock or poultry sectors with any idea when a final rule might be forthcoming. Analysts say it could be August or could be as late as year’s end.

“America’s pork producers are grateful to the nearly 150 House members who asked that the proposed GIPSA rule be withdrawn,” says Wolf, a pork producer from Lancaster, Wis. “As written, the regulation would be bad for producers, bad for consumers and bad for rural America.

“The letter’s signatories together represent districts that comprise the vast majority of rural America and together, their districts risk nearly 50,000 jobs if this rule is implemented as written,” Boyle notes.

To view the letter, go to AMI’s Website.

More information on the proposed rule, and an economic impact analysis of the proposal by John Dunham & Associates, is available here.  


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