US House denies GIPSA poultry marketing regulation funding

The U.S. House has passed legislation that funds the U.S. Department of Agriculture, the Food and Drug Administration and related agencies for fiscal year 2012, but denies money for USDA’s Grain Inspection, Packers and Stockyards Administration to push its livestock and poultry marketing regulation.
Known as the GIPSA rule, the regulation was prompted by the 2008 Farm Bill. But according to detractors, the proposed rule goes beyond the intent of Congress and includes provisions specifically rejected during debate on the Farm Bill. Also under scrutiny is the USDA’s lack of an in-depth economic impact study of the proposal before it was published.
“We commend the House for voting to rein in the USDA’s GIPSA, which went far beyond its mandate from Congress in developing a rule on production and marketing of livestock and poultry,” said Mike Brown, president of the National Chicken Council. “We have consistently urged the USDA to go back to the drawing board and produce a rule that responds to its instructions from Congress rather than trying to destroy the existing system as the proposed rule does. Now we hope that the U.S. Senate will see the wisdom in the House action and follow suit.”

147 US Congress members reject proposed GIPSA rule

A rule on the marketing of poultry and livestock that would "make profound changes in the relationship between ranchers and farmers who produce cattle, swine, chickens and turkey and the companies that bring meat and poultry products to market" is being opposed by 147 members of the U.S. Congress.
The rule, proposed by the U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration, should be withdrawn and revised once GIPSA completes an economic analysis, according to a statement made by Congress. “I am grateful for the action taken by so many members of Congress in urging the Secretary of Agriculture to withdraw and re-propose the GIPSA rule,” said Mike Brown, president of the National Chicken Council. “The GIPSA rule clearly needs more careful review in light of its impact on economic growth, jobs and the administration’s stated goal of doubling exports.”
The USDA published the proposed rule in June 2010 with a cursory economic analysis, and Vilsack has agreed to conduct a more detailed analysis before a final rule is published. Members of Congress also asked for an update from Vilsack on the timeline for completion of the economic analysis and further action on the proposal. The rule would change, among other things, live poultry dealer behavior, including the tournament system often used for poultry contracts and how the contracts are written.

USDA to conduct GIPSA rule cost-benefit analysis

The U.S. Department of Agriculture has announced that it will conduct a cost-benefit analysis of the rule on livestock and poultry production and marketing proposed by the Grain Inspection, Packers and Stockyards Administration.
This decision comes on the heels of industry concerns with regards to the perceived lack of an adequate economic analysis of the proposed rule. “A serious and robust analysis of the economic impact of the proposed GIPSA rule is long overdue,” said National Chicken Council Senior Vice President and Chief Economist Bill Roenigk. “The rule will have a profound, far-reaching and costly impact on the poultry and livestock industries, and it should not have been put forth without an appropriate analysis of its impact on farmers and ranchers, the industry and consumers.”
In addition to the analysis, Agriculture Secretary Tom Vilsack said teams are being put together within the USDA to study the thousands of comments submitted during the rule's comment period, which ended on Nov. 22. Vilsack would not speculate on the length of time needed to go through the comments, but did say that the rule as it currently stands is a draft and could be extensively changed before being finalized.

American Feed Industry Assoc. comments on proposed USDA-GIPSA rules

The American Feed Industry Association has added its weight to comments submitted to the USDA protesting proposed rules by GIPSA regulating the meat processing industry with respect to contracts between farmers and processors.
It is the contention of the AFIA and industry associations that the proposed rules would distort traditional economic relationships and deviates from the intent of Congress as delineated in the 2008 Farm Bill. AFI president and CEO Joel G. Newman stated: “Most likely economic effects of this change would be a reduction of performance-based competition among growers, which could lead to them not reinvesting in the industry, a reduced rate of capital investment, a reduced rate of efficiency, and higher animal prices.”

Poultry industry calls GIPSA rule 'ill-advised,' 'unconstitutionally vague'

The latest rule proposed by the U.S. Department of Agriculture's Grain Inspection, Packers & Stockyards Administration (GIPSA) is "ill-advised" and "unconstitutionally vague," according to comments submitted by the poultry industry to the agency.
According to the industry, the rule, which makes significant changes in the relationship between U.S. chicken companies and the farmers who grow chickens under contracts with those companies, should be withdrawn and rewritten. “GIPSA fails to provide an adequate justification for imposing such sweeping and detrimental changes to the poultry industry and does not explain corresponding benefits to counterbalance the hundreds of millions of dollars of detrimental effects this proposal will have on the U.S. economy,” said the statement, which was signed by both National Chicken Council President George Watts and U.S. Poultry & Egg Association President John Starkey.
The comments also raise concerns regarding GIPSA's proposed change from a "tournament" system of compensation, which rewards farmers based on performance, to a "base rate" system that the industry said might reduce the premiums given to more efficient growers. “The result would be increased production costs for poultry dealers coupled with a decreasing incentive for growers to deliver high quality chickens because compensation would not be tied to performance or quality,” the letter stated. The lack of an economic analysis and the concept of "competitive injury" were also addressed.

GIPSA rule would hurt small beef producers

Colin Wood (left) of the National Cattlemen’s Beef Association (NCBA) participated in a panel at the National Chicken Council annual meeting. Looking on are fellow panelists Pete Thomson of the House Agriculture Committee and Gary Kushner of law firm, Hogan Lovells.

What brings a beef lobbyist to a chicken industry meeting? Common cause in opposition to the proposed Grain Inspection, Packers and Stockyards Administration (GIPSA) rule.
Small- to medium-sized beef producers are opposing the proposed GIPSA rule because it will drive consolidation in the cattle business and take away opportunities for them to participate in branded beef programs, a representative of the National Cattlemen’s Beef Association (NCBA) told listeners at National Chicken Council (NCC) annual meeting.

Beef producers join in opposition to GIPSA changes
“A beef lobbyist in a chicken meeting, and the world is still turning,” quipped Colin Wood, vice president, government affairs, NCBA, who said his organization and its members are working alongside NCC in opposition to the proposed rule.
Wood predicted that under the proposed rule the beef packers would discontinue arrangements that pay premium prices to cattle producers in the branded programs because of the potential for lawsuits for providing preferential pricing. Currently, the packers pay premiums to producers in the branded programs who have invested in livestock with better genetics and adhere to best management practices under the programs.
The branded marketing arrangements, which command premium retail prices in supermarkets, include programs such as Certified Angus Beef, Laura’s Lean Beef and Rancher’s Reserve at Safeway Supermarkets.

More consolidation in beef production to result
An end to producer participation in the branded programs will result in consolidation in the beef production business as producers exit the business when current opportunities for the better returns no longer exist, Wood said.
Under the proposed regulations, packers would no longer be passing part of improved margins back to beef producers in the programs but instead will pocket them, he said.
“I can’t say that I don’t sympathize with the position that packers have told us they will have to take under the proposed rule,” Wood said. “Under this rule, if I were in their position, I would probably undertake to protect myself as well.”

GIPSA would create market disruptions
Wood cited other problems with the proposed GIPSA rule. The proposed ban on packer-to-packer sales of cattle would result in market disruption where some NCBA members own both feeder and packer operations. Also, the rule’s proposed ban on order buyers working for more than one packer would result in there being no buyer representation for packers at smaller sale barns.
“The Obama Administration in this rule took a shot at the packers, but they hit the small- and medium-sized beef producers,” he said.

New regulations will cost broiler chicken industry $1 billion over five years

The National Chicken Council (NCC) has released a study claiming that proposed U.S. Department of Agriculture (USDA) regulations will cost the broiler chicken industry more than $1 billion over five years.
The study, conducted by FarmEcon LLC, raises issues of reduced efficiency, higher feed and housing costs and increased administrative expenses, as well as potential litigation costs, lost export sales and increased consumer prices. The changes, proposed by the USDA's Grain Inspection, Packers & Stockyards Administration (GIPSA), would result in changes in the relationship between chicken companies and independent chicken farmers. They would also require changes in the production and marketing systems for pigs and cattle.
While GIPSA maintains that the changes will have little economic impact, the study puts the cost burden at about $337 million per year by 2015. The total cost for the first five years is estimated at $1.03 billion, according to the study.

American Meat Institute releases economic impact study on potential GIPSA regulations

John Dunham and Associates, commissioned by the American Meat Institute (AMI), has released an economic impact study related to a U.S. Department of Agriculture regulatory proposal.
If put into play, the proposed Grain Inspection, Packers & Stockyards Administration (GIPSA) rule would, among other things, affect the way livestock is purchased. Implementation, says the report, could result in up to 21,274 jobs lost in the livestock industry out of a total 104,000 potential jobs lost. Inefficiencies created by the proposal would also raise meat prices nationally by 3.33%, causing a 1.68% decrease in consumer demand for meat and poultry products. More information on the report can be found here.

GIPSA finds evidence of JBS USA Packers and Stockyards Act violations

The U.S. Department of Agriculture's Grain Inspection, Packers and Stockyards Administration (GIPSA) has filed a complaint against JBS USA LLC for alleged violations of the Packers and Stockyards Act.
The complaint alleges that JBS used an electronic probe known as the Fat-O-Meat'er to calculate the lean percent of processed hogs to adjust carcass merit payment to hog sellers. On occasion, this meter would fail, resulting in missing data that was never accounted for. This led to reduced payments for hogs delivered to various JBS plants by an estimated $350,000 between Jan. 1, 2007 and Nov. 30, 2007.
If the allegations are proven, JBS will be ordered to cease and desist the actions resulting in the violations and will be assessed a civil penalty.