Gipsa confusion causing uproar

GIPSA confusion causing uproar

USDA seems to be focusing on poultry contracts while opposition from hog and beef producers fears changes to marketing arrangements.

Both the House and Senate Agriculture Committees recently held hearings to hear from livestock industry groups, and a main theme was regarding Secretary of Agriculture’s Tom Vilsack’s decision to move forward on a Grain Inspection, Packers & Stockyards Administration (GIPSA) marketing rule that resulted from language included in the 2008 farm bill.

The drama started a few months ago when Vilsack made comments at the National Farmers Union that his agency was going to bring back to life the GIPSA rule which was defunded for several years. Without a rider to prohibit the agency from doing anything in 2016, he felt it was the right time to try and institute provisions that would protect those producers who need it.

Much of the opposition last week was from what was originally proposed in 2010, most notably the provisions that would impact marketing arrangement producers use for pricing their livestock.

One provision included in the GIPSA rule, for example, would have required meat packers to justify and document — including with revenue and cost analyses — price differences paid for livestock, making it difficult for producers to negotiate premiums based on certain production practices or accept lower prices for livestock of lesser quality. Such a “justification” provision was considered and rejected by the Senate.

Barbara Patterson, government relations representative for the National Farmers Union, shared that the vote Hill was referencing in his testimony is vote #427 on the Senate’s 2008 farm bill version. This would not have required meatpackers to justify and document revenue and cost analyses or price differences as Hill suggested, Patterson explained. “Instead, it would have said that it would have not been permissible for packers and poultry companies to violate the Packers and Stockyards Act merely by alleging that they had legitimate ‘business justifications’ for doing so,” she said.

She went on to detail this was directly related to the IBP court case where the appeals court overturned the lower court’s ruling in favor of the farmers by saying the IBP had legitimate business practices for doing so. “This amendment, that the Senate ultimately did not vote in favor of, was about that court case, not about undue preferences as suggested by the testimony.”

David Herring, vice president of Hog Slat Inc. who testified before the House Agriculture Committee on behalf of the National Pork Producers Council (NPPC), said NPPC has “grave” concerns that if the U.S. Department of Agriculture finalizes the GIPSA rule, it will repeat what was proposed in 2010. Herring noted that the GIPSA rules are very concerning because they are so vague and become a “trial lawyer's playground.”

All of those effects would have harmed the U.S. pork industry’s international competitiveness, costing on-farm and pork processing jobs as well as negatively affecting the U.S. balance of trade, Herring added. (Read the full story here on the GIPSA comments made during the House hearing.)

When the Senate Agriculture Committee held its hearing Thursday, witnesses again testified about the concerns with the GIPSA rule advancing. The House included a GIPSA rider in the agricultural appropriations bill although the Senate did not in their committee approved bill. However, Senate Agriculture Committee chairman Pat Roberts, R-Kan., said he would expect the same efforts to include a rider when the Senate considers its agriculture appropriations bill as it advances.

USDA had a strongly worded statement following the House Agriculture Committee hearing saying any efforts to block GIPSA’s rule to ensure fair treatment of livestock and poultry growers are not acceptable to this Administration.

“The incessant GIPSA rider demonstrates a complete lack of concern for honest, hardworking families. Maybe some people don’t remember the hardships recently suffered by our farming families in 2008 and 2009 when producers in Arkansas, Alabama, Florida, Georgia, Louisiana, North Carolina, Pennsylvania, Tennessee and Texas lost millions of dollars and their livelihoods when just one of the major poultry businesses went under. The focus should be on how to ensure a fair marketplace and a level playing field for our farming families—nothing less,” USDA said.

USDA then went on to tout the American Farm Bureau Federation, National Farmers Union and National Sustainable Agriculture Coalition’s opposition against the GIPSA rider. But that support is not without clear interpretation.

John Anderson, deputy chief economist at AFBF, said their support has always been for the protections needed to protect poultry growers. Anderson said if USDA goes back and pulls in some of the language which would classify marketing arrangements that producers set with packers as unfair or discriminatory, that would change Farm Bureau’s support of a GIPSA rider.

“I don’t know what USDA has in mind, but if they go back to the original [proposed rule from 2010], we might change our position,” Anderson said.

Statements from USDA indicate the focus is on ensuring a fair marketplace and level playing field for poultry growers. Vilsack has indicated he plans to public regulations later this year in late summer or early fall. It does appear that the public will have another chance to comment on the rule.

And so we wait to see what the USDA does and likely additional resources continue to be devoted to fight it off on Capitol Hill.

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