Obama administration touts GIPSA rule; others hope Trump overturns it
December 19, 2016
The Agriculture Department released new rules to enforce the Packers and Stockyards Act that resulted in predictable comments from the producers, companies and politicians involved in the issue, although in somewhat more colorful language that probably reflects a push to convince the incoming Trump administration to overturn the rules.
USDA released an interim final rule and two proposed rules —known collectively as the Farmer Fair Practices Rules — that Ag Secretary Tom Vilsack said would protect poultry growers in particular from "damaging unfair and deceptive practices."
The National Farmers Union, the American Farm Bureau Federation, the National Sustainable Agriculture Coalition and the U.S. Cattlemen's Association praised it, while the National Chicken Council, the National Pork Producers Council and the National Cattlemen's Beef Association denounced it.
The White House also weighed in with a blog post in which Charlie Anderson, a senior adviser to the director of the National Economic Council, said, "These three rules are another step forward in response to the president's Competition Initiative announced in April, which has the goal of enhancing competition to help consumers, workers, and small businesses get a fair shake in the economy."
In a call to reporters, Vilsack said that the interim final rule would give USDA the same powers of enforcement against live poultry dealers that it has against beef packers and swine contractors when they engage in practices that are unfair to producers. Without the rules, Vilsack said, the courts have ruled that USDA's Grain, Inspection, Packers and Stockyards Administration did not have enforcement powers. An important element in the rule, Vilsack said, is that poultry growers would no longer have to prove that an action against one grower hurt competitiveness in the industry.
While the rules are focused on poultry producers, some cattle and pork groups have said it would interfere with contracting for those animal species as well. But Vilsack said that the rule was substantially rewritten from a 2010 proposal and that the groups had overreacted to that older proposal.
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"All too often, processors and packers wield the power, and farmers carry the risk. Today, USDA is taking a big step toward providing the protections that farmers deserve and need," Vilsack said.
USDA added, "The four largest processors in the poultry sector in this country control 51 percent of the broiler market and 57 percent of the turkey market. In part due to this concentration, poultry growers often have limited options for processors available in their local communities to contract with. Fifty-two percent of growers have only one or two processors in their state or region to whom they can provide grower services. That means processors can often wield market power over the growers, treating them unfairly, suppressing how much they are paid or pitting them against each other."
The timing of the rules means that final decisions will be up to the Trump administration. National Farmers Union President Roger Johnson and Mike Weaver, president of the Contract Poultry Growers Association of the Virginias, noted that President-elect Donald Trump garnered a lot of votes in rural America, and said they hoped he would allow the rules to be finalized.
"American family farmers came out of the woodwork to support Trump, and we need some consideration," Weaver said.
"Producers said they were Trump supporters because they believed Trump would stand up for the little guy." said Johnson, a Democrat and former agriculture commissioner in North Dakota,
The National Pork Producers Council said that the rules were "an apparent attack on rural America for its role in helping elect Donald Trump as president" and the council "will work with the Trump administration and the new Congress to repeal the unnecessary, destructive and illegitimate midnight rule."
Asked on the call to respond to NPPC, Vilsack said, "That is absurd. It is unfortunate they would use such rhetoric." The rules, he said, are designed to finish the work of the 2008 farm bill passed during the Bush administration, but stopped for several years by congressional appropriations riders.
"This has nothing to do with the election of 2016; it has to do with what is fair to producers," he said.
Vilsack said that, if Congress had not interfered, the rule would have been in place several years ago.
Senate Agriculture Committee Chairman Pat Roberts, R-Kan., and House Agriculture Committee Chairman Michael Conaway, R-Texas, both criticized USDA's actions.
Roberts said that USDA "has chosen to ignore my persistent appeals over the last six years — along with the appeals of livestock producers — by finalizing rules that will limit the economic freedom of America's farmers and ranchers. I will take a hard look at the rule, but I have strong concerns based on the previous direction taken by USDA. The so-called GIPSA rule has been wrought with controversy since originally proposed in 2010 and will have a devastating impact on America's farmers and ranchers and how they buy and sell cattle, hogs and poultry. I'm deeply disappointed Secretary Vilsack and the Obama administration are taking such action towards rural America as their terms come to an end and during the holidays."
Conway said, "I'm disappointed that the generally productive and nonpartisan relationship I've developed with USDA over the past two years has culminated in a last-minute effort to push through a partisan trio of rules — even despite assurances that they would be tabled for more thorough and appropriate consideration by the incoming administration. It is particularly troubling given Congressional disapproval with the overreach of these costly rules dating back to their original proposal in 2010."
PRAISE AND CRITICISM
The National Chicken Council said the rules will "strangle" the industry.
"The vast majority of chicken farmers in rural America are happy and prosper raising chickens in partnership with companies, and they don't want the government meddling on their farms and telling them how they should run their businesses," said National Chicken Council President Mike Brown. "Business under the current contract structure has given thousands and thousands of farm families the opportunity to live in rural America and operate profitable businesses that allowed them to build nice homes, expand other aspects of their farm enterprises and put their children through college.
"These rules, however, could lead to rigid, one-size-fits-all requirements on chicken growing contracts that would stifle innovation, lead to higher costs for consumers and cost jobs by forcing the best farmers out of the chicken business," he added. "The interim final rule on competitive injury would open the floodgates to frivolous lawsuits."
National Pork Producers Council CEO Neil Dierks said, "I can't imagine a more devastating regulation on an industry. The rule, which creates legal uncertainty, will destroy opportunities for many in the U.S. pork industry, with no positive effect on competition, the regulation's supposed goal.
National Cattlemen's Beef Association President Tracy Brunner said, "The GIPSA rules are especially troubling to the cattle industry. As we have consistently stated, if adopted, this rulemaking will drastically limit the way our producers can market cattle and open the floodgates to baseless litigation "
The American Farm Bureau Federation joined the National Farmers Union in praising the release of the rules.
"Farm Bureau has long advocated for changes in the Grain Inspection, Packers & Stockyards Administration's rules," President Zippy Duvall said. "We have asked for changes to stop harmful business practices and protect chicken farmers. A one-size-fits-all approach doesn't work here, and that's why we have also worked to preserve the contract arrangements and marketing practices that make the beef and pork industries competitive." ❖