The Hagstrom Report

Agriculture News As It Happens

USDA sends modification of proposed GIPSA rule to OMB

The Agriculture Department on Thursday sent a modified version of its proposed changes to the Grain Inspection, Packers and Stockyards rule to the Office of Management and Budget for review, and today Food & Water Watch, a consumer group, and the National Farmers Union sent out conflicting reactions to USDA's approach.

The provisions will be published in the Federal Register in the coming weeks, a USDA source said today in an email. The Hagstrom Report has also learning the following about the revised rule:
  • Decisions about what to include in these rules and how to modify the contents have been guided by the comments received and the updated cost benefit analysis.
  • The final rule contains provisions required by the 2008 farm bill (the sections related to suspension of delivery of birds, additional capital investment criteria, breach of contract and arbitration) in addition to a section on swine and poultry sample contracts.
  • There will also be a separate interim rule, which contains a modified version of the section on poultry tournament systems and would be open to additional public comment.
  • USDA estimates show that these two rules combined have a cost of less than $100 million.
  • There are several provisions from the original proposal that USDA is no longer pursuing, including the section on packer-to-packer sales and packer buyers and the records retention section.
  • The remaining provisions from the June 22, 2010 proposed rule remain under consideration.
The National Cattlemen’s Beef Association, the American Meat Institute, the National Pork Producers Council and the National Chicken Council have been critical of the initial proposed rule, while the National Farmers Union, R-CALF USA and Food & Water Watch were generally supportive.

But Food & Water Watch said in a news release today that, “While the final rule could make several important improvements for contract poultry and hog producers, USDA has abandoned the portions of the proposed rules that would help independent cattle and hog producers. By submitting this deficient final rule, the Obama administration has broken the 2008 campaign pledge to ‘issue regulations for what constitutes undue price discrimination.’”

The news release continued, “The 2008 farm bill directed USDA to provide protections to poultry growers from some commonplace contract practices used by poultry companies to manipulate prices paid to growers and to prevent them from having access to the courts to settle contractual disputes.”

“The farm bill also directed USDA to finally determine which meatpacker practices are unfair to hog farmers and cattle ranchers under a nearly century old law — the Packers & Stockyards Act — that has been largely unenforced,” Food & Water Watch said. “Most of the poultry provisions are included in the rule that went to the White House yesterday, but none of the livestock provisions survived to the final rule.”

“The exact details of the final rule are not available," Food & Water Watch noted, "but it is clear that the administration has caved to meat industry pressure to abandon independent hog and cattle producers to unfair treatment at the hands of the large meatpackers. Cattle and hog producers should not have to wait another year or two for USDA to consider what is fair and unfair pricing; they have already waited more than 90 years since the Packers & Stockyards Act directed the agency to prevent unfair meatpacker abuses in 1921. USDA should immediately finish the livestock provisions and make them final.”

The National Farmers Union had a different perspective.

"The portions of the original rule that have been included in the final rule will provide poultry and pork producers with a degree of protection from abuse by integrators and processors," said Farmers Union President Roger Johnson.

But he added that “USDA did not yet forward to OMB the most critical parts of the rule, which include a clearer definition of USDA’s interpretation of competitive injury. The competitive injury definitions address the fundamental problems that have plagued the livestock and poultry industries."

“NFU is encouraged to see parts of the GIPSA rule advanced, but much more work has yet to be done, Johnson continued. "The most critical aspects of the GIPSA rule must be finalized in order to prevent further damage to rural America.”