Alert: GIPSA Livestock Marketing Rule
July 21, 2010

Should USDA Allow More Time For Comment On Changes to Livestock Marketing?

Some industry organizations say yes. Some say Aug. 23 allows plenty of time for the industry to comment. Bottom line, if you haven’t heard about the rule on livestock marketing proposed in the Federal Register by the U.S. Department of Agriculture (USDA) Grain Inspection, Packers and Stockyards Administration (GIPSA), it may be time to do your homework. Whether for or against, most in the industry would agree the proposed rule, announced June 18, would have a large impact on the way livestock are marketed in the U.S.

NFU says stay on track. National Farmers Union (NFU) President Roger Johnson sent a letter to Secretary of Agriculture Tom Vilsack urging the GIPSA to oppose any extension of time requested beyond the original 60-day public comment period established on the proposed rule, “Implementation of Regulations Required Under Title XI of the Food, Conservation and Energy Act of 2008; Conduct in Violation of the Act.”

The proposed rules address concerns that have been discussed for many years and were developed at the direction of the 2008 Farm Bill, which requires USDA to carry out specific rulemaking to improve fairness in the marketing of livestock and poultry.

“Extending the comment period into the fall calf season will give leverage for packers to offer lower prices to producers as a fear mechanism, as we have seen in the past with rules such as country-of-origin labeling (COOL),” Johnson said. “Reports of lower prices to producers from packers have already begun.”

The 2008 Farm Bill stated this rule was to be fully completed by June 18, 2010, another reason, NFU cites, not to extend the comment period. The current deadline for the decision on extension is Aug. 23, 2010.

“USDA has given a sufficient amount of time to comment on this rule,” Johnson said.

NCBA, NPPC say issue needs further study. Others in the industry question that statement, arguing many don’t know about the proposed changes, understand their ramifications or realize they have the opportunity to weigh in during the comment period.

On July 8, the National Cattlemen’s Beef Association (NCBA) requested a 120-day extension to the public comment period. In a letter sent to Butler, NCBA President Steve Foglesong reiterated NCBA’s concerns with the proposed rule, which suggests major changes to the way producers can market their cattle, and emphasized the need for additional time to thoroughly analyze its potential legal and economic effects on U.S. cattle producers.

“The Secretary of Agriculture referred to this as one of the most sweeping reforms of the Packers and Stockyards Act,” Foglesong stated. “As such, it’s extremely important that we thoroughly understand the rule and both its intended, and unintended, consequences on the U.S. cattle community.”

NCBA believes the scope of the proposed rule goes well beyond what Congress intended under the 2008 Farm Bill.

“American cattle producers are innovators who have worked hard over the past several years to develop alternative marketing arrangements and marketing alliances to get paid for the value they add to their cattle,” Foglesong continued. “Whether intended or not, we believe that this rule jeopardizes these long-standing marketing arrangements that compensate producers for providing higher-quality cattle.”

Two days before NCBA issued its letter, the National Pork Producers Council (NPPC) also asked for an extension of the comment period. In a letter to Butler, NPPC urged a 120-day extension of the comment period.

The proposed rule would implement parts of the 2008 Farm Bill related to livestock and poultry contracts, including establishing criteria under the Packers and Stockyards Act for what constitutes providing or giving undue or unreasonable preference or advantage in a contract.

After a preliminary review, NPPC said the proposed rule goes well beyond the parameters set out in the Farm Bill, specifically with regard to sections on “unfairness,” purchasing practices, contracts, “competitive injury” and recordkeeping.

“Our initial reading of the proposed rule,” said NPPC President Sam Carney, a pork producer from Adair, Iowa, “is that it is overly broad and very vague. We need more than 60 days to determine all of the ramifications this regulation could have on America’s 67,000 pork producers.”

NPPC said the scope of the proposed rule and the lack of an adequate economic analysis of its impact on the livestock industry warrant an extension of the 60-day comment period.

NPPC also pointed out that the Aug. 23 comment deadline is four days before the next USDA-Department of Justice (DOJ) workshop on competition in the livestock industry. Public comments from that event in Fort Collins, Colo., as well as ones from the final Dec. 8 workshop in Washington, D.C., should be considered before finalizing a rule, NPPC said.

The House Ag Subcommittee agreed. House Agriculture Subcommittee on Livestock, Dairy and Poultry Chairman David Scott, D-Ga., conducted a hearing July 20 to review livestock and related USDA programs in advance of the 2012 Farm Bill.

“Today’s hearing was an extremely productive one, and allowed us to explore in depth a wide array of issues with the Department. It also brought to light several issues that we will have to investigate more thoroughly in the future,” Scott said. “Overall, however, I feel that the hearing was a valuable and necessary part of our oversight of the 2008 Farm Bill, and has provided crucial insight into problems that will need to be addressed as we develop the next Farm Bill.”

“Fair and transparent markets are necessary for orderly commerce between producers, packers, processors, retailers and consumers. At the same time, we owe it to our constituents to ensure that the policy process is also fair and transparent so that the path of good intentions does not lead us to the land of unintended consequences,” said Subcommittee Ranking Member Randy Neugebauer, R-Texas. “That’s why today’s hearing is important, but I’m also disappointed that that GIPSA rule comment period is only 60 days and will close before the USDA/DOJ workshops on this subject are completed. For this reason, 21 of my colleagues from both sides of the aisle joined me in requesting that the comment period be extended 120 days so that the USDA/DOJ workshops can be completed and a thorough analysis can be conducted by everybody wishing to comment on the rule.”

Written testimony provided by witnesses at the hearing is available on the Committee website, http://agriculture.house.gov/hearings/index.html. A full transcript of the hearing will be posted on the Committee website at a later date.

To learn more about the proposed rule on livestock marketing, visit these websites:

USDA: www.gipsa.usda.gov/GIPSA/webapp?area=home&subject=landing&topic=landing
NFU: http://nfu.org
NCBA: www.beefusa.org and www.beltwaybeef.com
NPPC: www.nppc.org

Click here to see the proposed rule as presented in the Federal Register. Comments may be submitted by:

• e-mail to comments.gipsa@usda.gov;
  

• mail, hand delivery or courier to Tess Butler, GIPSA, USDA, 1400 Independence Ave., S.W., Room 1643–S, Washington, DC 20250–3604;
  

• fax to 202-690-2173; and
  

• federal e-Rulemaking Portal: www.regulation.gov, following the online instructions for submitting comments.
  

Note that all comments will become a matter of public record and should be identified as ‘‘Farm Bill Comments,’’ making reference to the date (June 22, 2010) and page number (35338-35354) of the issue (Vol. 75, No. 119) of the Federal Register. Comments will be available for public inspection at www.regulations.gov.

— Compiled by Shauna Rose Hermel, editor, Angus Productions Inc. from releases provided by NFU, NCBA, NPPC, USDA and the House Ag Committee