GIPSA rule implementation delayed, comment period extended
Rules have supporters, opponents.
USDA’s Grain Inspection, Packers and Stockyards Administration has delayed the effective date of the interim final Farmer Fair Practices rule by 60 days to April 22, in accordance with an executive order issued by the Trump administration on Jan. 20, 2017. Its comment period will be extended to March 24.
GIPSA also extended the comment period on the proposed rules, the Unfair Practices and Undue Preferences in Violation of the Packers and Stockyards Act and the Poultry Grower Ranking Systems, by 30 days to March 24.
“We’re very pleased that the Trump administration has extended the time we have to educate regulators about the devastating effects this rule would have on America’s pork producers,” said NPPC President John Weber, a pork producer from Dysart, Iowa, in a media statement. “The regulation likely would restrict the buying and selling of livestock, lead to consolidation of the livestock industry – putting farmers out of business – and increase consumer prices for meat.”
Not everyone was happy with the extension.
“Family farmers and ranchers have been waiting on the protections provided by the Farmer Fair Practices Rules for far too long, enduring heavily concentrated markets and the unfair practices associated with lack of competition,” said National Farmers Union president Roger Johnson in a media statement. “After having been delayed and obstructed for the past seven years, it’s time to end the unnecessary delays to the Farmer Fair Practices Rules and allow these basic protections to be finalized.”
Released in December
USDA on Dec. 14, 2016, released three rules for public comment that would increase protections for poultry and livestock farmers.
The rules drew praise from the American Farm Bureau Federation, among others, and were condemned by the National Cattlemen’s Beef Association and others.
What others are saying about the proposed rules:
“The Organization for Competitive Markets sees the GIPSA regulations as a step forward in protecting farmers against the imbalance of power which has been in the favor of the poultry companies, leaving contract poultry growers as mere serfs for some of the world’s largest multi-national food corporations and industrial factory farm interests,” said Mike Weaver, poultry grower and president of the Organization for Competitive Markets in a media statement.
“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. The interim final rule on competitive injury would open the floodgates to frivolous lawsuits,” said National Chicken Council President Mike Brown in a media statement.
“For too long, family livestock producers and poultry growers have endured a heavily concentrated market with little protection against unfair, anti-competitive practices. We are glad that this important set of rules is finally moving forward,” said NFU President Roger Johnson in a media statement. “While the Farmer Fair Practice Rules do not fix all of the fraudulent practices in the livestock and poultry industries, these rules are certainly an important step in the right direction.”
“The inevitable costs of the regulation could lead to further vertical integration of the pork industry, driving packers to produce more of their own hogs,” said National Pork Producers Council CEO Neil Dierks in a media statement. “That will reduce innovation, quality and competition, with no benefit to consumers. Coupled with the current strong headwinds buffeting pork producers, the net effect of this destructive, unnecessary and illegitimate midnight rule would be a crushing blow to hog farmers of all sizes and to America’s rural economies.”
Shortly after being inaugurated, President Trump signed an executive order freezing federal regulations, which impacts this order. Trump has also signed an executive order saying that for every regulation put into effect two must be eliminated. The effect on the Farmer Fair Practices rules in unknown.
Here’s a breakdown of the three rules released Dec. 14, 2016, according to the Center for Rural Affairs:
Interim Final Rule
This rule’s official name is “Scope of sections 202(a) and (b) of the Packers and Stockyards Act.”
When a poultry or livestock farmer thinks a processor has done something to harm them – such as changed contract provisions too quickly or too stringently – they can go to court. Previously, in order to get the court to rule in their favor, they have had to prove something impossible: that actions of the processor hurt not only them, but the entire industry of farmers.
Another important item: USDA published two types of rules, interim final and proposed. This one is interim final. That means USDA could start enforcing it the minute it hits the Federal Register (where all the government’s rules are published), but USDA will accept comments on it for 60 days. USDA can still change it; they would have to publish an additional interim final rule or final rule in order to do so. Until then, poultry and livestock farmers no longer have to prove damages to their whole industry when they’re in court.
Poultry Grower Ranking Systems, a Proposed Rule
Now, one of the unfair circumstances that poultry growers face is how “live poultry dealers” contract with and pay them for the birds they raise. Poultry growers compete against other contractors who are also selling birds through what’s called the tournament system. The system for competing allows poultry dealers to play favorites or punish growers who’ve complained about the system.
The Poultry Grower Ranking Systems rule puts in place guidelines that poultry dealers have to follow when awarding contracts to farmers.
This rule is the other type of rule – a proposed rule. That means that USDA is accepting comments on it for 60 days, and they will make changes to it and publish a final rule before they enforce it.
Unfair Practices and Undue Preferences, a Proposed Rule
The Unfair Practices and Undue Preferences rule applies to a broader portion of the meat industry: it impacts cattle, hog and chicken farmers. As the name implies, it addresses unfair practices and undue preference. Similar to the rules described above, USDA is proposing to more clearly define unfair business practices between meat processing companies and poultry and livestock farmers. For example, delaying or trying to delay payment to farmers is defined as an unfair practice. This rule would also return legal rights to the producers: the ability to take a processor to court, the ability to go to court in their home district, or the ability to ask for attorney fees if they go to court.
If this proposed rule is finalized, it will restore these and other rights to poultry and livestock farmers.
What will this mean under the Trump administration?
The 60-day comment period for these three rules ended on Feb. 21, 2017, but as of Feb. 6, has been extended to March 24, 2017, but order of the Trump administration. The task of finalizing the two proposed rules and potentially modifying the interim final rule will fall to Trump’s pick for Secretary of Agriculture Sonny Perdue. The USDA Secretary can’t start working until the Senate approves his appointment. As of Feb. 8, Perdue hasn’t had a hearing.
You can submit comments on the proposed rules at federalregister.gov.
Source: The Center for Rural Affairs, USDA GIPSA