Progressive Farmer: Harrington’s Sort & Cull – USDA Final Rule Ends GIPSA

The livestock marketing rules date back to language in the 2008 farm bill and were designed to give farmers more bargaining power to negotiate livestock contracts with meatpackers. (DTN/The Progressive Farmer file photo)

by Todd Neeley, DTN Staff Reporter | November 29, 2018

OMAHA (DTN) — The USDA on Thursday posted a final rule ending the Grain Inspection, Packers and Stockyards Administration,…, and transferring the standalone agency’s functions to the Agricultural Marketing Service.

The Organization for Competitive Markets was critical of the decision.

OCM founding member and Mississippi cattle producer Fred Stokes said in a statement said the change will harm efforts to police the meatpacking industry.

“Secretary (Sonny) Perdue’s action is clear evidence that America’s family farmers and ranchers are in harm’s way under his leadership at USDA,” Stokes said. “We remain hopeful that our litigation against Perdue for illegally withdrawing the farmer fair practices rules promulgated by the now defunct GIPSA will be ruled in our favor. Perdue’s actions today make that outcome even more imperative.”

Last spring, the OCM filed a legal challenge against USDA for withdrawing a set livestock marketing rules designed to level the playing field for producers while negotiating supply contracts with larger agribusinesses.

The rules originally were drafted by the GIPSA. In November 2017, Perdue announced that as part of a USDA reorganization, the GIPSA would no longer be a standalone agency. The Packers and Stockyards Division was renamed the “Fair Trade Practices” program as part of the Agricultural Marketing Service.

The livestock marketing rules date back to language in the 2008 farm bill. The rules were controversial throughout President Barack Obama’s administration. The rules were designed to give farmers more bargaining power to negotiate livestock contracts with meatpackers.

Early USDA proposals drew fire from major industry groups and Congress. The rules were then blocked by Congress. Lawmakers refused to fund any efforts to advance the rules. Congress relented in the fiscal year 2016 funding bill and USDA advanced the rules again.

The rules included an interim final rule on how USDA wanted courts to interpret a provision of the Packers and Stockyards Act. Courts have ruled in cases between poultry growers and poultry companies that a grower has to demonstrate a company’s action against the individual grower harmed the entire poultry market.

Since the 1980s, USDA used the standard in beef or pork cases that a livestock producer doesn’t have to show harm to competition to bring a Packers and Stockyards case against a company. USDA has pushed to apply the same language to poultry contracts.

Another proposed rule would have given producers more rights when dealing with marketing contracts. The rule would ensure packers can’t retaliate against producers who show their contracts to attorneys. The rule also would have prevented packers from giving undue price preferences in marketing contracts.

The final proposed rule would have restructured the tournament payment system by giving USDA authority to determine if a ranking system for poultry growers’ prices is fair or unjustly discriminatory, or deceptive. The poultry industry has opposed any USDA rules that could create problems with the company tournament systems.

The 2008 farm bill required the USDA to implement the rules by June 18, 2010.