Hogs in pen in modern hog barn darcy maulsby/ThinkstockPhotos

GIPSA rule changes thrown out by Trump administration

NPPC, NCBA, NCC pleased with the decision; OCM and Center for Rural Affairs ask Trump to immediately implement. NFU pledges to work with Congress to change.

USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) announced today it will withdraw the Farmer Fair Practices Interim Final Rule, Scope of Sections 202(a) and (b) of Packers and Stockyards Act, and take no further action on the proposed rule, Unfair Practices and Undue Preferences in Violation of the Packers and Stockyards Act. Thus far, no action has been announced regarding the proposed rule, Poultry Grower Ranking Systems.

The rules were written in 2016 by USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA). 

The interim final rule was due to take effect Oct. 19.

USDA in 2010 proposed several PSA provisions – collectively known as the GIPSA Rule – that Congress mandated in the 2008 Farm Bill. Although lawmakers did not include a provision eliminating the need to prove a competitive injury to win a PSA lawsuit, the agency included one in its proposed regulation.

The interim final rule would have broadened the scope of the Packers and Stockyards Act (PSA) of 1921 related to using “unfair, unjustly discriminatory or deceptive practices” and to giving “undue or unreasonable preferences or advantages,” according to the National Pork Producers Council. Specifically, it would have made such actions per se violations of federal law even if they didn’t harm competition or cause competitive injury, prerequisites for winning PSA cases. 

The Organization for Competitive Markets said the interim final rule would have restored the rights of farmers and ranchers who are harmed by a meat packing or processing company’s anti-competitive and unfair practices. It would have clarified and reiterated the USDA’s longstanding position that not all violations of the Packers & Stockyards Act require a showing of harm or likely harm to competition. Under this rule change, an individual farmer or rancher would no longer have had to demonstrate that the entire U.S. market was affected by unfair practices inflicted on him or her and would have been able to seek a fair remedy. 

The proposed rule, Unfair Practices and Undue Preferences in Violation of the Packers and Stockyards Act, would have established a list of practices that violate the rule and establish criteria that GIPSA would consider when determining whether a packer, swine contractor, or poultry integrator has engaged in conduct or action that violates the rule.

'A victory'

“We’re very pleased that the secretary will withdraw these bad regulations, which would have had a devastating impact on America’s pork producers,” said NPPC President Ken Maschhoff, a pork producer from Carlyle, Ill. “The regulations would have restricted the buying and selling of livestock, led to consolidation of the livestock industry – putting farmers out of business – and increased consumer prices for meat.” 

NPPC was the leading voice in opposition to the broader GIPSA rule, generating in 2010 more than 16,000 comments from pork producers against it, and to the interim final rule. It got about 2,000 comments early this year in opposition to that rule. 

“Eliminating the need to prove injury to competition would have prompted an explosion in PSA lawsuits by turning every contract dispute into a federal case subject to triple damages,” Maschhoff said. “The inevitable costs associated with that and the legal uncertainty it would have created likely would have caused further vertical integration of our industry and driven packers to own more of their own hogs. 

“That would have reduced competition, stifled innovation and provided no benefits to anyone other than trial lawyers and activist groups that no doubt would have used the rule to attack the livestock industry.”

The National Cattlemen’s Beef Association also supported the Trump administration decision.

“This is a victory for America’s cattle and beef producers – and it’s a victory for America’s consumers,” said Colin Woodall, National Cattlemen’s Beef Association's Senior Vice President, Government Affairs. “The proposed rule would have crippled cattle producers’ ability to market their products through the value-added programs that help make American-produced beef the most delicious and nutritious in the world.”

The National Chicken Council said the proposed rules were ill-advised and would have left the industry open to “frivolous and costly litigation.”

“It is clear the administration took into account the thousands of comments it received and recognized these rules would have come with deep economic consequences for American poultry and livestock producers,” said NCC President Mike Brown.

“We are also pleased that USDA decided not to issue a final rule on the performance based poultry grower ranking system, a system where more efficient farmers are paid premiums based on their performance.” Brown added.  “Rather, the department will continue to study this and we look forward to continuing to work with USDA to help explain the merits of a system that has benefited farmers, chicken processors and consumers for seven decades.”

An Informa Economics study found that the 2010 GIPSA Rule today would have cost the U.S. pork industry more than $420 million annually – more than $4 per hog – with most of the costs related to PSA lawsuits brought under the “no competitive injury” provision included in the interim final rule.

“Today’s decision helps restore both Congressional intent and common sense by ensuring American producers have the freedom to market their products without the threat of frivolous lawsuits,” said House Ag Committee Chairman Michael Conaway, R-Texas. “I am particularly thankful for Secretary (Sonny) Perdue’s leadership on this effort and look forward to working with him to ensure that other problematic regulations like the organic livestock rule meet the same fate.”

“The Obama administration spent the better part of a decade ignoring the calls from farmers, ranchers, and agriculture economists warning of the billion dollar blow this rule would have levied against American agriculture,” said Senate Ag Committee Chairman Pat Roberts, R-Kansas. “Secretary Perdue’s actions today demonstrate the Trump Administration’s commitment to promoting economic prosperity and reducing regulatory burdens in rural America.”

'Slap in the face'

“This withdrawal is a slap in the face to rural America and America’s farmers and ranchers,” said Mike Weaver, President of the Organization for Competitive Markets. “The administration is allowing multinational corporations led by foreign interests to hold America’s farmers and ranchers hostage with their monopolistic, retaliatory and predatory practices. The GIPSA rule represented a desperately needed change for farmers and ranchers and I am appalled that the administration would choose to support multinational corporate interests over those of our own farmers and ranchers, especially after campaigning on a promise to drain the swamp and Make America Great Again. Since the USDA cannot get the job done, we call on President Trump to issue an executive order to immediately implement the Farmer Fair Practices Interim Final Rule.” 

“Farmers and ranchers have waited years for USDA to institute basic fairness protections in the contract poultry and livestock industry,” said Center for Rural Affairs policy associate Anna Johnson. “Today’s announcement is a disappointment to America’s family farmers and ranchers who deserve a level playing field. 

“These rules should have been an easy decision for the Trump administration. Trump campaigned on promises to help downtrodden small business people across America, and these rules do precisely that,” Johnson said. “Farmers, ranchers, and consumers would have benefited from the competitive, transparent markets these rules would help protect. We urge USDA and Sec. Perdue to reconsider.” 

“It is deeply disappointing that USDA did not side with family farmers in the long-contested debate over rules for the Packers and Stockyards Act,” said National Farmers Union President Roger Johnson. “The Farmer Fair Practices Rules offered a basic, yet important first step to addressing the unfair practice that family farmers and ranchers face in the extremely consolidated meatpacking industries. With this decision, USDA has given the green light to the few multinational meatpackers that dominate the market to discriminate against family farmers.”

Source: NPPC, NCBA, OCM, NCC, House Agriculture Committee, Senate Ag Committee, Center for Rural Affairs, NFU

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