The USDA on Tuesday withdrew controversial proposed regulations allowing the government to determine what is fair in the marketing of livestock and poultry.
Opponents contend the regulations would broaden the scope of the Packers and Livestock Act with subjective determinations of fairness by the Grain, Inspection, Packers and Stockyards Administration and opening the door to lawsuits and harming marketing opportunities for producers.
Supporters, however, say the proposed rules would have strengthened GIPSA’s ability to protect producers against unfair, anti-competitive practices in heavily concentrated markets.
Now laid to rest are the Farmer Fair Practices Rules, which included an interim rule that would no longer require a showing of injury to overall market competition to claim a violation under the Packers and Stockyard Act.
They also included proposed rules to clarify what GIPSA views as unfair practices and to establish criteria for determining unfair practices in the poultry grower ranking system used by poultry processors.
The proposed rules would have crippled the cattle industry, harming the entire beef marketing chain, said Colin Woodall, senior vice president of government affairs for National Cattlemen’s Beef Association.
The last thing anyone wants is the federal government intruding in the marketplace, “telling us what’s a fair price for cattle,” he said.
The rule would have allowed a producer to claim his price is unfair compared to his neighbors’ and given him the opportunity to sue, he said.
Meatpackers made it clear that if the rule went through, they would stop their marketing programs. The rule would result in the loss of value-added programs and marketing opportunities, pushing the industry back toward commodity cattle, he said.
The regulations, set to go into effect Oct. 19, would have had a devastating impact on pork producers, Ken Maschoff, president of the National Pork Producers Council, said in a press release.
“Eliminating the need to prove injury to competition would have prompted an explosion in ... lawsuits by turning every contract dispute into a federal case subject to triple damages,” he said.
The associated costs and legal uncertainty likely would have caused further vertical integration in the industry, driving packers to own more of their own hogs, he said.
“That would have reduced competition, stifled innovation and provided no benefit to anyone other than trial lawyers and activist groups that no doubt would have used the rule to attack the livestock industry,” he said.
The National Chicken Council pointed out livestock and poultry contracting and marketing practices are already regulated by GIPSA and farmers already benefit from the protections of the Packers and Stockyards Act.
The proposed regulations were ill-advised, would inflict billions of dollars of economic harm, exceed GIPSA’s statutory authority and represent an abuse of federal regulatory authority, NCC stated.
Eight different circuit courts of appeal have uniformly and resoundingly rejected GIPSA’s position in the proposed rules to eliminate the need to prove competitive injury to demonstrate a violation, NCC stated.
“Rather than acquiesce in these decisions, however, the Obama administration sought to misuse the rulemaking process to achieve what GIPSA has not won in court,” NCC said.
National Farmers Union, however, said the rules would have provided the most basic of protections to family farmers and ranchers enduring increasingly concentrated markets and unfair treatment.
“With this decision, USDA has given the green light to a few multinational meatpackers that dominate the market to discriminate against family farmers,” Roger Johnson, NFU president, said in a statement.
American Farm Bureau Federation and R-CALF, which also supported the rules, did not immediately return calls from Capital Press for comment.