NSAC's Blog

House Small Business Subcommittee Hearing on GIPSA Proposed Rule

July 7, 2011

On Thursday, July 7, the Subcommittee on Agriculture, Energy & Trade of the House Small Business Committee held a hearing on a rule proposed by USDA’s Grain Inspection Packers & Stockyards Act (GIPSA) in response to a 2008 Farm Bill directive.  The directive requires USDA to implement regulations under the Packers & Stockyards Act to give farmers and ranchers open, transparent markets for livestock, and greater protections from unfair and deceptive practices by packers.  In addition, Congress directed USDA to provide for protections for poultry growers and hog producers who raise livestock and poultry on contract with packers and processors.  GIPSA issued the proposed rule in June 2010 and received over 60,000 comments before the comment period closed in November 2010.

With its power over farmers and ranchers threatened, the meatpacking and poultry processing industry has worked with congressional allies to launch a full out attack on the GIPSA proposed rule.  Last month, the House Agriculture Appropriations bill included a rider that would prevent USDA from working to finalize the GIPSA proposed rule.  Earlier in the year, the House Agriculture Committee held hearings on the poultry sector and beef sector with agriculture sector witnesses limited to those affiliated with the National Cattlemen’s Beef Association, the National Chicken Council and other trade associations that include packers and processors and that oppose the rule.

The title of the July 7 Small Business Subcommittee hearing was Regulatory Injury – How USDA’s Proposed GIPSA Rule Hurts America’s Small Businesses.  Not surprisingly, three of the four witnesses on the panel representing the agriculture sector were opposed to the GIPSA Proposed Rule and were affiliated with trade associations, the National Cattlemen’s Beef Association, the National Meat Association, and the National Turkey Federation which include packers or processors as members.

The highlight of the panel was the testimony of Bob Junk, with the Fay-Penn Economic Development Council in Pennsylvania, an NSAC member organization.  Junk spoke to the drastic loss of small and mid-sized farmers and ranchers who raise livestock and poultry and the adverse impact of this loss on rural communities.  He spoke about how the GIPSA proposed rule could help stem that loss with fair and open markets and contract protections that could keep farmers and ranchers on the land and more dollars flowing through rural communities.

Junk was previously the President of the Pennsylvania Farmers Union for 10 years and he noted that both the National Farmers Union (NFU) and the American Farm Bureau Federation (AFBF) oppose congressional attempts to block finalization of the GIPSA proposed rule.  Both these organizations represent farmers and ranchers but do not include meatpackers and processors as members.  Bob also included with his testimony a letter in support of the GIPSA proposed rule, signed by 144 organizations including the National Sustainable Agriculture Coalition and delivered to Congress on April 21, 2011.

One glaring example of inaccurate statements about the GIPSA proposed rule was provided by Ms. Robbie LeValley, speaking on behalf of the National Cattlemen’s Beef Association.  The LeValley family markets one-third of the calves from their ranch through Homestead Meats, a packing and direct marketing company the family owns with six other families.  Ms. LeValley stated her belief that the GIPSA proposed regulation’s ban on packer-to-packer sales of livestock would prevent her family from selling the remaining two-thirds of the calves directly to a packer.

This is clearly an inaccurate reading of the proposed rule.  It is an example of why USDA must get the GIPSA rule finalized and published to prevent the large-scale packer and processor sector from spreading this type of blatant misinformation and to end fear-mongering about the proposed-rule.  It will also allow USDA to follow normal rulemaking procedures, and accept the many substantive comments and suggestions for improving the rule, such as NSAC’s recommendation that the proposed ban on packer-to-packer sales exempt small lots of livestock on a weekly or monthly basis for small packers and coops like Homestead Meats.

The public notice and comment rulemaking process exists for this very purpose – to solve problems and refine proposed rules so that the final rule reflects honest attempts to improve the draft proposal.  Sadly, though, the special interests that benefit from the status quo are not interested in honest exchange and improvements to the rule.  They simply want to tear it down and go back to the status quo that works against the interests of American farmers and ranchers.  We will continue to work with AFBF, NFU, R-CALF and many other national and regional farm organizations to stand up for this rule to create a fairer and more competitive marketplace.

Categories: Budget and Appropriations, Competition & Anti-trust

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