Cattlemen Call on USDA to Withdraw Damaging GIPSA Rules
Today, the National Cattlemen’s Beef Association called on USDA to withdraw the Grain Inspection, Packers and Stockyards Act interim final and proposed rules, collectively labeled with the misleading title, Farmer Fair Practices Rules. Craig Uden, NCBA president, said the rules stand to threaten market incentives, the quality of American beef the industry is known for, and will ultimately cost $954 million to the cattle industry.
“These rules are just as troubling as they were when USDA initially proposed them in 2010, after which Congress immediately stepped in to defund the rules, recognizing them as a flawed concept that limits producers’ ability to market their cattle and adding layers of crippling bureaucracy,” said Uden.
Two proposed rules and one interim final rule came out on December 20, 2016, one month before the end of the Obama Administration. The interim final rule regarding the scope of the Packers and Stockyards Act and the proposed rule regarding undue preference and unjust treatment have a direct negative impact on the cattle industry.
Alternative Marketing Arrangements reward cattle producers for producing the quality beef consumers demand. Under the interim final rule, USDA or a producer no longer needs to prove true economic harm but rather one only needs to say that he or she was treated "unfairly" to sue a packer or processor.
“This approach is counter to the decisions of seven federal courts of appeals and it is this change that ultimately makes the interim final rule a trial attorney’s dream and jeopardizes the Alternative Marketing Arrangements cattle producers utilize,” said Uden. “What incentive would a packer have to pay for superior cattle when they may be sued for rewarding quality? The industry will be forced back to treating all beef as commodity beef under a one-size-fits-all approach.”
Much like the interim final rule, this proposed rule introduces more litigation into the cattle marketing system. The unfair practices and undue preferences provisions in the proposed rule are extremely vague and so ambiguous that broad interpretation is expected and compliance will be difficult.
“Vague and ambiguous rules typically result in producers and each segment of the beef supply chain unable to determine which practices are prohibited or permissible,” said Uden. “The resulting uncertainty will simply lead producers to incur litigation costs to protect their respective marketing arrangements. Conversely, it provides other producers an opportunity to file a lawsuit to challenge such arrangements.”
Furthermore, GIPSA admits it is “unable to quantify the benefits” of these proposals.
“This is concerning since issuing rules with no discernable benefits should alone be grounds to withdraw the interim final rule and the proposed rule,” said Uden.