The Trump administration announced it will withdraw regulations related to the buying and selling of livestock, a move strongly commended by a number of livestock groups that opposed the Obama-era rules.
“This is a victory for America’s cattle and beef producers — and it’s a victory for America’s consumers. Agriculture Secretary Sonny Perdue deserves a great deal of thanks and credit for this smart decision,” said Colin Woodall, the National Cattlemen’s Beef Association’s Senior Vice President of 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. This is a decision worthy of celebrating this evening with a top-quality steak.”
The decision came about when Agriculture Secretary Sonny Perdue decided not to move forward with an interim final rule of the so-called Farmer Fair Practices Rules, which was written in 2016 by the U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration (GIPSA). The agency also announced it will take no further action on a proposed regulation of the Farmer Fair Practices Rules.
“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 Ken Maschhoff, National Pork Producers Council president. “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.”
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.” 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 proposed rule would have defined the terms in the interim final rule.)
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.
“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.”
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.
The GIPSA Farmer Fair Practices Rules did have supporters, including the National Farmers Union (NFU).
“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. 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,” Roger Johnson, National Farmers Union (NFU) president. “The withdrawal of the competitive injury rule is unjustified, given the long-held, plain language interpretation by the Department that growers do not need to prove harm to the entire industry when seeking relief from poultry companies for unfair contract practices. It is particularly egregious given the abuses that poultry growers face in the vertically integrated marketplace.
“With this decision, USDA has given the green light to the few multinational meatpackers that dominate the market to discriminate against family farmers. As the administration has signaled its intent to side with the meat and poultry giants, NFU will pursue congressional action that addresses competition issues and protects family farmers and ranchers.”