Some of 2008 Farm Bill implemented

Dec 9, 2011

In a press release, Agriculture Secretary Tom Vilsack announced USDA has published the Final Rule implementing the 2008 Farm Bill provisions to better protect livestock producers and poultry growers under the Grain Inspection, Packers and Stockyards Administration (GIPSA).

The rule is a small part of the original proposal made by GIPSA in June 2010, but blocked by Congress after groups, including poultry, meat processing, and commercial producers, voiced concerns.

Although he considered the congressional blockage a setback, Vilsack said in the release that he was optimistic.

“As I travel throughout the countryside, I often hear from farmers and ranchers about their concerns with the marketplace becoming more concentrated,” Vilsack said.

“While concentration certainly comes with some efficiencies, Congress recognized in the 2008 Farm Bill that additional protections for producers are warranted. Today’s rule will implement these targeted protections and help provide more fairness and transparency in the marketplace.”

The provisions being finalized by the department were required by the 2008 Farm Bill and have been modified from the June 22, 2010, proposed rule. These sections include criteria the secretary may consider when determining whether a live poultry dealer has provided reasonable notice to poultry growers of any suspension of the delivery of birds, when determining whether a requirement of additional capital investments over the life of a poultry growing arrangement or swine production contract constitutes a violation of the Packers and Stockyards Act (PSA), and when determining if a packer, swine contractor, or live poultry dealer has provided a reasonable period of time for a grower to remedy a breach of contract that could lead to termination of a production contract.

The rule also includes a section requiring contracts that require the use of arbitration to include language on the signature page that allows the producer or grower to decline arbitration and provides criteria the secretary may consider when determining if the arbitration process provided in a contract provides a meaningful opportunity for growers and producers to participate fully in the arbitration process.

According to the release, USDA plans to seek additional public comment on several other revised provisions from the June 22, 2010, proposed rule including changes to the tournament system of payment for poultry growers, requirements to collect and post sample contracts, and to address the issue of need for producers to show harm to competition prior to asserting a violation of the PSA. However, the FY2012 Agriculture Appropriations bill passed by Congress included language prohibiting the department from moving forward on these provisions.

“Despite this setback, US- DA and the Obama Administration remain committed to promoting a fair and transparent marketplace,” Vilsack’s release said.

“While the Final Rule is a good first step, it is certainly not a last step,” National Farmers Union President Roger Johnson said. “In particular, it is critical that the competitive injury portion of the rule be implemented. Currently, a producer must prove that a packer’s anticompetitive practices damaged the entire marketplace.

Clarification of competitive injury is needed so that the producer would only have to prove that his or her operation was hurt by such actions, a much more reasonable standard.

The 61-page rule represents the least controversial aspects of the changes.

Some of the missing parts include the value-added production and premiums provision relating to contracts and price premiums; the recordkeeping section that would have required packers, swine contractors, and live poultry dealers to retain records on differential pricing decisions; competitive injury and likelihood of competitive injury definition; and the section on packerto-packer sales and relationships with dealers.

On Nov. 17, Congress voted on the $19.8 billion spending bill. The original GIPSA bill would have wreaked havoc on the U.S. cattle industry, causing livestock producers to lose an estimated $169 million, according to National Cattlemen’s Beef Association Vice President of Government Affairs Colin Woodall.

The agricultural appropriations bill is part of a $1.04 trillion bill adopted by both the U.S. House and U.S. Senate. The competitive injury, unfair practices and undue preference proposed rule caused the most concern for cattlemen and women like Robbie LeValley, a Colorado cow/calf producer and co-owner of Homestead Meats.

“The vague definitions would open the door to an increased number of law suits

because mere accusations, without economic proof, would suffice for US- DA or an individual to bring a lawsuit against a buyer. This would have been a trial lawyer’s bonanza,” said Le- Valley. — Traci Eatherton, WLJ Editor