USDA Delays GIPSA Rule

Livestock Marketing Rule Put on Hold as USDA Considers Other Possible Changes

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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USDA and the livestock industry feuded throughout the Obama administration over proposed livestock marketing rules. Now, the Trump administration has delayed an interim final rule. (DTN file photo)

WASHINGTON (DTN) -- A livestock marketing rule put forward by the Obama administration near the end of last year will be delayed at least six months, giving President Donald Trump's nominee for Agriculture secretary, Sonny Perdue, the final say on whether the rule will eventually go into effect or not.

USDA's Grain Inspection, Packers and Stockyards Administration announced the delay of the controversial rule on Tuesday, stating that the effective date would be extended until Oct. 19. Additionally, USDA announced the department would ask for further public comment on four possible actions should USDA choose to eliminate the interim final rule over how federal courts should interpret a provision of the 1921 Packers and Stockyards Act.

Sen. Pat Roberts, R-Kan., chairman of the Senate Agriculture Committee, praised the decision, noting he has been fighting USDA over the proposed livestock rules since they were first introduced in 2010.

"I commend USDA for extending the effective date of this disastrous rule. This extension will allow for the incoming secretary of Agriculture to fully analyze the effects of the rule and consider the recently submitted public comments," Roberts said.

The interim final rule addresses how USDA wants federal courts to interpret a provision of the 1921 Packers and Stockyards Act. Federal courts have repeated rules in cases between poultry growers and poultry companies that a grower must demonstrate a company's negative action toward an individual producer harmed competition in the entire poultry market. Since the 1980s, USDA has used the standard in cases involving beef and pork producers that the livestock producers does not have to show such harm to competition to bring a Packers and Stockyards case against a meatpacker. USDA has repeatedly argued the same language should apply to poultry contracts as well.

The National Cattlemen's Beef Association and National Chicken Council also applauded USDA's decision. NCBA stated the group looked forward to the rules' final demise.

"This is another step toward common sense and away from counterproductive government intrusion in the free market," said Craig Uden, president of NCBA. "That said, while a delay is welcome, ultimately this rule should be killed and American cattle producers should be free to market our beef without the threat of government-sanctioned frivolous lawsuits."

The Organization for Competitive Markets and National Sustainable Agriculture Coalition criticized USDA for delaying the rule and called the department's decision "anti-farmer." The groups said the interim final rule would help level the playing field for family farmers and ensure they have some recourse when their rights under the law are violated.

"USDA needs to stop playing games at the expense of the American family farmer," said Mike Weaver, president of the Organization for Competitive Markets. "This will be the third time USDA has asked for comments on this rule. Every time family farmers comment in favor of the rule, USDA delays and opens a new comment period. It's obvious USDA has a deaf ear to America's family farmers. We call on America's consumers to join family farmers in demanding USDA finally enact this rule."

The livestock rules came from language in the 2008 farm bill and immediately became controversial after USDA made its first proposed rules in 2010. The rules were blocked by Congress refusing to fund any effort to advance them. Last year, Congress relented in the fiscal year 2016 funding bill. USDA began advancing the rules shortly after.

USDA's action on the interim final rule did not address the status of two proposed rules dealing with poultry markets and marketing contracts. Those proposals are not as far along in the rulemaking process as the interim final rule.

One proposed rule would give producers more rights when dealing with marketing contracts. The rule would ensure packers cannot retaliate against producers who show their contracts to legal counsel. The rule also would prevent a packer from giving undue price preferences in those marketing contracts. The proposed rule has been opposed by packers that increasingly buy livestock through such contracts. Livestock groups such as NCBA and NPPC argue this rule would lead to packers ending contracts that offer specific premiums to producers.

The second proposed rule would restructure the tournament payment system used in the poultry industry by giving USDA authority to determine if a ranking system for poultry growers is fair or unjustly discriminatory, or deceptive. The poultry industry has opposed any USDA rules that could create problems with the company tournament systems.

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Chris Clayton