Opposition Could Challenge Rule in Budget

Todd Neeley , DTN Staff Reporter
Opposition to new livestock marketing rules could play itself out in an upcoming budget vote ahead of a Dec. 9 deadline to continue funding the federal government. (DTN file photo)

OMAHA (DTN) --Legislative opposition to USDA's new livestock marketing rules could be a part of the upcoming budget debate ahead of a Dec. 9 deadline to keep the federal government running, although Sen. Charles Grassley, R-Iowa, said Tuesday he doesn't think that will happen.

The rules under the Grain Inspection, Packers and Stockyards Administration, or GIPSA, have been sent to the Office of Budget and Management for review. Once OMB give a green light, the rules would then be published in the Federal Register and be subject to a public comment period that could extend beyond Dec. 9.

"You have to know what you're fighting," Grassley said during a teleconference with agriculture journalists.

The possibility still exists that opponents could offer a budget rider to prevent the new rules from taking effect.

Last week U.S. Secretary of Agriculture Tom Vilsack said in a letter to agriculture groups USDA was pressing on with the proposed "Farmer Fair Practices Rules."

Grassley said Tuesday he believes USDA is trying to "make the market more competitive for independent producers."

For years Grassley has offered legislation aimed at addressing what he said is an expanding fear among independent producers that packers are manipulating prices and "skirting price reporting" at critical times.

During his town hall events, Grassley said poultry and swine producers have said they are concerned packers are foregoing cash purchases in favor of "almost exclusively contracts."

Following the USDA announcement last week, the National Cattlemen's Beef Association, North American Meat Institute and the National Pork Producers Council came out in opposition to the rules.

"I don't understand them at all," Grassley said.

"Maybe it's too simple of a rule to say transparency is kind of part of accountability. Information in the marketplace is very important."

On numerous occasions Grassley said he and fellow Iowa Democratic Sen. Tom Harkin pressed for reforms to provide price transparency.

"We took the time to get legislative language and the regulation writers ignore our intent," Grassley said. "What's wrong with knowing what the marketplace is doing? I don't understand these complaints.

"When you just get basic information out on the price people are paying for a product, so other people can make a judgement, I just don't see the problem. Transparency is a pretty elementary principle."

Vilsack wrote in a letter to a variety of agriculture groups that the rules "will seek to help balance the relationship between livestock producers, swine production contract growers, and poultry growers and the packers, swine contractors, and live poultry dealers with whom they interact."

The rules consist of three separate rules by USDA's Grain Inspection, Packers and Stockyards Administration.

Parts of the rules have been in development since the beginning of the Obama administration and have led to heated public forums and congressional hearings in 2010. Members of Congress maintained the initial proposals went beyond congressional intent, and the rules had been blocked through language in funding bills until recently.

Because of divisions within the livestock industry on the rules, it's possible these rules could again be delayed or blocked with language in funding bills.

Groups such as the National Farmers Union and the National Sustainable Agriculture Coalition support the rules.

An interim final rule is expected to clarify the scope of a couple of key provisions in the Packers and Stockyards Act that would make it easier for a livestock producer to sue a packer alleging unfair practices.

In repeated court cases judges have ruled livestock producers could not claim damages against a packer because their cases "did not demonstrate harm to competition."

Some federal courts have ruled poultry operators and livestock producers have no standing to sue even though they claimed the packer's actions drove them out of business.

While the rule on litigation becomes an "interim final rule," two other rules were formally proposed. One rule involves unfair practices and deals with contracts between packers and producers offering special premiums that could create undue pricing preferences.

A third proposed rule on poultry would address the tournament system in poultry payments. Companies often group together growers and rank them on performance. Those farmers who rank higher receive more pay, while those producers who rank lower receive less. USDA proposes a rule that would include requirements for companies to determine grower payments.

Todd Neeley can be reached at

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Todd Neeley