USDA Delays Enacting Obama-Era Livestock Rules

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By Casey Wooten

The Agriculture Department’s Grain Inspection, Packers and Stockyards Administration is pushing back implementing Obama-era rules that would rework contract regulations between livestock produces and processors.

In a stakeholder notification sent out April 11, the USDA said it would delay the effective date for the regulations, known as GIPSA Rules, from April 22 to Oct. 19. The USDA also pushed back the deadline for public comments to June 12.

“The extension allows ample time for stakeholders to review the effects of the Scope Interim Final Rule on their operations, and ensures maximum opportunity for dialogue across every segment of the livestock, meat, and poultry industries,” GIPSA Acting Administrator Randall Jones said in the notification.

The delay casts doubt on whether the White House—which ran on a platform of cutting federal regulation—will implement the rules in the version published last year. Notably, the new memo didn’t use the Obama administration’s name for the regulations, the Farmer Fair Practices Rules.

Contract Rules Overhaul

Released Dec. 14, 2016, the GIPSA final rules would overhaul the scope of Grain Inspection, Packers and Stockyards Act regulations on “unfair or discriminatory trade practices” by livestock processors.

The rule establishes that it is not necessary to demonstrate that a trade practice harms the entire industry in order to prove a violation of the Packers and Stockyards Act rules governing unfair trade practices among processors, who contract with livestock producers. That could make it easier for livestock farmers to sue large processing companies.

The rule also addresses what critics have called undue preference in the tournament-style system in which poultry processors pay producers.

Chicken processors like Tyson Foods Inc. and Perdue Farms Inc. contract with individual chicken farmers, who then raise livestock owned by the processors. Farmers are paid using a competitive system in which prices are set based on the size and quality of the livestock raised.

Some critics of the system say that it places all the risk on the farmers and that pay between producers can very widely. Processors say the system keeps prices low for the consumer.

Criticism

The GIPSA rules have been in the works for nearly a decade. They were first mandated as part of the 2008 farm bill, but lawmakers have blocked their implementation in subsequent appropriations legislation.

However, in a measure to fund the federal government in late 2015, Congress did not include language blocking the GIPSA rules from advancing and the USDA moved to finalize the rules.

“The Obama administration made the imprudent decision to finalize this rule on their way out the door,” Senate Agriculture Committee Chairman Pat Roberts (R-Kan.) said in a statement supporting the department’s delay. “I hope the Trump Administration’s USDA will finally heed the concerns of farmers and ranchers and the Congress to get rid of this unneeded and unwanted rule.”

Livestock groups like the National Cattlemen’s Beef Association have asked the USDA to halt the rule altogether as well. The NCBA praised the department’s decision to push back implementation.

“This is another step toward common sense and away from counterproductive government intrusion in the free market,” NCBA President Craig Uden said in a statement. “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.”

Some farm groups, such as the American Farm Bureau Federation, have backed the rules, however.

To contact the reporter on this story: Casey Wooten in Washington at cwooten@bna.com

To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com

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