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PRIME CUTS – for Dec. 12, 2011

It takes a lot of angry cowboys (and girls) to sway a federal agency. This in a nutshell is what has happened with USDA s attempt to put more regulations on the way livestock and poultry are marketed in the U.S.

USDA stunned the industry in June last year when its Grain Inspection, Packers and Stockyards Administration (GIPSA) unveiled a rule that threatened to upend 30 years of progress in the beef industry to equate cattle (and hog) prices with quality. The proposed rule only came about because of loud and emotional cries from certain fringe groups for USDA to rein in the big bad packers.

GIPSA administrator Dudley Butler, who had previously helped chicken growers sue poultry processors, happily complied. His big mistake though was that he and two fellow authors wrote a rule that went way beyond what Congress in the 2008 Farm Bill had asked USDA to do. Congress wanted USDA to focus only on five poultry practices. The rule though threatened to upend years of livestock marketing agreements between packers and livestock producers.

This made the vast majority of producers so mad that they began a ferocious campaign to have the rule withdrawn or radically rewritten. They enlisted producers large and small to speak to the rule s potential damage to their businesses and to the industry. They even persuaded an unprecedented bipartisan coalition of members of Congress to criticize USDA. The result was that in early November, USDA said it had sent a much-watered down final rule and an interim final rule to the Office of Management and Budget for review. USDA s stunning retreat represents one of the most successful industry lobbying campaigns I have ever seen.

The battle is not quite over, however. The livestock industry has dodged a bullet for now because USDA left nearly all livestock provisions out of its rules. It says it does not intend to finalize a regulation that would have required packers, swine contractors and live poultry dealers to maintain records justifying price and contract terms. It will also not proceed with a proposed packer-to-packer sale ban and restrictions on packer buyers/dealers. But it intends to re-propose three livestock provisions at some point. These provisions are: elimination of the competitive injury requirement; unfair, unjustly discriminatory and deceptive practices; and undue or unreasonable preferences or advantages.

USDA provided some details about the two rules in a briefing of industry representatives in early November. Significantly, a senior adviser to Agriculture Secretary Tom Vilsack held the briefing, while Butler was conspicuously absent. It told the briefing that GIPSA needs more time to provide additional clarity on the above three provisions before modifying and re-proposing them. It appears particularly sensitive to the many comments that GIPSA received about the risk of increased litigation between producers and packers as a result of the proposed rule. GIPSA will re-propose the provisions in one rule and seek additional comment, says USDA.

As soon as news of USDA s final rules emerged, it was time for the proposed rule s supporters to get mad again. The Western Organization of Resource Councils said it was appalled that USDA had diluted the final fair livestock market rules so significantly. USDA and the Administration have let down independent farmers and ranchers, says WORC. The National Farmers Union demanded that USDA act in implementing the rule, notably the section on competitive injury.

However, USDA s actions and words in early November indicated it knows that GIPSA and Butler wildly over-stepped the mark, and that it will significantly water down any future livestock provisions. Chalk this up for a victory for common sense and non-stop industry lobbying.





USDA s actions and words in early November indicated it knows that GIPSA and Butler wildly over-stepped the mark, and that it will significantly water down any future livestock provisions

About the author


A North American view of the meat industry. Steve Kay is publisher and editor of Cattle Buyers Weekly.

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