Idaho Cattle Association

 Position Report

RE: Proposed rule published June 22, 2010 by the United States Department of Agriculture’s (USDA) Grain Inspection and Packers and Stockyards Administration (GIPSA) adding new regulations under the Packers and Stockyards Act (P&S Act) as directed by the 2008 Farm Bill.

A component of the 2008 Farm Bill directed GIPSA to issue regulations establishing criteria that determines: whether the arbitration process provided in a contract provides a meaningful opportunity for the grower or producer to participate fully in the arbitration process; whether an undue or unreasonable preference or advantage has occurred in violation of the P & S act; and whether various other practices in the swine and poultry industry constitute unfair trade practices.

In addition to fulfilling the mandate of the 2008 Farm Bill, GIPSA proposed requiring conduct that would provide a “fairer marketplace.”  Offering no explanation or rationale, GIPSA does not explain how many of the proposed regulations would be authorized by the P&S Act.

It is the Idaho Cattle Associations position that components within the GIPSA proposed rule changes go far beyond the scope of congress.  Furthermore, the ICA believes that the following elements of the proposed rule changes would bear significant burden on the free market and stifle innovation that has perpetuated the beef cattle industry:

• Elimination of the competitive injury requirement changes the way suits can be brought against a packer consequently discouraging any packer premiums and value-added contracts because of fear of litigation.  The broad nature of the proposed rule, only needing a measure of “un-fairness” to bring suit, will open doors for frivolous lawsuits and agenda driven trial lawyers.  If all that is needed is a perception of unfairness and a threshold of proof would now be virtually non-existing, litigation would then become a quintessential element in securing producer profitability in the cattle marketplace.

• Requiring buyers purchasing livestock through marketing arrangements to submit the arrangement to GIPSA for review and public display ludicrously contradicts the fundamentals of American business.  The notion of all contracts having to be submitted to GIPSA and any opportunities must be made available to all producers and all producers need to be aware of these opportunities, is positively un-capitalistic.  Marketing arrangements include forward, formula contracts, production contracts, and other incentive-based agreement.  Full public disclosure would be counterproductive to the innovation and creativity that has allowed many beef producers to succeed in America.  The right of a willing buyer and willing seller to negotiate a private business deal is quintessential to beef cattle business.

• A ban of packer to packer sale of livestock would encourage consolidation and displace producer livestock.  If packers cannot sell cattle to other packers, then many feedlots would suffer inefficiencies through added transportation costs that would lead to consolidation and less competition.   Furthermore, an order buyer only being able to represent one packer will significantly restrict market access.  There is no logistical way possible that packers could have adequate separate buyers across the nation to service all markets.  This will ultimately result in fewer buyers which means less competition, never good the for cattle markets.

It is highly apparent to the ICA that the above proposed rules would consequently mean a loss of opportunity and ultimately profit for Idaho and American cattle producers.  The proposed rules take way incentives for cattle producers to react to the consumer and produce the beef products that they prefer.  Cattlemen have the opportunity to reap the fruits of their innovation through penetrating markets at an incentivized level through both premium quality and branded products.  It is not of cattle producers best interests to hobble this innovation with rules that belittle it.  And ultimately, it is not of the consumers’ best interest to limit their beef choices through rules that disable production of the products they demand.  Nor is it of the best interest of our state and nation to impede on free enterprise in such a fashion. 

For more information:

ICA Comments to GIPSA

Proposed Rules Volume 75 Number 119 

NCBA Talking Points

NCBA Rule Facesheet

NCBA GIPSA

Beltway Beef

USDA GIPSA Homepage