When asking producers at the 2010 DakotaFest in Mitchell, SD about the proposed rule by USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA), South Dakota Cattlemen’s Association (SDCA) President Bryan Nagel said the most popular response was, “What’s GIPSA?” This concerns Nagel as he said the proposed rule will have huge implications for livestock producers, packers and consumers. And, while the original intent of the rule is to improve fairness in the marketing of livestock and poultry, Nagel fears the unintended consequences of the rule will accomplish the exact opposite.
Nagel shared his top four concerns with this rule at a question-and-answer session during DakotaFest, and he encourages producers to read up on the rule and provide comments to the USDA.
1. "First, the rule would change the compensation for injury definition. This rule would make it easier for anyone to sue if they can show economic loss. If packers are tied up in lawsuits, the court fees are more than likely going to be passed back onto producers," explained Nagel.
2. Packers will have to justify their prices. Nagel worries that the unintended consequence of this rule would be that packers wouldn’t reward producers for their quality cattle, and value-added programs would go by the wayside. Instead, packers would simply pay the same price for all cattle to skip the documentation process.
3. "There can be only one order buyer for each packer at the sale barn. Order buyers often purchase cattle for several different companies. This rule would eliminate that practice, which would hurt small cow-kill plants. Many of these smaller feedlots and packers don’t have the money to send an order buyer out to the sales, so it’s nice to make relationships where cattle not needed for one company could be purchased for the benefit of another," said Nagel.
4. Packer-to-packer sales would be eliminated. Current rules already monitor these relationships to make sure price fixing isn't occurring.
"The reason these relationships are beneficial is because, for example, a producer in Ohio can sell his cattle to a plant in Kansas. Then, sort-offs that don’t fit within that program can be sold to a smaller, local plant, instead of being shipped all the way back home. If this can no longer occur, it will hurt the producers' bottom line," added Nagel.
“My biggest concern is that this rule takes away one of our risk-management tools. The rule doesn’t say that marketing agreements aren’t allowed, but that’s exactly what it unintentionally does. I encourage all beef producers to learn more about the GIPSA rule and submit comments to Congressional delegates and GIPSA," advised Nagel.
USDA is accepting public comment on the proposed rule through Nov. 22, 2010. Comments may be submitted via e-mail to: [email protected]; hard copy via mail, hand delivery, or courier to Tess Butler, GIPSA, USDA, 1400 Independence Avenue, SW, Room 1643-S, Washington, DC 20250-3604; fax to 202-690-2173; or via the Federal eRulemaking Portal at www.regulations.gov.
What are your thoughts on the proposed GIPSA rule? Are you opposed to the rule, or are you in support of how it's written? Share your thoughts in the comments section below.