"Decided" Beef Producers Strongly Oppose GIPSA Rule

"Decided" Beef Producers Strongly Oppose GIPSA Rule

A reprise of last fall’s BEEF reader survey on the GIPSA rule finds little change in producer sentiment over the past year.

It’s been one of the year’s hottest issues in the U.S. livestock industry. The public hearings on it were packed and passionate; and, the ink this issue consumed in print, and the digital bytes it generated online, were fitting for the epic struggle it seemed to be.

I’m referring to the debate and political gamesmanship over proposed changes that the Grain Inspection, Packers and Stockyards Administration (GIPSA) seeks to make in the nation’s livestock and poultry marketing rule.

Those in support of the rule have argued that such changes are sorely needed to restore competition to the marketing side of U.S. livestock and poultry production. Those in opposition say the rules, once in place, will decimate the U.S. beef industry by rolling it back to a commodity market and undoing the quality production progress of the past two decades.

Another chapter in the saga is expected to unfold late this fall, according to what USDA Under Secretary Edward Avalos told BEEF in April 2011. That’s when USDA is expected to reveal its implementation decision on the hotly contested proposal that drew more than 60,000 public comments.

“I need to make it crystal clear – we have a lot of people for the rules as they are proposed, a lot of people against the rules as they are proposed, and a lot of people who like parts of the rules, but not other parts,” Avalos said last April.

But, according to the results of the latest BEEF reader survey on the topic, which was conducted in mid August, most folks are still uncertain about where they stand on the issue. In fact, the BEEF survey found that the biggest percentage of respondents (53.8%) say they are still uncertain about their feelings on the rule (Figure 1).

And that sentiment dominates despite the finding that the vast majority of respondents (82.6%) say they consider the current marketing practices used in the beef industry as positive for U.S. beef producers (Figure 2). Thus, the broad producer support for the proposed rules that proponents of the measure claim just isn’t backed up by BEEF readers surveyed.

In fact, only 4% of all respondents to the August survey indicated that they favor the measure, while 10 times that number (42.1%) say they are against the measure (Figure 1).

Revisiting last fall’s survey

Last fall, on the heels of the boisterous USDA listening session in Ft. Collins, CO, BEEF magazine conducted an email survey of its readership to gauge reader sentiment toward the proposed rule. Those results were published in the October 2010 issue of BEEF.

The results of those 730 returned and useable surveys indicated that, among all respondents, 78% believed that current marketing practices available in the U.S. beef industry are positive for beef producers (Figure 2). In fact, of all respondents to the fall 2010 survey, only 4.9% of respondents favored the rule, while 42.7% opposed it. The largest share of respondents (52.4%) said they were uncertain of their position on the rule (Figure 1).

Much has transpired since that September 2010 survey of BEEF readers. In the interim, proponents of the rule have claimed that the majority of livestock producers are in support of the rule. That contention seemed to be borne out, at least visually, by the success that proponents had in stacking various USDA listening sessions on the measure with an eclectic alliance of small producers, unionists and “green” groups.

So we decided to go back to the readership one year later, ask the same questions as we did in fall 2010, and test how sentiments had changed after a clamorous year of campaigning by both sides. (You can see a baseline data summary of the readers surveyed in 2010 vs. 2011 here.)

Lots of fence riding

A total of 20,202 BEEF readers were surveyed by email in mid-August 2011, with a total of 951 useable completed surveys returned, an effective response rate of 4.7%.

The results, frankly, surprised us. Reader sentiment seems to have changed little in the year-long interim, and the results certainly fly in the face of the level of public clangor and fever over the issue in the past year.

“I am a little surprised that our August 2011 survey found that more than half of our readers still haven’t formed a firm opinion on the proposed GIPSA rule,” says Scott Grau, BEEF research manager. “Yet among those respondents who indicated they had read the rule, 75.4% of them indicated opposition to it. Among those respondents who indicated they hadn’t read the rule, 24.8% were against it, while 74% were uncertain.”

In fact, 65.8% of all respondents in the August 2011 survey indicated they were aware that GIPSA had submitted a proposed rule, while 34.2% were not. Conversely, in the fall 2010 survey, those percentages were 68.1% and 31.9%, respectively (Figure 3).

In the fall 2010 survey, 68.9% of all respondents also indicated they had not read the rule, while 31.1% said they had (Figure 4). Of respondents to the August 2011 survey, 66.1% indicated they have not read the rule, while 33.9% say they have.

Broken down by sector, the greatest opposition to the rule was exhibited by stocker/backgrounders, with 47% being against the rule, and another 47% being uncertain. Among cow-calf respondents, 41.3% oppose the rule, while 55% say they are uncertain. Among feedlot respondents, 40.9% oppose the proposed rule, with 54.5% uncertain.

Interestingly, sector support for the GIPSA rule was strongest among stocker backgrounders (6%), and weakest among cow-calf respondents (3.7%). Feedlot respondents weighed in at a 4.5% level of support.
Survey respondents were also asked to indicate the percentage of their total income comprised by cattle production – 1-25%, 26-50%, 51-75% and 76-100%.

Logically, those respondents drawing their greatest livelihood from the cattle business (76-100%) scored highest in awareness of the GIPSA rules (72.1%), as well as having read the rule (41%). That segment also scored slightly higher in support of the rule (5%), vs. 4.9% for the 51-75% segment, 3.9% for the 26-50% segment, and 2.6% for the 1-25% segment.

Opposition to the rule was greatest (45.9%) in the 51-75% segment, followed by the 76-100% segment at 43.8%, the 26-50% segment at 40.2%, and the 1-25% segment at 38.8%.

Among the production sectors, stocker/backgrounders were strongest in the belief that current marketing practices in the beef industry are positive for beef producers (88%; see Figure 5). Meanwhile, 82.4% of cow-calf producers, and 73.8% of feedlot respondents agreed with the statement.

Stocker/backgrounders were also the segment that reported itself as most aware of the rule (71.2%; see Figure 6), and most likely to have read the rule (37.8%; see Figure 7). Of cow-calf respondents, 65.4% were aware of the rule, while 33.1% indicated they had read it. Of feedlot respondents, 62.1% were aware of the rule and 33% had read it.

By geographic area, support for the proposed rule was highest in the East South Central region (KY, TN, MS, AL) at 12.3%.The Pacific states (WA, OR, CA, AK) logged the highest opposition of all regions to the proposed rule at 50%, as well as the lowest percentage in favor (1.7%). The highest uncertainty regarding the rule was recorded in the South Atlantic region (WV, DE, MD, VA, NC, SC, GA, FL) at 59.8%.

Why favor or oppose?

Readers surveyed also were asked to designate issues for their support or opposition to the proposed GIPSA rule.

Of those favoring the GIPSA rule, the highest reason cited at 56.8% was the belief that the measure once enacted will reduce captive supplies through forward contracting. Meanwhile 54.1% believe the measure will increase the availability of legal recourse in packer/producer conflicts, and a similar percentage believe the measure will increase market access in certain parts of the country.

Meanwhile, 48.6% say implementation of the measure will reduce the number of cattle selling outside the cash market, and 27% contend that the rule will increase the number of packers.

Among respondents indicating their opposition to the rule, the most cited reason (85.7%) was that its implementation will allow the government to define how producers market their cattle; 84.1% say it will hinder the industry’s progress in value-based marketing.

Meanwhile, 78.8% believe the measure will restrict industry competitiveness, both domestically and globally, while 75.4% contend it will put lawmaking in the hands of regulators. Lastly, 66.1% say implementation of the rule will decrease the industry’s ability to provide consumers with what they are asking for, and 59.8% contend it will encourage frivolous lawsuits.

What’s next?

The next chapter in this saga lies just around the corner. An economic analysis on the measure, performed at the urging of Congress and grudgingly accepted by USDA, is currently underway by USDA Chief Economist Joe Glauber. Following that, USDA is expected to make its decision. USDA Secretary Tom Vilsack has said that his agency plans no additional public comment following the study.

But, the U.S. House of Representatives earlier this year denied funding for implementation of the measure. What exactly USDA will present in final form is unknown, but the matter likely faces its day before the court if implemented as currently formulated, experts say.

For the full results of the August 2011 survey, click here.

TAGS: Marketing