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Proposed GIPSA Rule Would Set Back Modern Beef Industry

TAGS: Legislative

If one was trying to capture the overriding sentiment in Washington, D.C., today, it’s that regulation/oversight is a good thing. Another is that industry and business are bad, government is good.

Of everything proposed, the release of the proposed Grain Inspection, Packers and Stockyards Administration (GIPSA) rules ( represents one of the most significant moves in this direction. Given the current political and legislative environment, that’s saying a lot.

It would require a team of lawyers to explain everything proposed in this proposed rule. It consists of 66 pages, and likely will require several thousand pages of clarifications and a myriad of legal challenges before anyone fully knows what it all truly means. However, the impacts of these regulations have the potential to change our industry in dramatic ways.

Undoubtedly, in 66 pages there are probably some positive changes, but there’s no doubt there are some devastating changes as well – that is, if you believe in market differentiation, value-based marketing and choice.

It’s Big Brother at a level most never thought would be proposed in America. And, it’s indicative of how this administration truly prefers government control to free enterprise.

Consider this scenario:

Every marketing arrangement would have to be disclosed and posted for everyone in the world to see, and GIPSA would determine if the arrangement was fair.

The proposed rule would make it far easier for virtually any party to sue for grievances. Imagine if Joe sells his calves for $125 after years of careful cattle management – creating superior genetics and collecting a decade of performance data. His contract is posted and GIPSA determines that the weigh-up conditions were out of spec because they were shrunk 2.5% instead of 3% under the formula GIPSA created. GIPSA also informs the parties involved that gathering the calves and sorting them without access to water for two hours is inhumane and must be addressed next year.

Meanwhile, another producer sells similar weight calves on the same day, slightly different location, and vastly different management and biological types, but is bid $110. He sues the buyer for discrimination, citing GIPSA rules that indicate differentiation based on a contention that quality or quantity could be considered unfair preferential treatment.

I’m not making this up. It would open the door to frivolous lawsuits, and would cause buyers to lower bids because they would have to pay everyone exactly the same. It’s a complete rejection of value-based marketing and differentiation, and would legislate us back to a commodity marketplace where everyone must receive the same price. This is the world we’re living in today.

Troy Marshall is a rancher and contributing editor to BEEF Cow-Calf Weekly.