Status Of Proposed GIPSA Rule

Last week, the USDA held a briefing on the status of the GIPSA rule.

November 6, 2011

2 Min Read
Status Of Proposed GIPSA Rule

Last week, the USDA held a briefing on the status of the GIPSA rule. Here is where the bill stands:

A final rule has been submitted to Office of Management and Budget (OMB) that contains four out of the five provisions included in the 2008 Farm Bill. Those provisions relate to delivery of birds, additional capital investment criteria, breach of contract and arbitration. These provisions apply to poultry and do not have an impact on us. OMB has 45 days to review the rule. Once they are done, the rule will be published in the Federal Register and will be implemented over the following 60 days before enforcement begins.

  • The fifth Farm Bill provision relates to definitions of unfair practices and undue preference. We had a significant concern with this language because it could have led to common practices such as quality and quantity premiums being considered unfair and thus subject to litigation, which would have a negative impact on marketing opportunities. This has been one of our core fights on the original GIPSA rule. Action on this provision has been postponed.

  • An interim final rule on tournament system pricing in the poultry industry has also been submitted to OMB. Once again, this provision does not impact us.

  • Sample contracts will still need to be submitted to USDA, but only for poultry and pork contracts. Cattle contracts are not included.

  • This final rule is estimated to cost $70 million annually to comply with for the provisions mentioned above. This is below the $100 million threshold to be considered an economically significant rule. Since proponents of the GIPSA rule failed to submit any economic data, our comments and the Informa study were factored into USDA’s analysis. However, even after multiple requests from Congress, we will not see the analysis until the rule is published.

  • The ban on packer-to-packer sales, and the requirement to only have one buyer per packer, have been eliminated.

  • The requirement to maintain records in order to try and justify the price paid for cattle has been eliminated.

Bottom line: Even though many of these actions are positive, the fight is not over. By law, USDA must define undue preference and unfair practices. Even though they have postponed that action, they told us they were reviewing those provisions and the provisions relating to competitive injury for a future re-proposed rule. We have to stay engaged in order to prevent this from happening.

For another perspective on USDA's action, see this release from the Western Organization of Resource Councils.

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