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Agriculture Today

Senators grill USDA rep over ‘Ranchers-Farmers Bill of Rights’

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Wilson County News
July 13, 2011 | 3,669 views | Post a comment

Proposed GIPSA rules continues to divide industry

WASHINGTON, D.C. -- Summer is a time for barbecues, but during a June 28 Senate hearing, Dr. Joe Glauber, chief economist for the U.S. Department of Agriculture in Washington, was the one being grilled. During a hearing, “The State of Livestock in America,” held by the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, Glauber answered questions on a variety of topics, but the proposed U.S. Department of Agriculture (USDA) Grain Inspection, Packers, and Stockyards Administration (GIPSA) rules kept Glauber in the hot seat.

Since June 2010, when Agriculture Secretary Tom Vilsack announced the proposed rules in the Federal Register, 60,000 comments have been received. Ranchers, producers, and other stakeholders also had the opportunity to voice their concerns at an August 2010 workshop in Colorado with the U.S. Department of Justice, Antitrust Division, and the USDA.

The proposed GIPSA rules, according to a USDA press release, “would provide significant new protections for producers against unfair, fraudulent, or retaliatory practices,” creating a fairer market place.

The proposed rules, dubbed by some as the “Ranchers-Farmers Bill of Rights,” hit a major roadblock when the House of Representatives deleted all funding for the continuation of the proposed GIPSA rules in the 2012 ag appropriations bill.

Ranking member Sen. Pat Roberts voiced his disappointment that J. Dudley Butler, administrator of the GIPSA program, was not present June 28 on the panel to answer questions from the Senate committee.

Roberts voiced his opposition in his opening comments, stating that GIPSA is a “regulatory attack” included in the last Farm Bill. Congress rejected it then and the exact proposal is being discussed again, he said.

An economic analysis of the proposed rules has been a topic of debate for months, with reports being released by different groups.

The reports cite:

•An increased cost to packers due to the reduction of marketing agreements, thereby affecting plant efficiency;

•Job losses in the production of beef, pork, and poultry, and related agricultural support activities, such as the food-service sector.

•The reduction of buyer participation at auction barns, and the possibility of smaller barns going out of business.

Roberts set his sights on Glauber’s analysis report, questioning its accuracy and the economic impact for the livestock sector and consumers.

Glauber admitted difficulties on how the proposed rules will affect packers and integrators. He stated a significant economic impact is estimated at $100 million in job and revenue losses.

Sen. Mike Johanns countered Glauber’s comment, suggesting losses in the billions.

Roberts continued grilling Glauber, raising legal aspects of the proposed rules and the potential increase in litigation against packers for prices paid to producers.

When Roberts did not get the answer he wanted, he was joined by Johanns, who questioned Glauber about the “force of action of the USDA,” and if USDA is exceeding its authority.

Glauber said he would answer economic questions from the senators, but would “defer to legal counsel” regarding constitutionality and the law.

While government officials served on the first panel, a second witness panel -- from the beef, pork, and poultry sector -- offered insight on the proposed rules, with mixed reviews.

See “Second panel comments” for more on this.

Although GIPSA received a lot of attention during the webcast, other issues, such as the Farm Bill, conservation programs, export numbers, and the proposed animal identification traceability program, also were discussed. Watch for more on these issues in a coming issue of the Wilson County News.

What is vertical integration?

“Vertical integration is the control of two adjacent stages in the vertical marketing channels from producers to consumers. An example would be one firm engaged both in cattle feeding and meatpacking.” The two primary types of vertical integration are contract and ownership integration.

Source: “Vertical Integration Comparison: Beef, Pork, and Poultry” by Clement E. Ward, professor and Extension economist, Oklahoma Cooperative Extension Service.

Second panel comments

Feedback from ag industry members on the second panel included:

Rick Sietsema of Sietsema Farms: The proposed GIPSA rules could reduce the labor force by 104,000 jobs.

Dennis O. Jones, pork producer and a member of the South Dakota Farmers Union: The top four packers control 80 percent of cattle and 55 percent of the pork industry. Animal concentration (vertical integration) by the packers continues to rise, and the USDA needs to address this to ensure the producers’ bargaining rights. The lack of market power can be attributed to fewer ranchers and farmers. Enforcement and clarity are needed and packers need to explain why they are paying the prices they pay.

Steven D. Hunt, chief executive officer of U.S. Premium Beef LLC of Missouri: Producers who receive more than the average price versus those who receive a loss on every lot sold is an issue that needs to be addressed. It is critical to produce better quality livestock to earn better prices. Small producers are unintentionally being harmed.

Frank Harper, president-elect of the Kansas Livestock Association: The importance of genetics in one’s herd is needed for the producer to receive better prices, citing programs such as U.S. Premium and U.S. Angus Beef. GIPSA will increase the number of litigation cases. Packers will pay average prices, since GIPSA rules will force packers to justify their prices to the producer.

“The rules go beyond the authority of Congress,” he said, and should not be implemented.

Michael Welch, president and CEO of Harrison Poultry in Georgia: This business was vertically integrated 40 years ago. With 1,000 employees and 40 family farms, he ranks GIPSA as his No. 2 concern, behind using corn in the production of ethanol; he asked for a “time out.”

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