Concerned a United States Department of Agriculture (USDA) proposed rule regarding livestock and poultry will limit consumer choice and drive up costs, U.S. Senator Pat Roberts (Kan.) called for better cost-benefit analysis on the rule in a letter to Cass Sunstein, the Administrator of the Office of Information and Regulatory Affairs.
At issue is USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) proposed rule amending the Packers and Stockyards act as published in the Federal Register on June 22, 2010.
The following is the text of the letter:
“I have strong concerns that the Administration’s cost-benefit analysis (CBA) of the proposed changes is inadequate. Given the potential impacts of the proposed rule on livestock and poultry producers, processors and consumers, I believe it is critical that a robust and comprehensive CBA is conducted to ensure all affected stakeholders have a firm understanding of the potential consequences of this regulation on their economic welfare and livelihood.
“On June 9, 2009, we met in my office to discuss your nomination to be the Administrator of the Office of Information and Regulatory Affairs (OIRA). During that meeting you expressed your support for the federal government to apply sound CBA principles in the regulatory process. Furthermore, in 2002, you wrote, ‘At least cost-benefit analysis will help show them what they are doing.’ I could not agree more. However, federal agencies must examine the full range of consequences of proposed regulations for the administration and public to truly ‘know what they are doing.’
“Unfortunately, I fear the Administration neglected to conduct a thorough CBA of GIPSA’s proposed rule. As an example, GIPSA’s CBA never references potential costs to consumers. Based on my initial discussions with constituents, this rule could dramatically reduce consumer choice and increase costs. Over the past decade, consumer demand combined with innovative marketing arrangements created specialty protein products like natural, age verified and branded breed meats and poultry. GIPSA’s proposal decreases the likelihood that a packer would enter into a variety of specialized arrangements over fear of litigation. Without such arrangements, consumers may find purchasing specialized products more costly or less convenient.
“Additionally, the CBA overlooked the potential for producers who currently receive a premium for operating efficiently and producing higher quality livestock and poultry to lose income due to an erosion or elimination of marketing options for their livestock. Under the proposed rule, plaintiffs would no longer have to prove competitive injury in order to bring a successful claim under the PSA. Therefore, packers may very well forego many of the current alternative marketing arrangements that benefit producers and simplify their procurement methods in an effort to decrease legal exposure. Ultimately, this reduction of marketing options could depress the prices received by many of America’s most efficient and successful producers. The Administration’s CBA fails to consider this potential outcome and its effects on producers and their bottom line.
“In 2007, GIPSA’s Livestock and Meat Marketing Study showed that over ten years a 25 percent reduction in alternative marketing arrangements would cost feeder cattle producers $5.1 billion; fed cattle producers $3.9 billion; and $2.5 billion for consumers. If marketing arrangements were eliminated, the 10-year cumulative losses for producers and consumers would top $60 billion. Feeder cattle producers would lose $29 billion; fed cattle producers would lose $21.8 billion; and consumers would lose $13.7 billion. Now is not the time to take money out of the pockets of both producers and consumers.
“As OIRA Administrator, your office is responsible for reviewing federal regulations before they are made public and put into practice. Simple cursory analysis in order to validate an agency’s pre-determined policy position is not in the best interest of our country. I urge the Administration to look deeper into the proposed rule and provide the public with a better understanding of its potential impact on their daily lives and pocketbooks.”
Senator Roberts is a senior member of the Senate Committee on Agriculture.