R-CALF Applauds USDA Decision to Proceed with GIPSA Rule

October 20, 2010 12:42 AM
 

Source: R-CALF USA 

U.S. Agriculture Vilsack declined the request by 115 members of Congress to complete a comprehensive economic analysis of the proposed competition rule (GIPSA rule) published by the U.S. Department of Agriculture’s (USDA’s) Grain Inspection, Packers and Stockyards Administration (GIPSA). In a news release also issued today, the National Cattlemen’s Beef Association (NCBA) called the Secretary’s actions “irresponsible” and asserted that the GIPSA rule “…could very likely result in financial devastation to a critical part of our country’s economy…” 

“R-CALF USA fully supports the Secretary’s decision,” said R-CALF USA President/Region VI Director Max Thornsberry. “The call for a new economic analysis by less than a third of the House and NCBA was, pure and simple, an effort to delay – if not completely derail – the long-awaited GIPSA rule. NCBA could not be more deceptive in its attack on the Secretary given the Secretary had already granted NCBA an additional 90-day comment period in response to NCBA’s July 8, 2010, letter to USDA that asked for an extension of the comment period so NCBA could perform its own economic analysis.”

NCBA’s request stated, “Therefore, we need (NCBA needs) additional time to adequately perform a full legal and economic analysis on the impacts of this rule.”

“Now that NCBA received the accommodation it requested, it has suddenly changed horses in order to achieve an even longer delay in the rulemaking process,” said Thornsberry.

“NCBA’s allegation that the GIPSA rule will cause harm to the economy is absolutely baseless and irresponsible,” said R-CALF USA CEO Bill Bullard. “NCBA claims outright that the GIPSA rule will hurt producers because it could result in packers’ deciding to stop participating in marketing agreements with producers, which, NCBA claims, would result in all cattle being valued at an average price, regardless of quality.”

Bullard said this is evidence that NCBA is carrying the packers’ water by conveying the packers’ hollow threats directly to producers. 

“This is the same sort of threat the packers made during the rulemaking for country-of-origin labeling (COOL) when packers threatened they would require producers to pay for third-party certification of origin claims, require producers to make their records available to the packers for ‘random producer audits,’ and pass all the costs associated with COOL onto producers,” he said. “Those were hollow threats then, and these are hollow threats today.

“There is absolutely no language in the GIPSA rule that would prohibit value-added or other legitimate marketing agreements between producers and packers,” Bullard continued. “These programs benefit packers as much as they benefit the producer, and the only way you could believe this NCBA nonsense is if there was absolutely no competition between packers for fed cattle or in the wholesale beef market.” 

He pointed to the 2007 multi-million dollar study that Congress directed GIPSA to complete, which states in part, “Packers also identified AMAs (alternative marketing arrangements) as an important element of branded products and meeting consumer demand by producing a higher quality, more consistent product.” 

Bullard said packers will not forgo the improved efficiency and profitability they gain through value-based marketing arrangements simply because the GIPSA rule would require them to maintain records that explain why price adjustments, including premiums and discounts, were applied to a producer’s cattle.

“We are dismayed by the outright scare tactics employed by NCBA and their meatpacking partners,” Thornsberry said. “But, we are pleased that USDA is not bowing to NCBA’s unscrupulous antics and is proceeding to finalize the GIPSA rule. In this rulemaking process, everyone has been given a full five months to submit their analyses and concerns, and these submissions will enable GIPSA to respond to and address any assertions of benefits and costs that were not already addressed in the proposed GIPSA rule that was made publicly available June 22.

“We’re not about trying to scare producers into opposing the most significant rulemaking our industry has seen in decades and one that holds promise to reverse the ongoing erosion of competition within our industry,” Thornsberry concluded. “Instead, we want producers to take a critical look at the rule itself and to formulate thoughtful comments that they can submit to USDA, which is how we can ensure that the rule will do what needs to be done to prevent the highly concentrated meatpackers from abusing their inherent market power.”

R-CALF USA encourages producers to read the rule, along with R-CALF USA’s summary of how the rule would impact the U.S. cattle industry by visiting http://www.r-calfusa.com/Competition/gipsaRule.htm, and also encourages producers to submit their own written comments to GIPSA before the comment deadline of Nov. 22, 2010.

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