Lawsuit Challenges Cancellation of GIPSA Rule

December 14, 2017 11:04 AM
Lawsuit Challenges Cancellation of GIPSA Rule

DES MOINES, Iowa (AP) — Farmers in Alabama and Nebraska joined with a Nebraska-based fair trade group Thursday to sue the U.S. Department of Agriculture over the agency's cancellation of an Obama-era plan that would have made it easier for farmers to demand better treatment when they contract with meatpacking companies.

The lawsuit seeks to reverse the USDA's October decision to vacate the Farmer Fair Practices Rule — regulations that would have, among other things, reduced the burden of proof farmers face to sue over contracts and practices they believe are unfair, discriminatory or deceptive.

"We know from decades of evidence that massive agribusiness companies don't hesitate to use their power to abuse these farmers, and the Farmer Fair Practices Rule was a crucial step to restoring fairness in the market," said Anne Harkavy, executive director of nonprofit legal group Democracy Forward, which filed the lawsuit on behalf of Lincoln, Nebraska-based Organization for Competitive Markets; Nebraska farmer James Dinklage; and Alabama farm couple Jonathan and Connie Buttram. "It should be restored either by USDA, or by the court."

USDA spokesman Jake Wilkins declined to comment, saying the agency doesn't discuss pending litigation.

The rules were first proposed by the USDA in 2010 but were not released until last December in the final days of President Barack Obama's administration. They were scheduled to take effect on April 22, but President Donald Trump's administration delayed them for six months before the USDA announced in October that it would not implement them.

The suit, filed in the 8th U.S. Circuit Court of Appeals, alleges Agriculture Secretary Sonny Perdue ignored thousands of comments in public hearings and submitted in writing and unlawfully sidestepped directives in the 2008 Farm Bill mandating some of the rules be enacted.

Trade groups for the meatpacking industry, including the National Chicken Council and the National Pork Producers Council, had complained that the rules would lead to costly lawsuits and would reduce competition.

Some companies, such as Tyson Foods and Pilgrim's Pride, require chicken and pork producers to enter into contracts that farmers say set their compensation at unprofitably low levels and force them deeply into debt.

Several court rulings have interpreted federal law as saying a farmer must prove a company's actions harm competition in the entire industry before a lawsuit can move forward. The rules would have eased that high burden of proof.

The elimination of the rules has helped large multinational corporations get the upper hand on farmers, said Joe Maxwell, a Missouri hog farmer and executive director of the Organization for Competitive Markets, a nonprofit think tank focused on antitrust, trade policy and competitive markets.

"In doing so, Secretary of Agriculture Perdue and the administration have thrown America's farmers to the wolves, telling them that their family businesses don't matter," Maxwell said.

Named in the lawsuit are the USDA, Perdue and the U.S. government.


Copyright 2017, The Associated Press

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Spell Check

Tom Terry
Tullahoma, TN
12/14/2017 05:24 PM

  In the case of Mr. Terry, the complex was being forced to change the type of poultry housing and the farmers were required to purchase substantial equipment whose value the integrator confiscated. The payment formula was rigged so that the older poultry houses were subsidizing the new houses even if the old houses were more efficient. The goal of the integrator was to get new housing at a cheaper price by forcing the older houses to pay for the new houses in the formula pay and to get everyone back in debt. Thus, the integrator was able to capture the value of the poultry farmer's investments through the exercise of market power. These are exactly the type of deceptive devices and unfairness that the Packers and Stockyards Act prohibited. The Packers and Stockyards Act was enacted to prohibit the meat packers from using its market power to set up such a situation. The courts ruled that Mr. Terry had to prove "harm to competition" but by engaging in the prohibited practices, the integrator was by definition was harming the competition that they managed (the formula for pay, quality of inputs and weighing fraud). The harms to competition were listed in the case. The regulations were meant to make it clear to the court that the law was intended for just such (and other) instances of abuse of market power by meat packers. They 2008 Farm Bill required the rules to be written, and they were, but Congress withheld funding in every funding bill to finish the rules and put them on the books. This was a move by the leadership in Congress. Later the speaker of the house quit Congress and was rewarded by being put on the board of one of the largest meat packers as a quid pro quo reward. We have the best Congress money can buy.


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