- The U.S. Department of Agriculture withdrew on Tuesday an interim final rule dating from the Obama administration that would have established certain legal protections for producers of chicken, cows and hogs who contract with large processors.
- USDA said the agency was taking this action on the so-called GIPSA rule — named for the Grain Inspection, Packers and Stockyards Administration within USDA — "because of serious legal and policy concerns related to its promulgation and implementation."
- USDA came out with the proposal during the last days of the Obama administration, but it never went into effect. The Trump administration initially postponed the rule's April 22 effective date for six months — until Oct. 19 — withdrawing it days before enactment.
The GIPSA rule was contentious from the start and polarized sectors within the livestock industry. There was no middle ground on the issue. Opponents said allowing the government to decide what was fair in livestock contracts would prompt lawsuits and limit marketing outreach. Supporters argued the GIPSA rule would have made it easier to legally shield producers of chickens, cows and hogs from unfair and anti-competitive treatment from large meatpacking companies.
Tyson Foods, Inc., the largest beef and poultry processor in the country, expressed concerns about the rule's impact on its business, as well as on producers and consumers, and predicted that it would have increased the price of meat products and hurt the industry's ability to compete internationally.
"We rely on thousands of independent cattle, hog and poultry producers and our relationship with them is already extensively regulated. This rule is unnecessary and potentially harmful," the company said in a statement.
Praising the USDA's rule withdrawal were the North American Meat Institute, National Chicken Council, National Cattlemen's Beef Association, National Pork Producers Council, the American Farm Bureau Federation and the chairmen of the agriculture committees in the U.S. Senate and the U.S. House of Representatives. They agreed that it would have disrupted key marketing arrangements in the livestock industry and end up stifling the competition it purported to encourage.
“Today’s decision helps restore both congressional intent and common sense by ensuring American producers have the freedom to market their products without the threat of frivolous lawsuits," House Agriculture Committee Chair Mike Conaway, R-Texas, said in a statement.
In opposition to USDA's action were the National Farmers Union, R-CALF USA, Organization for Competitive Markets, U.S. Cattlemen's Association and U.S. Sen. Charles Grassley, R-Iowa, who owns a family farm. Grassley called the rule withdrawal "pandering to big corporations" and indicated that some farmers under contract to them were being mistreated. Grassley and Sen. Jon Tester, D-Montana, who is also a farmer, wrote a letter to USDA Secretary Sonny Perdue protesting the rule withdrawal.
Roger Johnson, president of the National Farmers Union, said in a statement, “With this decision, USDA has given the green light to a few multinational meatpackers that dominate the market to discriminate against family farmers."
Given all the divisiveness around this issue, it's hard to know how the rule's provisions might have played out had it become effective. Complaints over unfair contracts and consolidation in the meatpacking industry continue to surface. They may not be addressed until this kind of proposal surfaces again, which could happen under a different presidential administration.