As a lifelong cattle producer, I’m well aware that even small changes in government regulations can have a big impact back on the ranch. I hear from livestock producers every day on a wide variety of issues affecting their ability to produce high quality, affordable meat. In all of these conversations, one issue keeps coming to the forefront: USDA’s proposed rule on livestock markets.
The Grain Inspection, Packers and Stockyards Administration (GIPSA) has put forward a draft rule that defines unfair livestock marketing practices, prohibits packers from purchasing livestock from another packer, and will inhibit the ability of producers to manage risk and earn premiums for their hard work and expertise in cattle production.
While this rule is intended to promote transparent and efficient markets, I’ve heard testimony from many industry leaders who argue that this rule will hurt the very producers it is purported to help.
In April, the House Agriculture Committee’s Subcommittee on Livestock, Dairy, and Poultry began a series of hearings to examine the current conditions and challenges in the livestock community. Cattle, poultry and pork producers all shared their concerns that the proposed rule not only goes far beyond the scope of the Farm Bill, but also lacks the sound economic analysis that allows us to judge both the need and utility of the proposed rule.
The first hearing, on the beef sector, took testimony from three witnesses. Mr. Jim Strickland, a cow calf operator from Florida, Anne Burkholder, owner of a small feeding operation in Nebraska, and Ken Bull, Cargill’s Vice President for Cattle Procurement each presented their views on the state of the beef sector.
Mr. Strickland testified that, “Under the new definitions included in the proposed rule, competitive injury and the likelihood of competitive injury are redefined and made so broad that mere accusations without economic proof will suffice for USDA or an individual to bring lawsuit against a buyer, packer, or processor.”
Ms. Burkholder lamented that the proposed rule “…takes away my freedom to market my cattle as I choose. If marketing arrangements are greatly reduced, cattlemen like me are the losers.”
Finally, Mr. Bull characterized the proposed rule as “…the single greatest policy threat in the U.S. livestock and meat sector in my 32 years in business.”
I do not take these concerns lightly, and I keep this testimony in mind as my colleagues and I consider the implications of this proposal. I am also mindful that not everyone in the livestock community opposes this rule. However, there is universal consensus that USDA’s decision will have a tremendous impact on how all livestock are marketed in the United States.
For that reason, it is particularly important that we carefully and thoroughly consider the potential consequences of this rule. I do not believe that USDA has fulfilled that responsibility. Despite the repeated concerns voiced by producers like you, USDA has failed to conduct a timely cost-benefit analysis on the proposed rule.
In today’s economy, when every other conversation in Washington seems to revolve around how to improve government spending, cost-benefit analyses are critical. We need to know how much this rule will cost, who will bear those costs, and what we stand to gain in return.
Last fall, the Administration refused to honor a bipartisan request of 115 Members of Congress to conduct a much-needed economic analysis that could be used to address these concerns. In December, the Department reversed course and promised a cost benefit analysis on the rule.
Unfortunately, the Department has turned away requests to perform an independent peer review on the cost benefit analysis, or publish it for comment. It has become clear that instead of using a cost-benefit analysis to aid in decision-making, USDA will simply publish the final rule and include a cost-benefit report at that point. This is not good government; USDA is plowing ahead with its own agenda, ignoring the concerns of producers, and refusing to adhere to requests for legitimate policy analysis.
Recently, I joined with 146 members of Congress to demand that the Secretary of Agriculture put this rule on hold until its full implications can be considered with a thorough economic impact analysis. My colleagues on the Appropriations Committee clearly share my concerns; in their legislation funding USDA for the coming year, they included language that would bar further work on the GIPSA rule.
GIPSA proposed these regulations pursuant to their understanding of their authorities under the Packer & Stockyards Act, which are authorities given to it by Congress. Congress has been clear in our desire for a transparent and open process for developing this rule. I will continue to advocate on your behalf to ensure that the Administration does not move forward without allowing producers the opportunity to comment on a thorough cost-benefit analysis and the potential consequences for America’s livestock producers.