GIPSA rules rollback

By: 
JENNY GESSAMAN
Reporter

A lone cow gets an early start on the day this summer outside of Windham.

Photo by Jenny Gessaman

On Oct. 18, the United States Department of Agriculture withdrew two rules commonly known as GIPSA rules.

The withdrawn rules were instituted just under a year ago, in December of 2016 under the Obama administration. According to a USDA press release, the rules aimed to reduce “harmful practices hurting farmers” and better outline common-sense protections for individual farmers.

GIPSA stands for Grain Inspection, Packers and Stockyard Administration, a federal department created from two separate departments combined in 1994. One of its ancestors was the Packers and Stockyards Administration, a department born out of a 1921 law responding to anticompetitive practices by major meat packers.

Today, the Packers and Stockyards part of GIPSA works to enforce its founding act and protect fair trade and competitive markets in the pork, poultry and beef industries. According to the Dec. 14, 2016, USDA press release, the recently withdrawn rules were inspired by comments from chicken producers on buyer contracts.

“The GIPSA rules were an attempt by the Obama Administration to define what illegal behavior on the part of these big firms is when dealing with these contract growers,” Gilles Stockton said.

Stockton, central district director for the Montana Cattlemen’s Association, explained the problem from his point of view.

“When I was young, people had public markets to take their hogs and cattle and chickens to,” he said. “These packers have been able to eliminate any public markets, and they contract with farmers to raise chickens and to raise hogs.”

Stockton went on to say areas usually have only one firm, leaving livestock producers captive.

“If they want to raise chickens, they have to contract with the local firm that has a plant in their county,” he said. “They’re totally dependent on having the contract because there’s no public market: They can raise chickens, but there’s nowhere to sell them.”

Before the GIPSA rules, producers who felt wronged had to prove an unfair practice harmed the entire market. The withdrawn rules changed that, and their removal was a bad choice, according to Stockton.

“It’s more than negative, it’s an insult to the free enterprise system,” he said.

Although Central Montana beef producers can still take their animals to market instead of entering contracts, Stockton doesn’t see it staying that way for long.

“To a certain degree, those of us raising cow-calf in Central Montana have been somewhat shielded from this corporate model of contract production, “ he said. “But contract growing is coming to the cattle industry, and it’s coming to Central Montana sooner rather than later.”

When it comes, Stockton sees the effects of the GIPSA rule change coming with it.

Errol Rice, executive vice president of the Montana Stockgrowers Association, had another view.

“At the end of the day, we’re going to be ok without these rules,” he said.

The Association had been following the rules since their start in 2010, and had concerns about some of their consequences.

One, they felt some of the additional transparency introduced would use pricing information to ensure fair pricing for all ranchers. Rice said that wasn’t actually fair because some ranchers used more resources to create their product, especially those focused on genetic improvements in cattle.

The Association’s other issue was with how the rules affected producers claiming unfair practices. Rice explained his group felt it made the claims too easy to prove.

“From our perspective, this doesn’t mean that we don’t support the Grain Inspection, Packers and Stockyard Administration,” he said. “There are good rules in place, and they need to stay in place to protect sellers. We just felt like this new layer of rules went a little too far.”

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