, V
ol. 32, No. 36, September 9, 2011
Reproduction Permission Granted with 1) full attribution to Daryll E. Ray and the Agricultural Policy Analysis Center, University of T
ennessee, Knoxville, TN;
2) Copy of reproduction sent to Information Specialist, Agricultural Policy Analysis Center, 309 Morgan Hall, Knoxville, TN 37996-4519
The USDA (United States Department of Agricul-
ture) published a proposed rule in the June 22, 2010
Federal Register that would "add several new sections
to the regulations under the Packers and Stockyards
Act, 1921, as amended and supplemented (P&S Act).
The new regulations that GIPSA is proposing would
describe and clarify conduct that violates the P&S Act
and allow for more effective and efficient enforcement
by GIPSA [Grain Inspection, Packers and Stockyards
Administration]. The proposed regulations would
clarify conditions for industry compliance with the
P&S Act and provide for a fairer market place (em-
phasis added)." The USDA originally allowed for a 60
day comment period but under pressure from industry
groups extended the comment period to November 22,
2010.
As of early September 2011, GIPSA has not issued
a final rule. And still the proposed rule continues to
generate strong reaction by its opponents as witnessed
by the testimony of Kansas Livestock Association
President Ken Grecian at a 2012 Farm Bill field hear-
ing on August 25, 2011 in Wichita, KS. The hearing
was held by Kansas Senator Pat Roberts and Michigan
Senator Debbie Stabenow, Senate Agriculture Com-
mittee Chair.
As reported on the Drovers CattleNetwork web-
site, http://www.cattlenetwork.com/, "'The proposed
regulations ultimately may remove from the mar-
ketplace products consumers prefer. Producers have
responded to consumer demand by finding innovative
ways to develop and market premium quality and
branded products. Programs like Certified Angus Beef,
U.S. Premium Beef, "naturally raised" and others
would be jeopardized,' said Grecian, who also serves
on the Board of Directors of the National Cattlemen's
Beef Association (NCBA). 'These alternative market-
ing arrangements have allowed producers to get paid
for the value they add. These arrangements ensure a
consistent supply of livestock that meet the require-
ments of such programs. Without these arrangements,
neither these programs, nor the producer alliances that
support them could be sustained.'
"Grecian stated that NCBA and KLA members
believe the proposed rule would set the beef industry
back to a time when all cattle received the same aver-
age price and beef demand was in a downward spiral
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PolicyPennings by Daryll E. Ray & Harwood D. Schaffer
Article Number 580
He strongly urged the committee to take action to
prevent the implementation of the GIPSA rule."
In our reading, there is nothing in the proposed
rule that would create the situation that Grecian fore-
sees. Just the opposite, rather than eliminating these
premium programs that allow cattle producers to earn
a premium price for their products, the proposed rule is
designed to ensure that packers offer these premiums
to all producers who can provide the required volume,
kind, and quality of livestock, either individually or
collectively.
In his tentative wording, Grecian recognizes this
when he says, "the proposed regulations ultimately
MAY (emphasis added) remove from the marketplace
products consumers prefer." The problem is not with
the wording of the regulation, but rather the fear that
packers would eliminate quality product premiums to
avoid litigation by farmers who felt they were unfairly
denied the premium.
The whole reason GIPSA was adopted in the first
place was the discriminatory behavior of packers that
was aided by their concentration. And, the reason
GIPSA proposed the rule was the testimony of cattle
producers who complained about being denied access
to premiums offered to other producers despite the fact
that they could meet the same requirements.
We have no doubt that the packers would rather
not have to comply with a new set of regulations, but
that is no reason to eliminate a rule that ensures that all
market participants are treated fairly and that no one
is discriminated against when it comes to having the
opportunity to earn premiums for a quality product.
Grecian feels so strongly about the elimination
of the requirement that according to Drovers, he
"suggested there is no need for a livestock title in the
2012 Farm Bill." To our way of thinking that is akin
to cutting off one's nose to spite one's face.
Daryll E. Ray holds the Blasingame Chair of Excel-
lence in Agricultural Policy, Institute of Agriculture,
University of Tennessee, and is the Director of UT's
Agricultural Policy Analysis Center (APAC). Har-
wood D. Schaffer is a Research Assistant Professor at
APAC. (865) 974-7407; Fax: (865) 974-7298; dray@
utk.edu; http://www.agpolicy.org.
