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Agricultural News

R-Calf Contends US Premium Beef Would See No Negative Impacts Under the Proposed GIPSA Rule

Thu, 12 Aug 2010 5:41:24 CDT

R-Calf Contends US Premium Beef Would See No Negative Impacts Under the Proposed GIPSA Rule One of the groups that is calling for full implementation of the livestock marketing rules being advanced by GIPSA and the Obama Administration claims that one of the highest profile value added programs in the cattle industry would not be impacted at all if the rules are radically changed as proposed. However, the organization admits that more paperwork and liability will fall on the processor that buys and harvests US Premium Beef animals. And the group is silent on whether National Beef will be subject to lawsuits if disgruntled cattle producers decide they disagree with how premiums are paid to US Premium Beef members. The following is a news release issued on Wednesday evening by the R-Calf organization.

In response to recent concerns expressed by members of U.S. Premium Beef (USPB) regarding the proposed competition rule (Competition Rule) by the U.S. Department of Agriculture's (USDA's) Grain Inspectors, Packers and Stockyards Administration (GIPSA), R-CALF USA analyzed any potential negative impacts to USPB members and found there would be none.

The USPB members said they were told by representatives of the U.S. beef industry the proposed rule would limit, restrict, or otherwise harm the marketing program established between USPB and National Beef Packing Co. (National Beef), so R-CALF USA submitted its findings to GIPSA Administrator J. Dudley Butler and requested that GIPSA evaluate whether the group's analysis is correct. Click here for what R-Calf has submitted to GIPSA.

R-CALF USA found that according to the Competition Rule, USPB would not be subject to provisions within the rule because USPB is not a packer, stockyard owner, market agency or a dealer. Furthermore, USPB is neither on the USDA-GIPSA list of Bonded Packers in the United States, which is current as of Feb. 1, 2010, nor is it on USDA-GIPSA lists of registered and bonded market agencies and dealers.

Additionally, USPB markets its cattle to National Beef, a packer that would be subject to the provisions of the Competition Rule. However, pursuant to the Competition Rule, National Beef can justify differential pricing and deviation from standard price or contract terms for USPB members based on: 1) payments to USPB members' investment in USPB units, (which give each member the right to deliver a specified number of cattle based on the number of units owned or leased), and, 2) members' ability to meet certain quality based standards established by National Beef for USPB members.

National Beef also can continue to pay premiums and apply discounts to cattle marketed by USPB members as long as National Beef provides reasons for the premium paid and substantiates the revenue and cost justifications for such premiums and discounts.

Also in its analysis, R-CALF USA found that according to the Competition Rule, the criteria for undue or unreasonable preferences that may be used by GIPSA include:
"Whether contract terms based on number, volume or other condition, or contracts with price determined in whole or in part by the volume of livestock sold are made available to all-livestock producers- who individually or collectively meet the conditions set by contract."
"Whether price premiums based on standards for product quality, time of delivery and production methods are offered in a manner that does not discriminate against a producer or group of producers that can meet the same standards."
"Whether information regarding acquiring, handling, processing, and quality livestock is disclosed to all producers when it is disclosed to one or more producers."

Therefore, National Beef would not be in violation of the prohibition against giving any undue or unreasonable preference or advantage when it: 1) offers specific contract terms to all USPB members that may not be offered to non-members; 2) offers a premium and discount schedule to all USPB members that may be different than the schedule given to non-members; and, 3) discloses to USPB members information regarding the acquisition, handling, processing and quality of livestock for the USPB program that may not be disclosed to other non-member producers.

"Our analysis of the provisions of the Competition Rule reveals there would be no limits, restrictions or other harms resulting from the marketing program between U.S. Premium Beef and National Beef," said R-CALF USA CEO Bill Bullard.



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