Agricultural News
US Cattlemen's Association Offers Novel Argument for USDA Not Doing an Economic Study on GIPSA- They Aren't Capable!
Mon, 01 Nov 2010 5:45:49 CDT
The U.S. Cattlemen's Association (USCA) commends U.S. Department of Agriculture (USDA) Secretary Vilsack on his recent commitment to maintaining the previously set-upon timeline for the proposed Grain Inspection and Packers and Stockyards Administration (GIPSA) rule. USCA agrees with Secretary Vilsack's points that the two needed analyses (Executive Order 1286 and Regulatory Flexibility Act) have been conducted, and adequately meet the guidelines for a federal rulemaking process.
The concerns that have been expressed by groups opposing this rule all focus on what they foresee to be potential economic crises that will be brought about as a result of the proposed rule's implementation. Such reasoning led them to urge Congress to propose the need for an economic analysis to be done before any additional action was taken on the rule. However, one need only to look at the country's current captive supply, declining cattle herds, and reduced market access for some producers to see the true economic need for this rule.
USCA President, Jon Wooster stated, "It is well understood across the industry that USDA lacks the actual capabilities and models to conduct the studies that are being requested by Congress; as in fact, the U.S. General Accounting Office (GAO) noted in 2002 in their Economic Models of Cattle prices report that USDA does not have the ability to measure the impacts of concentration and new marketing practices in the cattle/beef industry. GAO reported 'USDA models... do not incorporate market concentration, marketing agreements, and forward contracts because they were not designed to answer questions about these factors.' Moreover, data sets used to estimate the model have been lost, along with standard measures of statistical goodness of fit and other diagnostics of model performance.' Thus, such a review would have proved futile and would have only effectively stalled any action on the proposed rule's implementation and lengthened a process that is already unduly delayed as specified under the 2008 Farm Bill."
"It's interesting that the critics of this rule fail to reference that there is a continued increase of captive supply cattle in this country that decreases competitive price discovery and limits market access for many producers. That reality and the resulting continued decline of the U.S. cow herd are evidence enough for the need to implement this proposed rule. The proposed rule clarifies the existing business justification and competitive injury clauses, and will help create a long awaited level playing field and competitive market place for cattle producers and independent cattle feeders."
"Furthermore, these rule clarifications will more than likely decrease lawsuits," continued Wooster, "Anytime a rule tightens the scope of clarification for a violation it decreases the confusion for interpretation and defines the grounds for the merits of a lawsuit. Now cattle producers, feeders, and packers alike will all be on the same page regarding the provisions of the Packers and Stockyards Act. This should be welcomed by an industry that thrives under clear direction and an open, competitive business environment."
USCA Executive Vice President Jess Peterson noted, "USCA continues to evaluate specific portions of the rule such as limiting packer to packer sales, the changes affecting livestock dealers buying for more than one packer in the livestock market, and the effect the rule will have on premium marketing agreements. USCA has stressed that the final rules be clear that they are not to be interpreted in any way that would diminish existing value added programs such as CAB, CHB, or other such branded programs or premium based marketing programs, nor should they be interpreted in any way that would restrict future development of other such value based marketing agreements. USCA will request that in defining discrimination, the failure to offer appropriate premiums be justified as a discriminatory practice."
"However, USCA is confident that once these provisions are addressed, the U.S. cattle industry will have a rule that adequately addresses the concerns of producers across the country and ensures a healthy, competitive and business environment. USCA encourages all producers to submit comments in support of the proposed rule and outline how this rule can benefit their cattle operation."
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