Agricultural News
NFU President Roger Johnson Critical of American Meat Institute Sponsored Study on GIPSA Rule
Tue, 09 Nov 2010 4:59:48 CST
National Farmers Union President Roger Johnson issued the following statement in regard to the pending Grain Inspection, Packers and Stockyards Administration (GIPSA) rule and the economic impact study released by the American Meat Institute (AMI):
"Producers across the country support this rule and are making their voices heard through the USDA's comment process. By clarifying regulations in accordance with the 2008 Farm Bill and under the authority of the PSA (Packers and Stockyards Act), the proposed rule is a Farmer and Rancher Bill of Rights. This Farmer and Rancher Bill of Rights ensures that producers have a right to have their contracts reviewed by an attorney or financial specialist. It provides that producers have a right to competition in the marketplace and it prevents packers or integrators from colluding against or blackballing farmers or ranchers for exercising their right to free speech. When a farmer or rancher has been cheated in the marketplace, that same producer should not be required to prove that the entire market was somehow damaged before being able to receive redress. That would be like requiring a grocery store owner to prove that a shoplifter could only be prosecuted if the a mount of stolen groceries was large enough to force the store out of business. It is time for producers to be protected against the misdeeds and abuses of some packers and processors.
"The study released by AMI in October 2010 made multiple flawed assumptions that undermine the credibility of its results. The first of many assumptions was that the rule would lead to increased litigation between producers and packers. We believe the rule would have the opposite effect by defining the protection the PSA was originally intended to cover, clearing up any gray areas caused by judicial decisions in recent years. The rule would return the industry to practices followed prior to 2005, a period not known for being rife with lawsuits. Therefore, the argument that increased litigation will result from returning the industry to pre-2005 interpretations has no evidence to support it.
"Another assumption was that because of the increased litigation, processors would abandon marketing and production contracts to buy more livestock off the 'spot' or cash market. The study asserts such a shift would result in lower quality products for consumers and diminished demand. However, processors' own studies show that not only are some packers currently buying livestock off the spot market, but also the livestock is often of the same, if not better, quality than those from marketing agreements. The threat that processors and buyers will stop using all prearranged agreements is simply unfounded. Processors are not going to abandon years of work with these types of agreements and the pending rule does not require such action; in fact, it clearly permits such arrangements to continue.
"The study also assumes there will be an increase of 3.33 percent in the retail price of meat because processors will buy only from the 'spot' or auction markets. However, when one reads the study nowhere is this number explained in order to determine if it is even valid and the study continues to use this increase to calculate the economic impact of the proposed rule.
"The AMI study is based on unfounded assumptions and should not be considered as evidence against the GIPSA rule. The proposed rule will change as the comment procedure advances and we look forward to serious consideration of the economic impact of the rule."
Click here to view details of the AMI study that Johnson is critical of.
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