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Agricultural News

Organization for Competitive Markets Upset Over Changes to GIPSA Rule

Fri, 09 Dec 2011 16:22:31 CST

Organization for Competitive Markets Upset Over Changes to GIPSA Rule The Organization for Competitive Markets is relieved that the Department of Agriculture issued a new rule, known as the GIPSA Rule, but again expressed disappointment that many protections the rule should have had were blocked by Congress, thanks to lobbying from corporate agriculture.

According to OCM Executive Director Anita Poole-Endsley, "The rule as originally proposed in 2010 would have provided a wide array of protections for producers of poultry, swine and cattle. Unfortunately, through political wrangling, provisions regarding payment on a tournament system, a definition of 'harm to competition,' retaliation by companies against farmers, and any application of the rule to the cattle industry were blocked during the agricultural appropriations process."

The USDA Grain Inspectors, Packers and Stockyard Administration released the rule yesterday morning for publication in the Federal Register on December 9, 2011. The USDA was required to write the rule in the 2008 Farm Bill, but Congress decided recently that certain sections of the proposed rule were prohibited from being finalized.

The rule as originally proposed by the USDA received over 66,000 comments from across the nation, most of them favorable. "The final rule was a pale shadow of the proposed rule; not shaped so much by the comment process, but was more the result of meat packer and integrator congressional influence and a compliant administration," stated OCM President, Fred Stokes.

The rule does provide some protection for poultry producers by identifying criteria the USDA will utilize to determine company violations of the Packers & Stockyards Act. Companies will we required to give farmers adequate written notice at least 90 days prior to suspending the delivery of birds to a farmer to allow time to plan for the financial impact of the company's action.   

The rule also provides that poultry companies cannot require farmers to make costly upgrades in equipment or facilities when the company intends to or does close its processing facility within 12 months of the upgrade. The USDA may also consider whether other farmers with similar facilities were required to make similar upgrades and whether farmers were coerced or threatened with retaliation to get them to make the upgrades. Basically, the rule helps producers determine whether they will have the opportunity to recoup any investment cost that the company may request or require.

The final rule provides additional protection by outlining criteria for determining when a breach of contract action by a company against a farmer is unlawful by examination of written notice of what the breach was, an explanation of how the farmer can cure the problem and whether the company provided a reasonable time to cure the breach or rebut the allegation.

Finally, the rule provides that in the resolution of contract disputes, specific language must be used to allow farmers to choose whether to be bound by any arbitration clause. A provision was included that gives farmers the choice to keep their right to seek legal recourse through the courts without facing retaliation.

"The final Rule contains some mildly helpful provisions for contract growers but is a bitter disappointment from the standpoint of cattle producers," stated OCM President Stokes.



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