June 21, 2010

 

New USDA rule may transform livestock and poultry sector

 

 

The USDA on Friday (June 18) unveiled a proposed rule that, if adopted, would result in sweeping changes to how livestock and poultry are marketed and procured by meat packers.

 

The proposed rule, characterised by Agriculture Secretary Tom Vilsack as "aggressive," was mandated by the 2008 Farm Bill.

 

The proposed rule includes several new provisions:

• A producer would not be required to prove a harm to competition when bringing a claim about an alleged anti-competitive practice;
     
• Criteria would be established for what constitutes undue preferences or unreasonable advantages;
    
• Dealers who operate as packer buyers would only be permitted to purchase livestock for the packer that identifies that dealer as its packer buyer;  
   
• Packers would be prohibited from purchasing, acquiring or receiving livestock from other packers;
     
• Producers required to provide capital upgrades to their facilities would have to be given the opportunity to recoup 80% of the cost of a required capital investment;  
   
• A "clear and conspicuous print" requirement in contracts to ensure producers are provided the option to decline the use of arbitration to settle a dispute; 
   
• Packers, swine contractors and live poultry dealers would be required to provide sample copies of contracts to the Grain Inspection, Packers and Stockyards Administration (GIPSA) within 10 business days and these contracts would be made available on GIPSA's website for review.  

Meanwhile, the American Farm Bureau Federation (AFBF) is pleased with the proposed rule issued by the USDA's Department's Grain Inspection, Packers and Stockyards Administration (GIPSA) dealing with competition in the livestock and poultry industries.

 

Bob Stallman, AFBF President, said, "For too long producers have had to bear the financial hardship of being at the whim of production contractors, resulting in inequality in production practices, increasing losses and decreasing profitability."

 

Stallman expects that the GIPSA proposed rule would level the playing field.