Small Business Committee builds case against proposed GIPSA rule

By Sara Wyant

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WASHINGTON, July 7 - The USDA's Grain Inspection, Packer and Stockyards Administration's (GIPSA) proposed marketing rule would have devastating impacts on the poultry and livestock industries -if the regulations are implemented as currently written, testified National Turkey Federation (NTF) President Joel Brandenberger before the House Small Business Subcommittee on Agriculture, Energy and Trade.


Brandenberger told lawmakers there are three aspects of GIPSA's proposed marketing rule that would create enormous potential problems for all segments of the turkey industry.  “The competitive injury provision will make it easier to sue or bring regulatory action against processors, the provision that requires processors to virtually guarantee growers can recoup 80 percent of their capital investments, and the series of provisions that would discourage competitive contracts are of significant concern,” Brandenberger said.

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But Brandenber said the biggest impact from the proposed rule will come in the long term.


“The rule creates great economic and regulatory risk for the processors who raise livestock and poultry under production contracts since they will have to find ways to minimize that risk,” Brandenberger said.  Some options for processors would be to reduce the number of farms on which they raise livestock and poultry or to raise them on company-owned farms.  Right now such farms make up only 10 percent of turkey production.


USDA is in the process of conduct an economic assessment of the proposed rule that is expected to be completed later this year.


“Saddling small farms and small businesses with more government regulations will only prolong our economic downturn and crush more jobs. In fact, if the GIPSA proposed rule is adopted, it has the potential to reduce gross domestic product by over $1.5 billion and cost the U.S. economy nearly 23,000 jobs,,” noted Agriculture, Energy and Trade Subcommittee Chairman Scott Tipton (R-CO).


In June, Tipton and House Small Business Committee Chairman Sam Graves (R-MO) sent a letter to USDA Secretary Tom Vilsack calling on the agency to fully comply with the Regulatory Flexibility Act (RFA) and ensure that USDA understands the private-sector costs of the regulations it is imposing on all sectors within the livestock industry.


“More troubling are the inadequacies in the USDA's Initial Regulatory Flexibility Analysis (IRFA) and their failure to take into account the economic impact on small businesses. Especially when the USDA acknowledges that a majority of people involved in the livestock industry are small businesses, as USDA Undersecretary Edward Avalos admitted in today's hearing. The USDA must fully comply with the RFA- this is not an option.


Tipton said he was “pleased to hear from Undersecretary Avalos that the USDA is ‘fairly close' to completing the final economic analysis. This is the most information we have received from USDA since the analysis began. Nevertheless, I find it troubling that they are fairly close to completing the economic analysis, yet dodged questions in the hearing and claimed that it's ‘too early in the process' to answer specific questions on the impact it will have on our job creators.”



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