USDA GIPSA Proposed Marketing Rule Creates Long-Term Dangers for Family Farmers

October 24, 2012
Washington, D.C.

 National Turkey Federation (NTF) President Joel Brandenberger told a House of Representatives Small Business Subcommittee that the Grain Inspection, Packer and Stockyards Administration’s (GIPSA) proposed marketing rule would have devastating impacts on the poultry and livestock industries should the regulations be implemented as currently written by the U.S. Department of Agriculture (USDA).

Brandenberger told the House Small Business Subcommittee on Agriculture, Energy and Trade that 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.

Taken together these provisions would create significant new legal and regulatory risk for the livestock and poultry processors.  Within the turkey industry about 80 percent of all birds are raised through production contracts with family farmers. 

Brandenberger then went on to explain that 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.

Before closing, Brandenberger also expressed frustration in that USDA promulgated this rule without conducting an adequate economic assessment of its impact.  A study funded in part by NTF found an impact of more than $360 million on the turkey industry alone.  An additional study by John Dunham and Associates showed job losses to the meat and poultry industry at 104,000 and would reduce the national Gross Domestic Product by $14 billion.

“USDA now has agreed to conduct an economic assessment and that is a positive development.  Still, no one at the department has committed to submitting the study for public comment before finalizing the rule.  This is an essential step if there is to be any level of confidence that the final rule truly has the interests of small family farmers and businesses at heart,” Brandenberger concluded.

Brandenberger’s testimony is available