In an open letter to Secretary of Agriculture Tom Vilsak, Mark Legan, pork producer from Coatesville, IN, a member of the National Pork Producers Council (NPPC) board of directors and chairman of the NPPC’s Competitive Markets Committee, asks USDA to scrap the Grain, Inspection and Packers and Stockyards Administration’s (GIPSA) proposed rule and start over. Legan wrote:

“Dear Secretary Vilsack,

“I spent seven years as an agricultural Extension agent before starting out in hog farming in Putnam County, Indiana. I sincerely appreciate your efforts to revive rural America. I also attended your recent competition workshop in Fort Collins, CO.

“I have a suggestion, if you really want to entice people back to the rural lifestyle and increase competition in the livestock industry: withdraw the regulations you proposed in June that will result in government – not producers – deciding how livestock are bought and sold in this country.

“In the name of ‘reforming’ meatpacker contracts, these regulations will stifle innovation, eliminate jobs and dictate contract terms in my industry.

“For starters, your rules will make it extremely difficult for producers like me to negotiate premiums for our animals. Let’s say a packer wants me to deliver livestock on a holiday, which would typically require paying my employees overtime. Under the new rules, the packer would be unable to pay me a premium unless the higher price is justified in writing and with a cost analysis.

“Rather than cope with all that paperwork, packers will likely pay just one price – almost certainly the lowest – to all producers, regardless of quality of their animals or any other special circumstances. This will not only lower prices, it will take away any incentive we have to innovate or produce higher quality animals.

“Your draft rules also greatly expand the definition of what constitutes a violation of the Packers and Stockyards Act. Under the new definition, a violation can be almost any practice shown to be ‘unfair,’ whether or not it actually harms competition. That will turn ordinary contract violations into federal Packers & Stockyards (P&S) Act cases and trigger years of lawsuits.

“Rather than face all that, some packers will decide to raise their own livestock and not bother with producers at all. I don’t know about you, but that sounds like a prescription for decreased – not increased – competition in my industry.

“You contend these rules simply fulfill a mandate under the 2008 Farm Bill. In fact, they go way beyond what was called for in the farm bill. Several provisions were either turned down by Congress or run afoul of court decisions. The provision requiring packers to justify price differences in writing, for example, was specifically rejected during the farm bill debate. The change in the definition of a violation under the P&S Act is contrary to numerous federal court decisions.

“If the goal is to limit packer contracts, the new rules will certainly succeed. They will force hog farmers like me into the smaller ‘cash market,’ where risks can be greater. With fewer contracts, producers will find it more difficult to get financing. Some will simply not survive. That will eliminate desperately needed rural jobs and, once again, lead to decreased – not increased – competition in livestock farming. It will also drive up costs, leading to higher retail meat prices and fewer choices for consumers.

“There’s no way I could start out in farming today if these rules were in effect. They are a disaster for pork producers, not to mention an outrageous intrusion into private markets that will eventually affect all Americans. You and the others at USDA need to go back to the drawing board and come up with something better.”

Sincerely,
Mark Legan
Hog Farmer
Coatesville, Indiana

The GIPSA proposed rule was published in the Federal Register on June 22, 2010, outlining several new sections under the Packers & Stockyards Act. The comment period on the proposed rule closes on Nov. 22, 2010. Comments may be filed via e-mail to gipsa@usda.gov; by mail, hand delivery or courier to Tess Butler, GIPSA, USDA, 1400 Independence Ave. SW, Room 1643-S, Washington, DC 20250-3604; by fax to (202) 690-2173; or via the federal eRulemaking Portal at http://www.regulations.gov.