The proposed Grain Inspection and Packers and Stockyards Administration (GIPSA) rule would cost the economy an estimated 104,000 jobs, including 21,274 livestock producer jobs, according to a study conducted by New York-based John Dunham and Associates. The study found that the disruption and resulting inefficiencies in the market should the proposed rule be implemented would increase retail meat prices by 3.33% at a national level, causing a 1.65% decrease in consumer demand for “potentially lower quality” meat and products. The loss of jobs would reduce national gross domestic product (GDP) by $14 billion and would cost a total of $1.36 billion in lost revenues to the federal, state and local governments. The American Meat Institute (AMI), which commissioned the study, stated, “At a time of record unemployment, slow economic recovery and rising poverty levels, it is unfathomable that the administration would propose a rule that could cost one American job, let alone 104,000. As the analysis shows, these are not just jobs in meat packing or livestock production, but in nearly every sector of the American economy.” The complete study can be found at www.MeatFuelsAmerica.com/GIPSA.

Request for Economic Analysis of GIPSA Rule Denied — Secretary of Agriculture Tom Vilsack rejected the request by the 115 congressmen that USDA conduct a comprehensive economic study of livestock and poultry marketing reforms proposed by the Grain Inspection and Packers and Stockyards Administration (GIPSA). The Secretary said in a letter to the members, “You requested a comprehensive economic study of the proposed rule. Beyond the cost-benefit analysis we have conducted for the proposed rule, we look forward to reviewing the public comments to inform the department if all factors have been properly considered, if or how changes should be incorporated, and to aid more rigorous cost-benefit and related analyses pursuant to the rulemaking process.” The National Cattlemen’s Beef Association (NCBA) said, “The GIPSA rule will further inject the federal government into the market and could very likely result in financial devastation to a critical part of our country’s economy” and “it is irresponsible governing on the administration’s part to advance this rule without providing all stakeholders, including those supporting this proposal, a clear and comprehensive analysis defining how it would affect the marketplace.” R-CALF indicated their strong support of Secretary Vilsack’s decision. According to R-CALF, it is “pure and simple, an effort to delay – if not completely derail – the long-awaited GIPSA rule.”

USDA Announces Renewable Energy Initiatives — Secretary of Agriculture Tom Vilsack announced a series of measures as part of the administration’s effort to promote production of fuel from renewable sources. USDA is publishing the final rule to implement the Biomass Crop Assistance Program (BCAP). This program was authorized in the 2008 farm bill to provide for that large base of new, non-food, non-feed biomass crops is established to meet demand for renewable energy consumption. BCAP provides assistance for the establishment and production of eligible renewable biomass crops within specified crop areas. Producers who enter into BCAP contracts may receive payments of up to 75% of the cost of establishing eligible perennial crops. Vilsack also announced that USDA and the Federal Aviation Administration (FAA) were entering into a five-year agreement to develop aviation fuel from forest and crop residues and other “green” feedstocks in order to decrease dependence on foreign oil and stabilize aviation fuel costs. An Economic Research Service (ERS) study was released that found replacing more petroleum with cost-competitive domestic biofuels reduces crude oil imports, thereby lowering prices for energy and benefiting the U.S economy. The report includes the following findings:

• The biofuels industry becomes more productive as cost-reducing technology is applied, which results in higher wages for workers.

• Gains in Gross Domestic Product (GDP) and real income are driven largely from the contribution from technological progress in biofuels, which increases the productivity of the economy.

• Next generation biofuels are considered to be a decreasing cost industry. This means that the cost of producing ethanol will decline as output increases.
P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.