Livestock Producers Split Over Long-contested GIPSA Rule

Some livestock producers are feeling crippled by a packing industry that’s run by a handful of companies, saying they’re being cut out of a profit when they sell their animals.

The U.S. Department of Agriculture announced a final rule under GIPSA, the Grain Inspection, Packers and Stockyards Administration meant to offer farmers some protections. Some organizations, however, say it will hurt family farms.

A concentration of power in the packing industry is a major problem for family farms, said Doug Sombke, president of South Dakota Farmers Union and a farmer near the east-central South Dakota town of Conde.

Sombke sees the results of an unbalanced system when he visits the grocery store. A ribeye steak was selling for $12 per pound in the week before Christmas. That’s $3 a pound less than three years ago when he was getting $18,000 a head for his cattle. This year, his cattle sold for $800 a head.

“There’s a problem here, and people see value in products we produce, but it’s not getting funneled down to producers,” Sombke said.

He’s hopeful that will improve if the new GIPSA rule is approved.

Changes to the fair practices rules under the Packers and Stockyards Act were announced Dec. 14. They originally were part of the 2008 farm bill but have been subject to much debate in Congress.

The South Dakota Pork Producers Council was one of several industry groups that submitted comments with concerns about GIPSA, which deals with contracts between farmers and processing companies.

Many hog farms in South Dakota are operated by contract growers where the farmer and the contractor share a stake in the operation. In some cases, the grower invests in the building and provides the labor while the contractor supplies the animals, feed and veterinary services.

Pork council executive director Glenn Muller said the arrangement is working well for South Dakota growers, but GIPSA rules could change the way their contracts are negotiated, and that would hurt family farms. Those arrangements are important, he said.

“This is part of a way that our next generation can get in the industry, by negotiating contract feeding agreements and minimizing the amount of capital it takes to get them in,” Muller said.

Secretary of Agriculture Tom Vilsack said the rules would benefit contract poultry farmers particularily.

Under the current rules, processors could terminate contracts with little notice or require the grower to make big investments in their operations. Growers can appeal for protections under the stockyard act only if they show those actions are hurting the entire market.

Vilsack called it an extraordinary burden and said new GIPSA rules would change that.

The four largest poultry processors control 51 percent of the broiler market and even more of the turkey market.

Talking on a conference call after the new rules were announced, National Farmers Union President Roger Johnson compared the current system to serfdom. Farmers take on all the risk, and their operations can fail based on factors that are out of their control, he said.

“This is not an antitrust law. It’s a regulation to protect farmers from abuse by these multinational corporations,” said Mark Weaver, a producer and president of the Contract Poultry Growers Association of the Virginias and the Organization for Competitive Markets.

“I’m hoping these efforts will abate the demise of the American farmer,” he said.

GIPSA will be taking comments on the final rule during a 60-day period and will consider amendments. Sombke said he’s concerned the Trump administration won’t support the rule.

Source: Janelle Atyeo, Tri-State Neighbor

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