AMI expresses concerns about proposed USDA rules

by Editor fleischwirtschaft.com
Monday, June 21, 2010

USDA unveiled a proposed rule that, if adopted, would result in sweeping changes to how livestock are marketed and procured by meat packers.

The proposed rule, characterised by Agriculture Secretary Tom Vilsack as “aggressive”, was mandated by the 2008 Farm Bill.

The USDA rule include several new provisions:
- A producer would not be required to prove a harm to competition when bringing a claim about an alleged anti-competitive practice;
- Criteria would be established for what constitutes undue preferences or unreasonable advantages;
- Dealers who operate as packer buyers would only be permitted to purchase livestock for the packer that identifies that dealer as its packer buyer;
- Packers would be prohibited from purchasing, acquiring or receiving livestock from other packers;
- Producers required to provide capital upgrades to their facilities would have to be given the opportunity to recoup 80 percent of the cost of a required capital investment;
- A “clear and conspicuous print” requirement in contracts to ensure producers are provided the option to decline the use of arbitration to settle a dispute;
- Packers, swine contractors and live poultry dealers would be required to provide sample copies of contracts to the Grain Inspection, Packers and Stockyards Administration (GIPSA) within 10 business days and these contracts would be made available on GIPSA’s website for review.

AMI expressed strong concern about the potential impact of these changes. USDA was attempting to turn the clock back on the livestock and meat marketing practices that had made the U.S. meat production system the envy of the world and that had delivered the most abundant and affordable meat products available to the American consumer, said AMI Senior Vice President of Regulatory Affairs and General Counsel Mark Dopp.

Courts had affirmed that the meat industry is dynamic and competitive and had rejected USDA’s arguments repeatedly. Now, in the face of repeated judicial rejection of their arguments, USDA was engaging in a regulatory end-run and attempting to change the law through administrative fiat, Dopp said. This was not an appropriate role for the Department to play and could potentially cause harm and enormous disruption.
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