Heightened regulatory hurdles

by Bernard Shire
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Recent figures show fewer than two percent of Americans make their living in agriculture. That includes farmers and ranchers in production and “row” agriculture, as well as “agribusinesses” – including meat and poultry processors and slaughterers, as well as others making their livelihood in companies related in some way to agriculture or the production of food.

There’s no doubt this is due, in part, to the increasing urbanization and suburbanization of the United States. Less land is being preserved today, especially land used for farming or food processing. Even efforts to preserve farmland often result instead in the preservation of “open land” for parks, recreational areas and other purposes having nothing to do with food processing or farming. As a result, fewer Americans know much about agriculture, and that includes more people who serve in Congress, state legislatures, or as government regulators.

With this country becoming less rural, and more urban and suburban every day, there is an increasing ignorance about farming, food processing and agriculture, in general. One wonders if this is being translated over to government rulemaking, posing an increasing challenge to what’s been a great American success story – agriculture.

Regulations being  considered
Two regulations raising great challenges to American agriculture are being considered now. The Environmental Protection Agency had put into effect a rule requiring poultry and livestock farmers to apply for discharge permits, even though farmers were not discharging any substances onto the land where they worked. A first EPA rule required farmers with the “potential” to discharge to apply for permits under the Clean Water Act. This rule was later changed to require application for permits if poultry or livestock operations with the “potential” to discharge manure into waterways.

A federal appeals court ruled unanimously the EPA cannot require livestock operations to obtain Clean Water Act permits unless they actually discharge manure into a waterway. The court said the EPA exceeded its statutory authority in making concentrated animal feeding operations apply for permits, whether they’ve discharged or not. The EPA rule said poultry and livestock farmers “had a duty to apply” for such permits, even if they haven’t discharged. EPA was telling the operations they had to show they would not be discharging into waterways. The regulation has been thrown out by the courts, at least for the time being. But the EPA may re-write the rule to make it more palatable to our courts.

The other regulation is the “GIPSA rule,” which would make major changes in the production and marketing of poultry and livestock with the idea of increasing competition, proposed by USDA’s Grain Inspection, Packers & Stockyards Administration. Much of industry has asked Agriculture Secretary Tom Vilsack to withdraw and re-write the regulation. The latest request to revamp the proposal has come from Georgia Gov. Nathan Deal, who called the plan “costly and disruptive,” going beyond the intent of Congress, which as part of the 2008 Farm Bill directed the agency to make certain changes in its rules. Coming from a big poultry-producing state, he noted the rule would drastically change the longstanding contractual relationships between poultry processing companies and the growers who work with the company to raise chickens or turkeys. Opponents also say the rule as written will eliminate the ability of producers to gain premiums for highquality animals, and instead, everyone will be paid the same no matter the quality of the animal.

A study by Informa Economics, commissioned by rule opponents, estimated meat and poultry industry indirect losses from the proposed rule could add up to $1.34 billon every year, including one-time costs of $136 million and costs every year of $169 million. Over time the rule, if implemented as written now, would decrease beef, pork and poultry production and lead to almost 23,000 job losses. GIPSA proposed the rule with the goal of helping poultry and livestock producers compete better and to help the agency prosecute violators. The rule has divided the industry, with large producers saying it will drive up costs and reduce marketing options, and small producers saying it will help them get prices paid to their larger rivals. Currently, USDA is looking at thousands of comments that have come pouring into the department in response to the proposed rule, with strong opinions on both sides. The department has not made  any decision about whether the rule will be re-written or finalized as is.

As more of America’s rural areas become suburbanized and even urbanized, and as more of our legislators and government regulators become further removed from agriculture, expect the trend toward unsympathetic rulemaking for meat and poultry processors, and farmers, to continue.
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