“The study highlights the vast potential damage that could be done to livestock producers, meat packers and American consumers and workers should USDA’s Grain Inspection, Packers and Stockyards Administration [GIPSA] move forward with an obscure bureaucratic regulation that attempts to change dramatically the way livestock are procured and marketed in the United States,” states an AMI press release.
Should the rule be implemented, the disruption and resulting inefficiencies in the market would increase retail meat prices by 3.33% at a national level, causing a 1.68% decrease in consumer demand for potentially lower-quality meat and poultry products, the study relays. Therefore, not only will there be fewer opportunities for meat packers, wholesalers and retailers, but livestock and poultry producers and their suppliers will also see a reduction in demand and economic opportunities.
Approximately 104,000 Americans would lose their jobs following the implementation of this rule, it is estimated. This would reduce national GDP by $14 billion, and would cost a total of $1.36 billion in lost revenues to the federal, state and local governments. The study’s findings further highlight that livestock producers would be especially affected by the implementation of this rule, losing as many as 21,274 jobs, many in rural America.
A portion of the proposed rule was mandated by Congress in the 2008 Farm Bill. However, the actual proposed rule that appeared in the Federal Register June 21, 2010, went well beyond Congressional intent by proposing new regulatory restrictions and by lowering the standards of evidence required to sue meat companies, something that GIPSA’s own administrator has characterized as a “plaintiff lawyer’s dream,” the press release states.
An economic analysis was not included in the proposal, which was criticized recently by 115 members of the US House of Representatives in a bipartisan letter to Agriculture Secretary Vilsack. That omission makes this new study the first to quantify the proposal’s potential impact.
“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,” said J. Patrick Boyle, AMI president and CEO. “As the analysis shows, these are not just jobs in meat packing or livestock production, but in nearly every sector of the American economy. This is, quite simply, reckless regulation.”
According to Gallup's 2010 annual Governance survey, an expanded proportion of Americans (59% – up eight percentage points from a year ago) believe the government has overstepped its bounds and grown too intrusive and too powerful, Boyle added.
“This government intervention will dismantle 20 years of progress that has helped the US meat and poultry industry to deliver the safest, most affordable meat and poultry supply in the world,” Boyle said. “As our study shows, this protectionist policy proposal would do nothing but harm Americans who work every day to put food on our tables.”
“As an economist who makes his living studying and modeling the economic impact of government regulations on businesses and industries, I have seen firsthand the unintended consequences of misguided policy proposals like the one proposed by USDA,” said John Dunham, president of John Dunham and Associates, who conducted the study. “It is noteworthy that USDA says this proposal will revitalize rural America, yet my analysis shows it will actually cause substantial job losses.”
The study is presented in a new, interactive Web site that aggregates economic impact on national, state and congressional district levels. The complete study, a methodology report and frequently asked questions and answers can be found at www.MeatFuelsAmerica.com/GIPSA.
For more information on the proposed rule, visit: http://www.meatami.com/GIPSA and http://www.themarketworks.org/.