Obama’s recent Executive Order directs a government-wide review “to remove outdated regulations that stifle job creation and make our economy less competitive.”
“Indeed, this executive order may be just in the nick of time,” Boyle said, adding that the number of government regulations has greatly increased in the last two decades, with their annual cost in the past two years predicted to reach a staggering $26.5 billion, based on recent Heritage Foundation data.
There are currently almost 200 regulations on the docket, including the Grain Inspection, Packers and Stockyards Administration (GIPSA), which has many in the industry up in arms.
“This rule, while obscure, could effectively dismantle the business models used by livestock producers, meat packers and poultry processors – setting the industry back decades in its customer-driven evolution toward value-added products. It was introduced by an Agriculture Department official, who was formerly a trial attorney,” Boyle warned.
Under the proposed rule, marketing agreements would become more “legally risky,” and subject to challenge by livestock producers who aren’t part of the agreement, Boyle noted. This would discourage use of such agreements, forcing a return to the days of relying on the “spot market” — and ultimately reduce the options available to consumers.
The proposed rule would impose other burdensome new requirements, like prohibiting packers from selling livestock to other packers, he continued.
“This provision won’t solve small producers’ real challenges — from rising feed costs to a declining economy and increasingly demanding consumers,” Boyle said.
The rule also threatens to make the US industry less competitive globally, because international competitors wouldn’t need to comply with these rules, Boyle said. The net result could be an increased trade deficit, elimination of domestic jobs and reduced government revenues — when severe austerity measures are already in place.
“The USDA rule is a perfect example of what Obama called ‘regulations that stifle job creation and make our economy less competitive,’” he added. “This ‘little’ rule would have staggering negative economic consequences.”
Based on a recent John Dunham and Associates study, the rule could eliminate 104,000 US jobs, reduce national gross domestic product by $14 billion and cost $1.36 billion in lost revenues to the federal, state and local governments.
“Under the new government regulatory paradigm, USDA should withdraw the proposed rule, because it threatens to dismantle the supply chain in one of the most dynamic and competitive sectors of US agriculture,” Boyle urged.
“It would be ironic, and unfortunate, that in its quest to eliminate economically stifling regulations, the administration missed rules its agencies were introducing right under its nose,” Boyle concluded.