CENTENNIAL, Colo. – The Grain Inspection, Packers and Stockyards Administration (GIPSA) has put forward a draft rule that defines unfair livestock marketing practices, prohibits packers from purchasing livestock from another packer and will inhibit the ability of producers to manage risk and earn premiums for their hard work and expertise in cattle production, said Congressman Frank Lucas (R-Okla.), House Agriculture Committee chairman.

“While this rule is intended to promote transparent and efficient markets, many industry leaders argue this rule will hurt the very producers it is purported to help,” he added.

In April, the House Agriculture Committee's Subcommittee on Livestock, Dairy and Poultry began a series of hearings to examine the current conditions and challenges in the livestock community, Lucas said. “Cattle, poultry and pork producers all shared their concerns that the proposed rule not only goes far beyond the scope of the Farm Bill, but also lacks the sound economic analysis that allows us to judge both the need and utility of the proposed rule.”

During the first hearing on the beef sector, testimony was taken from Jim Strickland, a cow calf operator from Florida; Anne Burkholder, owner of a small feeding operation in Nebraska; and Ken Bull, Cargill's vice president for cattle procurement.

Strickland testified that, "Under the new definitions included in the proposed rule, competitive injury and the likelihood of competitive injury are redefined and made so broad that mere accusations without economic proof will suffice for USDA or an individual to bring lawsuit against a buyer, packer, or processor." Burkholder said the proposed rule "...takes away my freedom to market my cattle as I choose. If marketing arrangements are greatly reduced, cattlemen like me are the losers." Bull characterized the proposed rule as "...the single greatest policy threat in the US livestock and meat sector in my 32 years in business."

Universal consensus contends USDA's decision will have a tremendous impact on how all livestock are marketed in the US. “It is particularly important we carefully and thoroughly consider the potential consequences of this rule,” Lucas said. “I do not believe USDA has fulfilled that responsibility. Despite the repeated concerns voiced by producers, USDA has failed to conduct a timely cost-benefit analysis on the proposed rule.”

“We need to know how much this rule will cost, who will bear those costs, and what we stand to gain in return,” Lucas insisted.

In December, USDA promised a cost benefit analysis on the rule. “Unfortunately, the department has turned away requests to perform an independent peer review on the cost benefit analysis or publish it for comment,” Lucas said.

Instead of using a cost-benefit analysis to aid in decision-making, USDA will simply publish the final rule and include a cost-benefit report at that point, Lucas added. “This is not good government; USDA is plowing ahead with its own agenda, ignoring the concerns of producers and refusing to adhere to requests for legitimate policy analysis,” he said.