By DAVE BLOWER JR.

Senior Editor, Farm World

WASHINGTON, D.C. — The Trump administration’s decision on Oct. 17 to suspend an Obama-era decree known as the Farmer Fair Practices Rule drew harsh criticism from two farm-state senators last week.

Sens. Chuck Grassley (R-Iowa) and Jon Tester (D-Mont.), the only two farmers now serving in the U.S. Senate, said the decision of the USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) to withdraw from the Farmer Fair Practices Rule may hurt smaller-scale farms and ranches.

“We vehemently disagree with that decision,” Grassley and Tester wrote in a letter to USDA Secretary Sonny Perdue on Oct. 19. “We look forward to working with (President Donald Trump) and the (USDA) to ensure everyone in agriculture is getting a fair shake so rural America can thrive again.”

The Farmer Fair Practices Rule would have streamlined the process for farmers to sue companies they contract with regarding unfair, discriminatory or deceptive practices. The rule was first proposed by the USDA in 2010, but was never enacted. The rule has met with strong opposition from the meat-processing industry and some lawmakers in Congress.

In December 2016 under former USDA Secretary Tom Vilsack, the agency released the rule with an April 22 start date. The USDA delayed that start date for six months earlier this year, and last week it ruled the regulation would not be implemented.

As a result of previous court rulings, federal law requires a farmer to prove that a company’s actions would harm competition for an entire industry before a lawsuit can proceed. The Farmer Fair Practices Rule was intended to ease that burden of proof. GIPSA concluded the rule is inconsistent with many court decisions and would lead to increased lawsuits.

Grassley and Tester wrote that the meat-processing industry has been consolidating for decades, enabling a few companies to exert market power, putting smaller scale farms and ranches at a disadvantage.

“They’re just pandering to big corporations,” said Grassley during his weekly media conference call. “They aren’t interested in the family farmer. The USDA is the U.S. Department of Agriculture, not the U.S. Department of Big Agribusiness.”

Perdue answers critics

Perdue wants to assure farmers, ranchers and the meat-processing industry that the USDA and GIPSA are committed to fair-trade practices, financial integrity and competitive markets, reported Farm World correspondent Rachel Lane.

“I think the concern was that this rule, as proposed, would lead to unnecessary and unproductive litigation in many ways,” he explained last week. “We believe that the initial Packers and Stockyards Act indicated that it should be helping in facilitating competition, not necessarily one-on-one litigation. And I think the courts have affirmed that, and I think Congress has declined to intervene in any of that.”

The secretary is confident that withdrawing the Farmer Fair Practice Rule was the correct action. “In fact, I believe it had the potential for harming the very people that it was intended to protect, and I think in a very unwise way,” he said.

Perdue added that USDA will watch to make sure that producers individually and collectively are not disadvantaged by unfair, uncompetitive rules.

Senate Ag Committee Chair Pat Roberts (R-Kan.) said this action shows the Trump administration’s commitment to boosting economic prosperity and reducing regulatory burdens in rural America.

He added, “The Obama administration spent the better part of a decade ignoring the calls from farmers, ranchers and agriculture economists warning of the billion-dollar blow this rule would have levied against American agriculture.”

National Chicken Council President Mike Brown said the rule would have “opened the floodgates to frivolous and costly litigation. It is clear the administration took into account the thousands of comments it received and recognized these rules would have come with deep economic consequences for American poultry and livestock producers.”

Kenny Graner, president of the U.S. Cattlemen’s Assoc. (USCA), said in part however, “Withdrawing (from) the rule is a win for multinational packers and fails to put U.S. cattle producers first.

“USCA has been committed to seeing through necessary clarifications to the Packers and Stockyards Act, and a withdrawal of the rule does not solve the problems in today’s marketplace. Anti-competitive buying practices and the lack of true price discovery remain critical issues to our industry and ones that must be addressed.”

The National Cattlemen’s Beef Assoc. (NCBA), on the other hand, supports the decision to withdraw the rule. “This is a victory for America’s cattle and beef producers – and it’s a victory for America’s consumers,” said Colin Woodall, NCBA senior vice president of government affairs.

“The proposed rule would have crippled cattle producers’ ability to market their products through the value-added programs that help make American-produced beef the most delicious and nutritious in the world.”

The National Sustainable Agriculture Coalition (NSAC) called the decision to withdraw the rule “a sad day for American farmers.”

In a press release, the NSAC stated: “By withdrawing this rule, the administration is leaving GIPSA toothless and telling American family farmers to sit quietly while it ushers forward the further consolidation and degradation of their industries. … The decision to withdraw the rule is nothing more than a smokescreen to allow packers and integrators to further consolidate their power.

“The agribusinesses behind this decision are not interested in the fate of family farmers, in consumer choice or in fairness. They are interested only in further increasing their own bottom lines, an interest this administration seems to share.”

NPPC celebrates withdrawal

The National Pork Producers Council (NPPC) said more than 16,000 comments from pork producers have been filed against this rule since 2010. “Eliminating the need to prove injury to competition would have prompted an explosion in (Packers and Stockyards Act) lawsuits by turning every contract dispute into a federal case subject to triple damages,” NPPC President Ken Maschoff said.

“The inevitable costs associated with that and the legal uncertainty it would have created likely would have caused further vertical integration of our industry and driven packers to own more of their own hogs. That would have reduced competition, stifled innovation and provided no benefits to anyone other than trial lawyers and activist groups that no doubt would have used the rule to attack the livestock industry.”

An Informa Economics study said the 2010 GIPSA Rule would have cost the U.S. pork industry more than $420 million annually – more than $4 per hog – with most of the costs related to lawsuits brought under the “no competitive injury” provision included in the interim final rule.

The Nebraska-based Center for Rural Affairs said it campaigned for the inclusion of a livestock market competition title during the 2002 and 2008 farm bill debates.

“Many rural communities struggle from lack of economic opportunity, and contract poultry and livestock production is an important source of jobs and income for many rural people,” said Center policy associate Anna Johnson. “These hardworking farmers and ranchers who contract with meatpacking companies when raising poultry and livestock deserve the important and common sense provision that this rule provides.

“Farmers, ranchers and consumers would have benefited from the competitive, transparent markets these rules would help protect.”