Economic Impact of Grain Inspection, Packers and Stockyards Administration Proposed Rule

Economic Impact of GIPSA

 

Economic Impact of Grain Inspection, Packers and Stockyards Administration Proposed Rule

Not many people. The National Cattleman’s Beef Association, the National Pork Producers Council, National Chicken Council, North American Meat Institute, and many other mainstream groups, lawmakers, and university professors oppose it. Read what they are saying.

The rule's proponents include some protectionist groups that yearn for days when livestock were only sold through auction barns or other market sales, rather than through contracts and marketing agreements, which have become a normal part of American business, inside and outside of agriculture.

Rather than help farmers, however, the proposals being advanced by GIPSA will harm producers, harm American workers, and harm consumers.

 

Americans enjoy the safest, most abundant, and most affordable meat supply in the world. The market works well in the U.S. because buyers and sellers of livestock have shifted away from an old, outdated commodity approach and now work as partners to deliver to consumers what they want, whether it’s lean, prime, raised without hormones or derived from a certified breed like Angus.

Language included in the 2008 Farm Bill directed an agency within USDA called the Grain Inspection and Packers and Stockyards Administration (GIPSA) to promulgate regulations related to livestock marketing and industry structure. What resulted was a proposed rule, commonly called the "GIPSA Rule," that went far beyond the Congressional mandate. So significant were the potential consequences for meat and livestock producers (pdf) and for poultry producers that considerable debate and controversy arose.

Many experts said the rule would force the increasingly sophisticated meat and poultry marketing system to revert to the days of commodity meat – a bad move for the industry, for the industry’s competitiveness in the international export arena – and a bad move for consumers, who likely would be asked to pay more for potentially lower quality products. The analyses also projected about 104,000 people would lose their jobs if the proposed rule were implemented; reducing national GDP by $14.0 billion and causing $1.36 billion in lost revenues to the Federal, state and local governments.

The rule will hurt not just producers but consumers, as well. One reason for a 20-year decline in beef demand was that beef lacked consistency. One in four steaks was deemed unacceptable in quality. The industry tackled this issue, in part by implementing marketing systems that identified carcass quality and rewarded producers for upgrading their cattle. The result was the industry arrested the decline in demand in 1996, then significantly improved demand in subsequent years. Consumers began to pay more for beef because they were more assured that each cut would provide a satisfying eating experience. I shudder to think what might happen to beef quality and demand if GIPSA’s rule takes effect.
Steve Kay of Cattle Buyers Weekly

In 2011, Congress withheld funding, preventing GIPSA from finalizing and implementing the proposed rule. But now, efforts are under way to breathe life into this misguided proposal. It was a bad idea then and it remains so today.

The GIPSA rule should remain filed away in the drawer labelled “bad ideas.”

 
 
##label##
Click on the map to select a state and a district.
 
  • Summary of the Impacts
  • Impact on Consumers
  • Impact on the Economy
  • Impact on Producers

    So who likes the proposal?

    Not many people. The National Cattleman’s Beef Association, the National Pork Producers Council, National Chicken Council, North American Meat Institute, and many other mainstream groups, lawmakers, and university professors oppose it. Read what they are saying.

    The rule's proponents include some protectionist groups that yearn for days when livestock were only sold through auction barns or other market sales, rather than through contracts and marketing agreements, which have become a normal part of American business, inside and outside of agriculture.

    Rather than help farmers, however, the proposals being advanced by GIPSA will harm producers, harm American workers, and harm consumers.