USDA has conceded that its proposed rule on livestock and poultry production and marketing will have “significant” economic impact, which raises new hurdles to final approval of the rule. This is according to USDA testimony before the Senate Agriculture Committee this week.

Republican Senators Pat Roberts of Kansas and Mike Johanns of Nebraska questioned USDA officials closely about the rule proposed by the USDA Grain Inspection, Packers & Stockyards Administration that would put new restrictions on meat packers and poultry processors in terms of their relationships with livestock producers and poultry contract growers. Johanns asked USDA Chief Economist Joseph Glauber about the fact that USDA originally said the rule was not “economically significant,” an important bureaucratic distinction.

“The designation on this rule will be changed to economically significant,” Glauber replied, citing the numerous comments filed by industry sources concerning the actual impact of the rule. “Economically significant” means that the rule will have a continuing impact of more than $100 million per year, and it triggers a much more detailed level of analysis than if the rule were not considered “economically significant.”

Glauber said his office has been put in charge of USDA’s cost-benefit analysis, which was apparently not the case when the rule was proposed last year. Only a cursory cost-benefit analysis was included when the proposed rule was published. Industry comments since then have put the potential cost in the range of billions of dollars, Glauber noted.

“It is a difficult analysis,” Glauber said. Estimating the direct costs of a rule is usually “pretty easy,” he said, but trying to calculate the effect of the GIPSA rule on packers and processors and the way they do business is “much more difficult,” he said.

The “economically significant” designation makes it unlikely that the rule will be finalized soon. USDA’s written statement to the committee, although it was not attributed to any particular person, said the agency has “no preset timeline for completing this rulemaking.” GIPSA Administrator J. Dudley Butler did not attend the hearing, leading Senator Roberts to joke that he was in the “witness protection program.”

Senator Roberts forcefully told the USDA officials present that the GIPSA rule plainly went beyond the intent of Congress when it passed the current Farm Bill. “During the last Farm Bill, we had a very strong, spirited debate on many of the exact proposals that are included in the proposed rule,” he said, “and we rejected them all, in some cases by very substantial vote margins. So much for congressional intent.”  He said the Obama administration has acted “in direct opposition to congressional actions” in formulating the GIPSA rule.

 

Comments are closed.