The 2008 Farm Bill directed the USDA Grain Inspection, Packers and Stockyards Administration (GIPSA) to issue regulations to establish criteria for determining whether an undue or unreasonable preference or advantage occurred in violation of the Packers & Stockyards Act, regarding poultry and swine contracts; and arbitration use in contracts.

However, GIPSA’s proposed rule went much farther and exceeded congressional authority by including language from proposals and amendments defeated or withdrawn during Farm Bill debate.

  • It eliminated the long-standing competitive injury requirement necessary to prove harm and replaced it with an undefined “fairness” standard – allowing frivolous lawsuits to be brought by an individual or USDA against a packer based on accusations of harm rather than economic proof.
  • It defined and established new criteria for determining if an undue or unreasonable preference or advantage was provided to a producer – requiring buyers to justify all transactional differences.
  • It required all Alternative Marketing Agreements (AMAs) to be reviewed and approved by GIPSA and posted on their website.
  • It banned packer-to-packer sales of livestock and would have caused severe unintended consequences. This ban would have displaced current cattle supplies and encouraged more consolidation to maintain quality control.

The proposed rule had the potential to take the beef industry back 30 years by stifling the innovative efforts of U.S. cattle producers to add value, manage risk and enhance the quality and safety of their products. Thanks to the efforts of TCFA, NCBA and many other opponents, the Final Rule submitted by GIPSA contained only those provisions required by the 2008 Farm Bill.

The remaining provisions from the original proposed rule remain under consideration, meaning USDA will not be submitting, at least not anytime soon, the sections that prohibit undue preferences or the section that changes the definition of competitive injury. In addition, language in subsequent Agriculture Appropriations bills prohibits USDA from using federal funds to work on sections of the GIPSA rule related to competitive injury, unfair practices and undue preference.