Grain Inspection, Packers and Stockyards Administration (GIPSA)

NPPC’s Position

NPPC, in general, opposes any policy that interferes with producers’ ability to enter agreements of their choosing.

 

NPPC opposes legislation or regulations that restrict marketing opportunities and interventions in hog markets unless such actions address a clear, unequivocal instance of market failure or abuse of market power.

 

NPPC opposes creating any new office at USDA specifically focused on antitrust in agriculture.

Background

The Packers and Stockyards Act (PSA) was enacted in 1921 to prohibit unfair, deceptive, and unjustly discriminatory practices by market agencies, dealers, stockyards, packers, swine contractors, and live poultry dealers in the livestock and poultry industries.

In the 2008 Farm Bill, Congress directed the United States Department of Agriculture (USDA) to issue rules under the PSA to clarify and better define the act’s provisions and address perceived unfair business practices related to poultry production.

In 2010, USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) proposed new regulations – collectively known as the GIPSA rule – that went beyond the Farm Bill requirements. Two significant changes to the PSA – which GIPSA had no authority to make, were:

  1. Eliminating the need to prove that an action harmed competition.
  2. Making all contract breaches federal violations (contract disputes between individuals or entities are usually state matters).

In January 2017, USDA issued these rules as midnight regulations. NPPC opposed the GIPSA rule because it negatively impacted the highly competitive U.S. pork industry by encouraging frivolous litigation and forced industry consolidation.  In part because of NPPC’s advocacy, USDA rescinded its GIPSA rule.

In January 2020, the agency proposed significantly revised rules that clarified that to prevail in PSA challenges, a plaintiff must show a preference or advantage that is likely to harm competition in the marketplace. The new GIPSA rule also outlined four criteria for determining if a preference or advantage can be justified based on market conditions and reasonable business decisions. The new rules were finalized in December 2020 and took effect on Jan. 11, 2021.

USDA is now proposing a new GIPSA Rule, but the language is not yet available for review. Additionally, legislation has been proposed to create a special investigator for competition matters within GIPSA.

Fast Facts

$420 million annually

would have been the cost to the livestock industry of the 2010 GIPSA rule that would have eliminated the need to prove practices harmed competition and made it easier to bring and win PSA cases.

The 2010 GIPSA rule would have unduly burdened the pork industry by interfering with innovative business practices developed in a competitive market, imposing one-size-fits-all regulations that had no relation to the unique structure of the individual livestock sectors or the realities and unique structure of each producer’s business relationships and needs with a packer.

Concentration in pork production and processing are well below the DOJ’s standard for concern, and over the past five years, packer ownership has significantly diversified, with producers making significant investments in new packing plants, leading to an increase in competitive options.

Related Resources

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