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CME: GIPSA Rule Enaction Creates Doubts

by 5m Editor
23 November 2011, at 4:36am

US - Congressional action last week has put even more doubt that the entire GIPSA rule will be enacted — at least in FY 2012, write Steve Meyer and Len Steiner.

Last Thursday both the House and Senate approved the conference report on a spending bill that included FY12 agriculture appropriations.

The President signed the bill Friday. This is the culmination of budget work that began last summer.

You might recall that in June the House passed an agricultural appropriations budget that precluded GIPSA from working on rules enforcing the livestock title of the 2008 Farm Bill — the part that included the Congressional mandate for GIPSA to write rules on five specific topics. That feature made it into the “conference report“ — ie. the merger of the House and Senate versions — that passed both houses last Thursday.

So, USDA cannot spend funds writing, preparing or publishing a final or interim final rule unless the annual cost/impact of the rule is less than $100 million. USDA has sent a final rule regarding four of the five 2008 Farm Bill mandates to the Office of Management and Budget. It estimates that the annual cost of the rule will be $95 million.

USDA has also proposed an interim final rule putting some restrictions on the tournament payment system used almost exclusively by the poultry sector.

The important part of these rules is what is NOT in them.

The most notable absence is rules regarding undue or unfair preference or discrimination, the fifth topic included in the ‘08 Farm Bill and the one that would have required justification of all price differentials, significant record-keeping, submission and publication of contracts and a host of other actions by and restrictions on livestock buyers and production contractors.

Informa Economics put a $300 million cost estimate on these provisions so it will be difficult for USDA to argue the impact will be less than $100 million.