No Positives to GIPSA Rule Proposal According to Economist
Plain says previous state attempts have failed.
Compiled by staff
Published: Oct 11, 2010
University of Missouri agricultural economist Ron Plain says USDA's Grain, Inspection and Packers and Stockyards Administration's proposed rule changes don't provide a single positive improvement to the livestock marketing process.
"These proposed changes are not coming from court decisions, but from bureaucrats, who think this set of rules and regulations will provide answers in lieu of an economic study," Plain said."This is not the way we envision that our democracy is supposed to work."
Plain says for those backers of bolstering the spot market, selling farm commodities when they are ready for slaughter rather than having a contract or some other type of marketing agreement, GIPSA provisions tighten contract requirements. But Plain charges that will only serve to concentrate contracts among the larger producers and leave the spot market to the smaller producers.
Another section in the proposed rule says packers can't sell hogs to another packer. As an example, Smithfield Foods is both a producer and a packer; its large Circle 4 Farms operation in Utah sells market hogs to Clougherty Packing in California because it represents the closest market. If that won't be allowed, Smithfield could choose to buy the plant, increasing industry concentration instead of decreasing it as proponents want.
Two states, Missouri and South Dakota have passed laws similar to some of the proposed GIPSA rules, and neither stood the test of time. The Missouri law lasted three to four months and the South Dakota law lasted two to three days.
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Tagged: farm, usda, farm commodities, livestock marketing
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