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GIPSA rule would hurt small beef producers, says producer group

Colin Wood (left) of the National Cattlemen’s Beef Association (NCBA) participated in a panel at the National Chicken Council annual meeting. Looking on are fellow panelists Pete Thomson of the House Agriculture Committee and Gary Kushner of law firm, Hogan Lovells.
Written December 4, 2010
Livestock Feed Manufacturing

Proposed GIPSA rules changes, which are designed to protect poultry and livestock producers, will actually harm small- to medium-size beef producers, says NCBA.

What brings a beef lobbyist to a chicken industry meeting? Common cause in opposition to the proposed Grain Inspection, Packers and Stockyards Administration (GIPSA) rule.

Small- to medium-size beef producers are opposing the proposed GIPSA rule because it will drive consolidation in the cattle business and take away opportunities for them to participate in branded beef programs, a representative of the National Cattlemen’s Beef Association (NCBA) told listeners at the National Chicken Council (NCC) annual meeting.

Beef producers join in opposition to GIPSA changes  

“A beef lobbyist in a chicken meeting, and the world is still turning,” quipped Colin Wood, vice president, government affairs, NCBA, who said his organization and its members are working alongside NCC in opposition to the proposed rule.

Wood predicted that under the proposed rule the beef packers would discontinue arrangements that pay premium prices to cattle producers in the branded programs because of the potential for lawsuits for providing preferential pricing. Currently, the packers pay premiums to producers in the branded programs who have invested in livestock with better genetics and adhere to best management practices under the programs.

The branded marketing arrangements, which command premium retail prices in supermarkets, include programs such as Certified Angus Beef, Laura’s Lean Beef and Rancher’s Reserve at Safeway Supermarkets.

More consolidation in beef production to result  

An end to producer participation in the branded programs will result in consolidation in the beef production business as producers exit the business when current opportunities for the better returns no longer exist, Wood said.

Under the proposed regulations, packers would no longer be passing part of improved margins back to beef producers in the programs but instead will pocket them, he said.

“I can’t say that I don’t sympathize with the position that packers have told us they will have to take under the proposed rule,” Wood said. “Under this rule, if I were in their position, I would probably undertake to protect myself as well.”

GIPSA would create market disruptions  

Wood cited other problems with the proposed GIPSA rule. The proposed ban on packer-to-packer sales of cattle would result in market disruption where some NCBA members own both feeder and packer operations. Also, the rule’s proposed ban on order buyers working for more than one packer would result in there being no buyer representation for packers at smaller sale barns.

“The Obama Administration in this rule took a shot at the packers, but they hit the small- and medium-size beef producers,” he said. 

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