USDA's proposed regulations governing the production and marketing of poultry and livestock is unconstitutional, unsupported by any meaningful economic analysis, and is in defiance of court rulings and congressional mandates, the poultry industry says.
Taking a swipe at the legal basis for the rule proposed by USDA's Grain Inspection, Packers & Stockyards Administration (GIPSA), which would force sweeping changes in the relationship between the nation's chicken processors and the farmers who grow chickens under contract with them, it insists that the proposed regulation should be withdrawn and rewritten.
"The proposed rule is ill-advised, exceeds GIPSA's statutory authority, and, for some provisions, is unconstitutionally vague," said a 45-page letter signed by George Watts, president of the National Chicken Council, which represents chicken meat companies, and John Starkey, president of the U.S. Poultry & Egg Association.
And, the letter continues: "GIPSA fails to provide an adequate justification for imposing such sweeping and detrimental changes to the poultry industry and does not explain corresponding benefits to counterbalance the hundreds of millions of dollars of detrimental effects this proposal will have on the U.S. economy."
Their submission was delivered in response to USDA's call for public comments on the proposed GIPSA rules. It asserts that the proposed rule is unconstitutional because it has so many vague and undefined terms that it is not clear what would be illegal and what would not.
The industry also objects to the changes proposed by GIPSA in the so-called "tournament" system of compensation for poultry growers, in which more efficient farmers are paid premiums based on their performance. The GIPSA proposal would establish a "base rate" that, in effect, would be likely to reduce the premiums given to higher-performing growers, the comments say.
"The result would be increased production costs for poultry dealers coupled with a decreasing incentive for growers to deliver high quality chickens because compensation would not be tied to performance or quality," the letter says.
USDA's analysis of the rule projects an economic effect of less than $100 million per year. However, a study commissioned by NCC concludes that the rule's economic consequences for the broiler industry alone would be more than $83 million in 2011 and $137 million in 2012, totaling approximately $1.03 billion in the first five years of enforcement. Studies commissioned by the meatpacking and livestock industries also projected costs far in excess of USDA's $100 million estimate.
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