Chicken Growers Could Face $1 Billion In Extra Costs Under Proposed GIPSA Rule

GIPSA's proposed new regulations would cost the broiler chicken industry more than $1 billion over five years in reduced efficiency, higher costs for feed and housing, and increased administrative expenses, according to a study released recently by the National Chicken Council. That does not include the potential costs of litigation, lost export sales and increased consumer prices, according to the study by FarmEcon, an agricultural economics consulting firm.

GIPSA's proposed new regulations would cost the broiler chicken industry more than $1 billion over five years in reduced efficiency, higher costs for feed and housing, and increased administrative expenses, according to a study released recently by the National Chicken Council. 

That does not include the potential costs of litigation, lost export sales and increased consumer prices, according to the study by FarmEcon, an agricultural economics consulting firm. 

The proposed rules would require changes in the relationship between the nation's chicken companies and the independent farmers who grow chickens under contracts with the companies, as well as requiring changes in the production and marketing system for cattle and pigs. 

"The proposed rule changes are likely to slow the pace of innovation, increase the costs of raising live chickens, and result in costly litigation," wrote Thomas Elam, president of FarmEcon.

"Higher costs would put upward pressure on chicken prices, and economic theory strongly suggests that consumers would ultimately bear most of these costs." 

"The most likely economic effects would be a reduction of performance-based competition among growers, a reduced rate of capital investment, a reduced rate of efficiency gains, higher chicken prices, and reduced chicken exports," Elam said, adding that the study indicated that the cost burden from all identified sources increases over time, reaching about $337 million per year in 2015. The total identified cost over the first five years is about $1.03 billion. 

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