GIPSA Rules: Comments From The Field

More than 50,000 comments have been submitted on the livestock marketing rules proposed last June by the U.S. Department of Agriculture. Here is a sampling of what people are saying.

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Editor’s Note: In June, the U.S. Department of Agriculture proposed major changes in the rules that govern the relationship between livestock growers and packers. 

The rules came out of the Grain Inspection, Packers and Stockyards Administration and they are meant to clarify the 1921 Packers and Stockyards Act. Over the years, the meat packing business has become increasingly consolidated. The new rules are meant to restore competition in the market for livestock, especially for cattle.

The rules are also meant to give contract livestock growers, particularly those in the chicken business, new rights when dealing with large poultry integrators.

The new rules have stirred intense controversy. Members of Congress, both Democrats and Republicans, initially attacked the proposed rules.  Livestock raisers, meanwhile, descended on Fort Collins, Colorado, this summer to testify about the rules.  

The government also took comments from the public — lots of comments. More than 50,000 comments before the deadline last Monday. All the big livestock groups and meat packing lobbies filed lengthy reports and economic analyses. But thousands of individuals added their points of view, too.

Last week we spent several hours plowing through the comments, thinking we might find original, on-the-ground stories about the state of the American livestock industry. Mostly, we were disappointed. Nearly every “comment” on the GIPSA regulations was canned, a copy of talking points prepared by the large organizations involved on both sides of this fight.

Still, there were many comments from farmers and ranchers who tell what it’s like to raise livestock here at the beginning of the 21st century.

You can do your own searching through the comments here. Or, you can sample the comments we found that didn’t sound like they were formulated by one of the big players in this contest. Happy reading!

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Dear GIPSA,

I am a former contract poultry grower from El Dorado, AR.      

I am writing to strongly support all of the proposed rules published by GIPSA on June 22, 2010.  I especially support all of the proposed poultry rules and here are some of my experiences and reasons why the rules are important to me.  

Contract security – The poultry companies have been coming around and getting growers scared. They’ve come around and gotten growers to sign contracts under the ranking system and it’s just not good for them. They can pretty well know what they’re going to pay you.  

As far as the company, they have the growers at their mercy when they sign a one-flock contract. It can be broken at anytime by the company for any reason they want to.  

I know a fellow right now who has four houses. They are giving him a ten-year contract at 30 cents per square foot but the contract to raise the birds is only for seven years.  And it can be broken at any time.  When Pilgrims filed bankruptcy all the contracts were broken. The growers had kept up their end of the contract but the company did not.  

[img:GipsaIllustration4.gif]The growers need to have some input on contracts somehow but they don’t. You can go to your lawyers with it but all they can tell you is not to sign and then you won’t get any more birds. If you’re $300,000 in debt you’ve got to have birds to pay for it. We need some protections in these contracts.

We quit growing because Pilgrims went bankrupt. There’s a lot of people like that. There’s two or three people in our area that have been called in by the banks and if they don’t get in a payment, it’ll be foreclosed. Some companies have come in and offered to let them raise two or three flocks but that’s not enough to get someone out of debt. We need contracts that are long enough that will guarantee that we make at least 80% of our investment back and then if the integrator cancels your contract for something besides a breach of contract, the grower would be able to [get] enough money from the integrator to equal 80% of his/her investment.  

Johnny Lofton, El Dorado, AR

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Please pass the GIPSA rules. 

Bigger is not always better in the world of food production. Smaller farms can take care of their livestock in more humane ways. They have less concentrated waste to dispose of and are therefore do not pose the pollution threats that bigger operations do. However, small farms have a hard time competing with bigger outfits in part because those bigger companies don’t play fair. Please don’t let small producers down. They’re an important and vital part of our economy and could be more so if these rules were passed. 

Rachel Hart-Brinson,  Grinnell, IA 50112 

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I am employed in the poultry industry, and I am writing to express my adamant opposition to the proposed new regulations announced on June 22, 2010 by the U.S. Department of Agriculture’s (USDA) Grain Inspection, Packers and Stockyard Administration. 

These regulations are being touted by USDA and a vocal minority as being ‘good for the poultry industry,’ but from my perspective, I couldn’t disagree more. In fact, the proposed regulations as written far exceed the scope and intent of the 2008 Farm Bill mandate, and they threaten a contractual system between contract growers and integrator that has worked well for decades. 

Simply put, the current system works. As written, the regulations would dramatically increase costs to the U.S. poultry production system. And, with approximately 15 percent of U.S. poultry going to export sales, the proposed rules would hinder our ability to compete in the world marketplace against other poultry producing companies. The proposed rules are not in the best interest of the hard-working farm families under contract to grow poultry, and they are not in the long-term best interest of the poultry industry.

Michael Jones, Owensboro, KY 42303 

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I am writing to OPPOSE the regulations on contract poultry production proposed by GIPSA on June 22, 2010. These proposed regulations are not in the best interests of contract growers, poultry companies, or consumers. I urge GIPSA to withdraw the proposed rules. 

Enough laws and rules are already on the books to regulate this industry. Additional government regulations are not needed. The system for compensating farmers who grow chickens under contract has been in effect for many years. By putting additional restrictions on the system, the proposed rules will reduce the rewards for superior performance. 

If these rewards are diminished or taken away, the growers will have less incentive to be more efficient and productive. GIPSA’s proposed rules are so vague and subject to interpretation that they will cause a flood of litigation filed by plaintiffs’ attorneys who are seeking to take advantage of the confusion. 

Jonathon Bullard, Chattanooga, TN 37403 

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I support the proposed rules published by GIPSA on June 22. These rules will go a long way toward guaranteeing fair contracts for America’s livestock producers and poultry growers. They will give them the information they need to make good business decisions and ensure their rights as producers are upheld.

For years, poultry processors and meatpackers have used their market power to bully poultry and livestock producers and feeders to accept unfair and deceptive contracts. The more consolidated the processing and packing industry becomes, the more these corporations are able to use this market power to manipulate contracts and the markets. I am pleased that USDA is finally stepping up to protect America’s family farmers from these abuses. By implementing these rules, USDA can better use the laws already in place and stop the manipulative actions of poultry processors and meatpackers.

[img:gipsaILLUSTRATION2.gif]These rules are a good step toward solving the problems of market manipulation. The next step is to require packers to pay a firm base price for all livestock they procure and require them to purchase their livestock supplies and to sell livestock they already own in an open public market where all buyers and sellers have access.

America’s family farmers need these protections now. Thank you for proposing these important rules and considering my comments.

Laura Bernstein, Highland Park, IL 

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My husband and I are poultry growers. We began our endeavor with Peterson Farms of Decatur Arkansas in February 2001. In September, 2007, we changed to Tyson Foods just shortly before Peterson Farms sold its operation. 

We raise about 5.5 flocks of about 93,000 birds a year in five houses. We, like every poultry grower we know, invested several hundred thousands of dollars in borrowed money in our operation. 

On the tournament schedule, we’ve been on the top and we’ve been on the bottom. For the first six to seven years, we always ranked in the top fourth of the growers we sold with. 

However for about the last few years, many of the flocks we received were inferior birds (birds that were sick when they were delivered or were sick before the flock reached the catch stage). Several times the feed supplied by the company has been feed the birds would not eat — sometimes pellets for the small birds and sometimes mash for the large birds. The company has yet to make an adjustment in our pay because of these situations. 

Do I believe the company have and will retaliate against growers? Yes I do and I believe we have had that happen to us. Here are several questions concerning the retaliation that I have:

* How will the rule be enforced? 

* Who will take the complaints and investigate the complaints? How will they be investigated? 

* How/who will the farmers report the retaliation? 

* What are the fines and penalties that will be accessed to the companies? 

* What compensation will be returned to the farmers if determined they were retaliated against? 

* Will growers be offered legal services provided by the USDA if they do file a retaliation complaint? If not, most growers will not have the funds to defend themselves against the companies’ host of attorneys.

One area that is not addressed in the rules is the cost of utilities. This is the highest expense every poultry grower has; however the total control of the house temperatures and lighting programs is dictated by the companies. The companies tell the growers the houses must be at 94 degrees when the baby chicks are delivered or the grower will not get the chicks. They tell the grower what the temperature should be EVERY day of the life of the flock as well as how long the lights should [be] on.

[img:GipsaILLUSTRATION.gif]Therefore, the companies should have to bear the costs of the utilities. The way it is today, every growers pays 100 percent of the utilities costs — which (once again) is by far the biggest cost the growers bear. 

Another issue not addressed is dead birds. The companies own the birds from start to finish. However, when the birds die, it is up to the contract poultry grower to gather the birds and dispose of them. This costs the grower both work and money. The disposal of the dead birds should fall back to the companies as the birds belong to them unquestionably. 

Feed scale tickets: There should NEVER be any ‘add ons’ in handwriting across the digital print outs of the feed tickets. There should NEVER be a reason for anyone to write on amounts that could change a bonus or tournament pay schedule. Poultry weigh ins: There should be a USDA inspector at the scales of the processing plants to verify that each and every load is weighed correctly and credited to the correct farmer. 

Twice in the past three years, we believe a load of birds was not credited to our farm. However, because we are so busy on the farm at sell time, we have no way to track the birds from the farm to the processing plants and verify the weights and the tickets. 

One farmer commented to me recently that “the poultry companies have the only scales in the world that are never wrong or off.” We have no way of knowing if these loads are being weighed correctly or credited correctly. Some oversight would be helpful. 

And finally, I’m concerned about the base pay amount. I’ve heard that some companies have stated they will just adjust their pay to growers if the payout system changes through these laws. I hope the base pay that companies are required to pay will be enough for all growers to make a living. 

Thanks to all for your time and efforts. 

Bev Saunders, Colcord, OK 

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These proposed rules will help balance the playing field, by requiring companies to use fair business practices and to provide growers with information that they need to run their businesses.

As a grower, I was cut off when my poultry company closed its processing plant. Therefore, I was particularly pleased to see provisions included in this rule that would protect growers in the future from experiencing the type of financial disaster that I suffered as a result of the plant closure. 

Specifically, I am pleased that the rule specifies that: USDA would consider it an unfair practice for a company to require a grower to make a substantial upgrade in their poultry houses while at the same time that the company is making plans to substantially reduce or end operations at the plant that processes the grower’s birds; and, future poultry contracts have to be long enough in duration to allow growers to recoup at least 80 percent of the cost of their investments.

Had these provisions been in place years ago, it would have protected me from the major financial loss that I experienced when my poultry company cancelled my contract without warning, after I had made significant investments in my poultly houses in order to grow chickens for the company that held my contract. 

I strongly support these provisions as well as all of the other important poultry provisions of the proposed rule. 

Gordon R Brazzel

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I am a poultry grower, and I am writing to OPPOSE the rules published by GIPSA on June 22, 2010. These proposed rules will hurt the family farm I have worked so hard to build. 

They will take money out of the pockets of hard-working, progressive poultry growers and take away the incentive to achieve above-average performance. The rules also open the way for many lawsuits that will benefit mostly the trial lawyers. These proposed regulations also go far beyond the action mandated by Congress in the Farm Bill. 

Daniel M. Schlabach, Ohio

 

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