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Friday, August 27, 2010

GISPA - if you want to stay in business you better pay attention

It's scary

Today in Ft. Collins, Colorado, there is a hearing that could change the way farmers and ranchers do business, and it's all about this thing called GISPA. The Department of Justice is holding a livestock competition workshop, where statements will be provided from individuals on either side of the issue.

So what is the issue? Well this is where I am calling in my good friend Chelsea Good. Chelsea has wrote to excellent posts on the Young Producer Council blog here and here. I would encourage to read them as full as I am only posting a portion of what Chelsea says, and I completely agree with. Here is part of what she wrote:

BACKGROUND As part of the 2008 Farm Bill, USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) was directed to issue regulations regarding poultry and swine contracts; arbitration use in contracts; and to establish criteria for the Secretary to consider in determining whether an undue or unreasonable preference or advantage has occurred in violation of the Packers and Stockyards Act.  GIPSA released their proposed rule on June 22, 2010.
So what does this mean for the cattlemen:
• New criteria require buyers to justify every single penny difference they offer to one producer over another. Inadequate justification for a price differential would give cattle producers yet another way to bring suit against another party.
• The proposed rule bans packer-to-packer sales of livestock.
• Order buyers will only be able to represent one packer.

• Under the new definitions included in the proposed rule, “competitive injury” and “likelihood of competitive injury” are re-defined and made so broad that mere accusations, without economic proof, will suffice for USDA or an individual to bring a lawsuit against a buyer.
And what does this mean:
It means that if cattle rancher A and cattle rancher B had to sets of cattle, same number in the pen, all black cattle and were the same genetically, however rancher A has done a pre-weaning program, knows the genetic capability of his cattle through years of performance testing and maybe even uses a source and age program. So when the packer comes to by his cattle he gets more dollars from the packer.


He deserves those dollars. He took steps to add value to his cattle and marketed them as a "superior product." Yet as Chelsea reminds us...

If the definition of competitive injury is changed, the door would be opened to frivolous lawsuits from trial attorneys. Packers will manage this law-suit risk by simply offering a one-price-fits-all bid for cattle. This type of pricing does not recognize variation between animals can result in value differences of up to $300.00 per head.


This could close the door to any premiums that individuals receive. The trail lawyer (someone who I think has no place in writing regulations for our industry) who brought GISPA forward wants to take a shot at the packers. However, it takes a shot at the producer. Sometimes, those premiums that we earn are the only thing that keeps us out of the red. And to the people that have spent years and dollars trying to improve the quality of their herds those benefits could go out the door.


So what can you do? You need to speak up. The problem is that this issue flew under the radar for awhile, and not enough cattlemen are aware of what is going on. Get on the Internet and start reading, there is lots of information out there now. Here is a great letter form that you can send to your representative. 


This is a scary issue. It could change the cattle industry more than many other issues that we have been faced with. 

6 comments:

  1. thanks for the information! i had been hearing lots about the issue, and yet no one could really tell me what the details were...

    great job (as always) of keeping us informed!

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  2. Thanks for keeping us informed and yes sometimes being a farmer (doesn't matter what kind) is being really scary...

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  3. I'm sitting in the workshop in Fort Collins right now. It is a huge issue and definitely something to be aware of! Thanks for informing people!

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  4. Great post! I love that you mix up your blog with serious posts and fun posts!

    Very informative :-)

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  5. My case was mentioned in the new GIPSA rules, Terry vs. Tyson. In my case the court said I had to prove a harm to competition in order to have a claim against Tyson when they wouldn't allow me to watch my livestock being weighed (there is no dispute here) and in their retaliation against me in forming an association of other producers who felt they were being cheated (again, no dispute here in the facts, just technical excuses by the courts which the last farm bill corrected).

    I don't think you have the hypotheticals correct. Read the rules for yourself here and stop taking someone else's word for it:

    http://www.agandfoodlaw.com/search/label/Packers%20and%20Stockyards%20Act

    Tom
    931-247-1684

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  6. Excellent post! Do you mind if I copy some of your text and form letter to send to our customers? I would like to encourage them to contact their representatives and speak out. I appreciate the way you have presented the info on this topic is such a a useful manner.

    ReplyDelete

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