GIPSA Analysis Released

Report shows big impact on livestock industry by proposed rule.

Published on: Nov 11, 2010

A comprehensive economic analysis of USDA's proposed rule on buying and selling livestock and poultry was released on Wednesday in Kansas City.  The study was conducted by Informa Economics on behalf of the National Cattlemen's Beef Association, the National Meat Association, National Pork Producers Council and the National Turkey Association.

"Our charge was to try to put some numbers and quantified costs around this proposed rule," said Informa Economics Senior Vice President Rob Murphy. "I don't think anybody has been particularly happy with the cost work that USDA has done with regard to this rule, or maybe I should say lack of cost work. A more in-depth dive was called for and that's the project that we undertook here."

 According to the proposed rule would result in more than 22,000 lost jobs, an annual drop in gross domestic product by as much as $1.56 billion dollars, and tax revenue losses annually of $359 million.

The study also looked at how much of the direct and indirect annual costs generated by the proposed rule would be put on producers. For cattle 82% of those costs would be shouldered by producers compared to 56% for pork producers and 19% for poultry.

"As I look at this I ask myself does this proposed rule address the needed questions and needed answers," said National Cattlemen's Beef Association President-Elect Bill Donald. "I would say no so I would ask that this rule be pulled, and we start over and we come up with some common sense, realistic proposals."

National Pork Producers Council President-Elect Doug Wolf says the GIPSA rule is vague and ill-defined and will create uncertainty for producers and packers alike and will have a detrimental impact, particularly on small producers. 

"Bottom line is that the rule will add to the cost of buying and selling hogs; increase the risk of litigation; and lead to more vertical integration in the pork industry," Wolf said. "All of which means lost jobs, higher meat prices for the consumer and lower prices to the producers."