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BOYLE: What the heck is GIPSA?
Bureaucratese for a $14 billion price tag
Question of the Day
Job creation is at the forefront of most Americans’ minds - and rightly so. With unemployment hovering in the 9 percent range, the need for family-sustaining jobs is abundantly clear.
Recently, House Speaker John A. Boehner wisely targeted costly rules that hinder our nation’s economic recovery when he asked President Obama for a list of any regulations in development estimated to cost more than $1 billion. Among the seven regulations outlined in a White House letter responding to the request: a $10 billion Environmental Protection Agency emission standard for coal- and oil-fired steam generating units and a $1 billion “hours of service” rule proposed by the Department of Transportation. Noticeably missing? A rule proposed by the Grain Inspection, Packers and Stockyards Administration (GIPSA) that places new restrictions on livestock, meat and poultry marketing - early estimates say it could cost into the billions of dollars.
As a member of the meat industry, I was puzzled by the absence of the GIPSA proposal. Perhaps the rule didn’t make the list because the U.S. Department of Agriculture (USDA) originally told the Office of Management and Budget the proposal’s costs would be less than the $100 million threshold that triggers a significant economic impact analysis. Still, following criticism from 115 lawmakers from both sides of the aisle who signed a letter to Agriculture Secretary Thomas J. Vilsack, the USDA agreed in December 2010 to conduct a more comprehensive analysis. While the USDA’s final price tag of the proposed GIPSA rule is still unknown, the department’s chief economist has already told members of the Senate Agriculture Committee during a recent hearing the rule appears to cost more than $100 million - something the meat and poultry industry has known for a long time.
How much more? Private analyses have found that the rule’s costs far exceed the threshold that initially should have triggered an in-depth study. An analysis by John Dunham and Associates estimated the rule’s impact at $14 billion. Dunham also said the rule stood to eliminate 104,000 jobs nationwide - 10 percent of the 1 million jobs that the president says he aims to create with his new jobs plan.
Why so costly? Because the rule, if finalized, would turn the clock back on the progress in the meat and poultry industry that has advanced product quality while maintaining affordability and expanding consumer choices. Partnerships between meat processors and livestock producers that have brought branded products such as Certified Angus Beef to the meat case could be in jeopardy. This is because the strategic agreements voluntarily entered into by meat processors and innovative livestock producers could be more easily challenged in court by other livestock producers who believe those alliances cause them harm. That’s like saying Ford must buy tires at an auction rather than contract with suppliers to produce tires that suit their various car and truck models.
The rule also includes many other costly and nonsensical provisions that extend well beyond what Congress told GIPSA to do in the 2008 Farm Bill. In fact, some of the most ludicrous and dangerous provisions in the proposal were specifically considered by Congress and rejected, and many members are frustrated with the regulatory end-run that is playing out at the USDA.
Those who long for the old days when livestock and poultry were little more than a commodity say this rule is essential to their economic survival, but a USDA Economic Research report just released has forecast farm income up 30 percent in 2011.
Meanwhile, our trading partners are subject to none of these requirements in their countries, which in turn, would place American meat, poultry and livestock producers at a competitive disadvantage in the trade arena, one of our industry’s great success stories.
The USDA’s long-awaited economic study still isn’t out and the fact remains: Hiding the price tag won’t make the costs disappear, nor will it ease the pain that the rule stands to cause the American economy. In the interest of the nation, Mr. Obama needs to amend his list of costly rules to include the $14 billion GIPSA rule.
J. Patrick Boyle is president and chief executive officer of the American Meat Institute.
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