USDA is considering changes to the Grain Inspection Packers and Stockyards Administration Act. According to Paragon Economics President Steve Meyer, this proposal is in response to the 2008 Farm Bill. At that time, Congress asked USDA to focus on five specific areas….
Number one, establish some criteria for deciding whether an undue or unreasonable preference or advantage had been given by a buyer of livestock or a seller of meat to an opposite party in the marketplace. To define the conditions that constitute a reasonable notice of suspension of delivery of birds under poultry contracts…specifically for poultry, whether a requirement of an additional capital investment is a violation of the Packers & Stockyards Act or an unfair practice.
Again, it’s not specific to poultry but it really addresses an issue in the chicken business where growers would sometimes require new ventilation or new feeders on a very regular basis, and it’s very costly.
Whether a reasonable time period had been given to remedy a breach of contract, again not specific to chicken, but really in response to the situation there.
And finally some specifics about what constitutes a fair arbitration process and a kind of a reiteration of the arbitration opt-out provision that was given a few years ago.
Meyer says USDA went beyond the five areas sought out by Congress and now impacts contract arrangements….
“GIPSA has the authority under the Act to write rules to enforce the act. There are some that have suggested that those rules go beyond that, I’m certainly not going to judge that, that’s for the lawyers to talk about. But, so, they wrote some other rules, and those rules define and those rules go kind of towards defining some ways that we have to go about when we do marketing contracts, and production contracts, Because, contract growers of pigs are covered under the GIPSA Act. so, they’re now regulating the market for pigs, but the market for contract services between owners of pigs and owners of buildings in the marketplace.”
We’ll continue this series, focusing on the GIPSA rule proposal, in the next Pork Report.
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