Trump Administration Drops GIPSA Litigation Rule for Farms

By Lauren R. Hartman, Product Development Edtior

Oct 31, 2017

The Trump Administration is rescinding an Obama ruling that would have facilitated bringing lawsuits by independent farmers against big food companies for which they raise chicken and other livestock. 

According to the Wall Street Journal, the USDA’s Grain Inspection Packers and Stockyard Administration (GIPSA) dropped the interim final rule one day before it was set to take effect. The rule prevented farmers from having to prove in court the company’s actions not only harmed them individually, but also harmed competition throughout the entire industry. Some livestock farmers complained for years that the companies exercised excessive control over their livelihoods and that the companies' practices and pricing were unfair.

Meat packers had argued the rules would have mired processors and farmers in costly litigation and made U.S. meat more expensive.

Nearly all domestic chickens are owned by companies like Tyson Foods Inc. and Pilgrim’s Pride Corp., and raised by farmers under contract. A substantial portion of hogs are raised under similar practices. The new rule would have created new grievance procedures to handle disputes between farmers and meat packers about unfair, discriminatory or deceptive practices. The system was never implemented, and the USDA said on Oct. 24 that it was dropping the rule because of “serious legal and policy concerns.”

This has reportedly infuriated farmer advocates, including a Republican senator from Iowa who claims he has "violent opposition" to the move.

Currently, several court rulings have interpreted the federal law as saying a farmer must prove a company's actions harm competition in the entire industry before a lawsuit can proceed. The rule would have eased that high burden of proof.

Chicken and pork producers, for instance, must often enter long-term contracts with companies like Tyson Foods and Pilgrim's Pride that farmers allege lock them into deals that fix their compensation at unprofitably low levels and forces them deeply into debt.

But the GIPSA concluded the rule is inconsistent with several court decisions and would lead to further lawsuits.

"Protracted litigation to both interpret this regulation and defend it serves neither the interests of the livestock and poultry industries nor GIPSA," the agency said.

Mark Dopp, senior vice president for regulatory and scientific affairs and general counsel for the North American Meat Institute, said the rule would have been “extremely detrimental” for the meat industry. Dopp explained the rule contradicted rulings of eight federal appellate courts, which all said an injury to competition was necessary to bring a claim under the Packers and Stockyards Act. Fear of litigation from lowering the burden of proof, he said, would have prevented companies from entering into individualized contracts with farmers.

Advocates say the interim final rule represented the first step in creating a culture of accountability, particularly in the poultry industry, where they say farmers are forced to compete against each other in what’s often a rigged system. Some poultry farmers who approved of the rules said they felt abandoned by the new administration and USDA Secretary Sonny Perdue, previously governor of Georgia, one of the largest chicken-producing states. the WSJ reports.

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