By J. Patrick Boyle
WASHINGTON -- Rather than helping struggling consumers during these difficult economic times, an obscure bureaucratic regulation proposed by the U.S. Department of Agriculture's Grain Inspection, Packers and Stockyards Administration will lead to higher consumer prices for meat and meat products.
The meat and poultry market works well in the U.S. because buyers and sellers of livestock have shifted away from the old commodity mindset -- when producers offered livestock on a spot market, and packers and processors sold meat and poultry as generic commodities.
Today, the use of marketing agreements between producers and processors has created an increasingly integrated supply chain which lets the industry offer unique meat and poultry products with certain characteristics that consumers desire, such as hormone free, grass fed, certified humane, free range or derived from a specific breed like Angus cattle.
All this progress is in jeopardy because a GIPSA-proposed rule would create a strong disincentive for producers and processors to use marketing agreements. It would do this by putting those agreements in legal jeopardy, thereby increasing the likelihood that they would generate legal challenges from both the federal government and individual plaintiffs.
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In fact, GIPSA's own administrator has called the rule "a plaintiff lawyer's dream."
The industry's processed products have long borne company brands, but the use of marketing arrangements have let companies increasingly put their brand label on fresh meat and poultry products.
Consumers value these branded products for their consistent, satisfying and increasingly convenient attributes. These supply partnerships between producers and processors also have supported the dramatic increase in retail store-brands for meat and poultry.
In the past six years, store brands for beef have increased from 15 percent to 51 percent.
But if the proposal is finalized, it will turn the clock back 50 years on our industry. It would have a chilling effect on the partnerships between producers and processors that have encouraged industry growth and provided more abundant choices for consumers at the lowest prices in the world.
Not included in the GIPSA proposal is a comprehensive economic impact analysis, a fact that has been criticized in writing by nearly 150 members of Congress. Therefore, the American Meat Institute recently commissioned John Dunham & Associates to conduct a detailed economic impact study of the proposed rule.
Our study found that the disruption and resulting inefficiencies in the market would increase retail meat and poultry prices by more than 3 percent -- or $6.1 million -- for the residents of the Peace Garden State. Furthermore, at a time when America needs to be adding jobs, North Dakota would lose more than 200 jobs as a result of this rule, with lost wages totaling more than $7 million and the total economic impact surpassing the $43 million mark.
These are not just jobs in meat packing or livestock production, but in nearly every sector of the economy. Real people with real jobs in industries as varied as paper and packaging, grain and feed production, advertising and business services and even local butchers and grocery stores will be hurt by this regulation.
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It is hard to see how anyone will benefit. In fact, even the federal and North Dakota state governments will be hurt due to $2.8 million in lost business and personal tax revenues.
For these reasons, organizations such as the National Cattlemen's Beef Association and the National Pork Producers' Council -- groups that represent livestock producers -- strongly oppose this government interference in the marketplace. I urge North Dakotans to do the same and provide comments to GIPSA at the address below.
The comment deadline for the proposed rule is Nov. 22. Comments may be submitted via e-mail to comments.gipsa@usda.gov ; mailed to Tess Butler, GIPSA, USDA, 1400 Independence Ave. SW, Room 1643-S, Washington, DC 20250-3604; faxed to (202) 690-2173; or submitted via the Federal eRulemaking Portal at http://www.regulations.gov .
Boyle is president and CEO of the American Meat Institute.
