July 30, 2015

Congress to the USDA: “It’s GIPSA’s Time to Shine”

By Molly Knobler and Tim McCormack

In a town of acronyms, who doesn’t love the Grain Inspection, Packers & Stockyards Administration (“GIPSA”)?  GIPSA is the agency within the U.S. Department of Agriculture (“USDA”) tasked with overseeing livestock, poultry, meat and other agricultural markets.  In particular, the agency is responsible for promoting fair business practices within the meat production markets, but for years it has been limited by statute in its ability to do so.  This may be about to change.  Farmers have long complained about abusive and anti-competitive practices within the meat production industries, but due to a little satire and celebrity attention, GIPSA may finally have its day.

In 1921, the “Packers and Stockyards Act” was born.  The law was intended to assure fair business practices and competitive markets for consumers and participants in the livestock, meat, and poultry industries.  It was enacted after the Federal Trade Commission (“FTC”) conducted a review of the meat packing industry and reported back “an intricate fabric of ‘monopolies, controls, combinations, conspiracies, and restraints.’”

Despite the law’s good intentions, it appears that not much has changed, at least in some respects.  On May 17, 2015, John Oliver, HBO-satirist and protégé of Daily Show host Jon Stewart, ran a segment on the poultry-farming industry and pointed out that there are currently four gigantic companies that control the majority of poultry production in the United States – an industry that now produces over 8 billion chickens a year.  The FTC, in its report in 1918, pointed a finger at five companies, so it would appear that the concentration of power in these industries has only gotten worse.  And market consolidation isn’t the only problem.  As Oliver noted, “Multiple studies have shown that many growers whose sole source of income is chicken farming live below or near the poverty line.  Which sounds insane.  How can the people who make the meat we eat the most barely be making a living?  We eat chicken when it’s been popcorn-ed, when it’s been fingered, and when it’s in Disney’s mouse-shaped nuggets.”

Oliver aptly pointed out that this may be due in part to the fact that while Congress has made it seem like it wants to protect farmers from market behemoths, in fact it has been hamstringing the agency tasked with performing that protective function.  In the 2008 Farm Bill, responding to years of market consolidation and complaints of unfair and abusive business practices, Congress directed the USDA to write regulations implementing the Packers and Stockyards Act.  GIPSA did just that, issuing proposed rules on June 22, 2010.  The rules included a variety of provisions to level the playing field between farmers and companies with which they contract.  One of these defined “unfair” conduct prescribed by the Packers and Stockyard Act to include “[a] retaliatory action or omission by a packer, swine  contractor, or live poultry dealer in response to the lawful  expression, spoken or written, association, or action of a poultry  grower, livestock producer or swine production contract grower.”  Proposed Rule 9 C.F.R. § 201.210(a)(2).

To reiterate, the GIPSA’s proposed rules had to specify that it was “unfair” to retaliate against a farmer for engaging in lawful expression about his or her work.  “Contract” poultry farming, the manner in which 97% of chickens are now raised, is a unique and somewhat bizarre business model in which the massive chicken sellers we’re all familiar with – Tyson, Perdue, etc. – contract with farmers to raise their chickens.  Under this model, the farmers own, and are responsible for, all of the land and equipment necessary to raise chickens (as Oliver points out “everything that costs money”), and the companies maintain ownership of the chickens and feed (“everything that makes money”).  This leaves farmers wholly dependent on these companies to continue providing them with chickens.  As a result of market consolidation and this immense power disparity, farmers have found themselves vulnerable to abuse, even for something as simple as speaking about their contracts.  And the farmers brave enough to speak out have described being punished, in the form of poor quality chicks and feed, sudden demands that they invest in capital improvement projects, or contract termination, if they talk about their contracts.  And this is why GIPSA found it necessary to establish the seemingly commonsense rule that such retaliation would be deemed “unfair.”

But if GIPSA’s rules were proposed in 2010, why is John Oliver talking about this now?  Despite the Congressional directive of the 2008 Farm Bill, since 2010 Congress has quietly but effectively kept GIPSA from finalizing and enforcing any of the protective rules it set out to establish.

Every year since 2010, a rider, known as the “GIPSA rider,” has been attached to the annual agricultural appropriations bill prohibiting GIPSA from enforcing its rules.  Until now.  On July 8, 2015, seven weeks after John Oliver’s 18 minute segment (which has now logged over 3.5 million views on youtube), the House Appropriations Committee approved the fiscal year 2016 agriculture appropriations bill without a GIPSA rider.  Further, while the Senate Agriculture Appropriations Subcommittee must debate and release its own version of the bill, the Senate has not historically attached such a rider to its legislation.

Do we have John Oliver to thank for getting this issue the attention it needed?  Or maybe Willie Nelson?  The dedicated public servants who tried to bring reason to this debate?  The farmers who stood up at those town halls with the USDA when it was so clearly not in their personal interest to do so?  No matter who put the nail in the GIPSA rider’s coffin, we hope it sticks, and give full applause to all whistleblowers who seek to shine sunlight on fraudulent, anticompetitive, retaliatory and bullying practices.

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If you would like more information or would like to speak to a member of Constantine Cannon’s whistleblower lawyer team, please click here.

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