Indeed, the pro and con focal point of the GIPSA debate is the portion of the proposed rule that explicitly states that courts need not require plaintiffs to prove competitive injury at the industry level. It is fear of litigation that drives most of the additional costs that Informa projects with regard to the implementation of the proposed GIPSA rule.

Here is what the USDA says in their summary of the proposed rule, “many practices can be unfair and never have an anticompetitive implication. Examples of such practices include, but are not limited to, not allowing a poultry grower to watch birds being weighed, using inaccurate scales, providing a grower poor quality feed, giving a grower sick birds to raise, failing to provide a grower the growing contract in a timely manner, or retaliation against a grower.”

To us as analysts, without law degrees or years of experience in researching livestock marketing issues, this intra-industry fight seems to boil down to disagreements on what are “unfair practices.”

With anticompetitive impact no longer a consideration, should the proposed rule be implemented, the packers/integrators are faced with the prospect of dealing with the merits of the “practices” themselves.

If the practices can be defended in court, they have nothing to worry about. If they cannot, the rational thing to do is change the “practices” that juries are likely to declare unfair. Claiming that practices that juries would find “unfair” should be allowed to continue simply because the alleged economic disruption that would be caused by their elimination, seems contrary to our judicial heritage.

Marketing reasons for AMAs

The critical question on the alternative marketing agreements would seem to be: were there market reasons for initiating AMAs? If there were demand and/or cost efficiencies for creating AMAs, those economic reasons for continuing them are likely to persist. The cost of reducing to paper and making public the criteria and non-discriminating conditions for starting, joining, or adding to an existing AMA is likely trivial compared to the market opportunities that AMAs afford. The issue centers on “practices” again, including transparency and availability.

And, again, the decision is whether to change practices or fight in court claiming that moving away from practices that have been found to be “unfair” would be economically disruptive.

Are we missing something here??

Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural Policy, Institute of Agriculture, University of Tennessee, and is the Director of UT’s Agricultural Policy Analysis Center (APAC). Harwood D. Schaffer is a Research Assistant Professor at APAC.  and;