Murphy: Rolling Back the Rules

The Trump administration has decided not to implement a USDA regulation that would have made it easier for growers and producers to file suit against the meat and poultry companies they contract with over what are perceived to be unfair, discriminatory or deceptive practices.

Called the Farmer Fair Practice Rule, the proposal was put forward by the Grain Inspection, Packers and Stockyards Administration during President Barack Obama’s final weeks in office, according to an Associated Press story. However, the rule never took effect, and after President Trump took office, the department delayed the planned April 22 start date for six months, then announced last week that USDA would not implement the regulation at all.

Most of the media coverage of the long-delayed decision portrayed the situation as a choice between the economic interests of the industry, versus the rights of small-scale farmer/producers who overwhelmingly raise poultry and pigs as contract growers.

Bloomberg headlined its coverage as, “Trump Chooses Big Meat Over Little Farmers. Rural Americans voted for him, but he didn’t return the favor when it came to an Obama rule meant to level the playing field.”

Industry sources begged to differ.

National Chicken Council President Mike Brown said the rule would have “opened the floodgates to frivolous and costly litigation.” National Pork Producers Council President Ken Maschhoff added that the proposed regulation “would have reduced competition, stifled innovation and provided no benefits to anyone other than trial lawyers and activist groups that no doubt would have used the rule to attack the livestock industry.”

Some of the back-and-forth, the opposing perspectives on the prospect of growers suing the billion-dollar corporations that control meat and poultry production is predictable, although it’s hard to imagine how even a flood of lawsuits by individual farmers would “stifle innovation.”

In this case, however, the rift may run deeper.

As several industry-connected media sources noted, the Trump administration’s decision angered many farm country advocates. Again, that’s to be expected. But what wasn’t expected was the angry response of a Republican stalwart who reliably lines up with Trump on most other issues.

Sen. Charles Grassley (R-Iowa) said that he has “violent opposition” to the action.

“They're just pandering to big corporations. They aren't interested in the family farmer,” Grassley told the Des Moines Register. “The USDA is the U.S. Department of Agriculture, not the U.S. Department of Big Agribusiness.”

Wow.

A Long Time Coming
To be clear, the rule in question was initially proposed by USDA way back in 2010, less than two years after President Obama took office. But industry pressure generated resistance in Congress, and the rule languished until December 2016.

The reason the Obama administration proposed the rule in the first place was to counter a number of judicial decisions in federal courts that ruled that farmer/growers must prove that a company’s actions harm competition across the entire industry before a lawsuit can move forward.

The proposed rule would have removed what many legal authorities considered a near-impossible burden of proof.

Producers who sign long-term contracts with leading meat and poultry processing businesses argue that they’re often locked into deals that set compensation at levels that are unprofitable and force them into debt, since the contractor is fully responsible for all capital investments in housing, infrastructure, feed and often the chicks or piglets themselves.

However, GIPSA officials sided with the courts, claiming that the rule would lead to an increase in 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.

That statement presumes that litigation per se is a negative. Moreover, GIPSA is not supposed to be in business to support industry interests, but to objectively enforce regulations designed to maintain a level playing field, support competition and make sure that business practices among both contractors and companies are fair and non-discriminatory.

I don’t buy the argument of Sen. Pat Roberts (R-Kan.), who is chairman of the Senate Agriculture Committee, that deciding not to implement the rules is all about the Trump administration’s “commitment to promoting economic prosperity and reducing regulatory burdens in rural America.”

If rural prosperity is the goal, how in heaven’s name does USDA’s decision to make sure that individual farmers and growers — like “small business,” the much-lionized “backbone of the economy,” to listen to Roberts’ and his party’s rhetoric — are virtually shut out of the legal system if they attempt to remedy contractual situations that are crippling their ability to earn a profit and stay in business?

I thought that the primary mission of Donald Trump and the GOP was to help “the little guy.” That’s certainly been the mantra of the presidential campaign and the theme of most of the messaging surrounding attempts at healthcare reform and the pending tax cuts Congress is considering.

But making sure that farm families cannot access the legal system seems a lot more like a boon to business, not a helping hand for rural America.

According to Roberts, “The Obama administration spent the better part of a decade ignoring the calls from farmers, ranchers, and agriculture economists warning of the billion-dollar blow this rule would have levied against American agriculture.”

Yes, if — and that’s a decidedly speculative “if” — a flood of lawsuits were to be launched, were GIPSA’s rule to be implemented, that would economically impact the major packers and processors.

A billion-dollar impact? Hardly.

Farm advocates insist that individual growers “need protection from harmful and abusive practices that are standard in their industry,” as Sally Lee, program director for the Rural Advancement Foundation International-USA group, phrased it.

That may be overstating the case, but not nearly as much as industry apologists who insist that corporate America is doomed if individuals are allowed to sue the leading companies that dominate the meat and poultry industry.

Which side is right?

Isn’t that what the courts are for?

Editor’s Note: The opinions in this commentary are those of Dan Murphy, a veteran journalist and commentator.