Bloomberg News

Tyson, Poultry Group Say USDA Rule Will Boost Costs for Industry

December 12, 2011

Dec. 8 (Bloomberg) -- The National Chicken Council and Tyson Foods Inc., the largest U.S. processor, said a rule issued today by the U.S. Department of Agriculture that regulates processors would boost costs for the industry.

The so-called GIPSA rule, issued after more than a year of debate, implements provisions from the 2008 farm bill intended to protect livestock producers and poultry growers, the USDA said. Among the changes, companies must provide “reasonable notice” to growers on any suspension of the deliveries.

“We are disappointed that the final rule still includes provisions estimated to cost the chicken industry as much as $55.5 million annually,” Mike Brown, the president of the National Chicken Council, said in an e-mailed statement. “This is especially burdensome on an industry that has struggled financially in the face of this difficult economic climate and record-high costs of production.”

Congress put restrictions on the USDA from implementing some portions of the rule that had been proposed earlier this year, the department said. The rule doesn’t include “highly controversial” sections, including provisions on undue preferences and unfair practices, according to the American Meat Institute, a Washington-based trade group. The provision on “undue or unreasonable preference” would have implemented criteria on producers receiving different treatment from companies, the USDA said.

“From the outset, we agreed with others that the GIPSA rule originally proposed in 2010 was bad for farmers, processors and consumers,” Gary Mickelson, a Tyson spokesman, said in an e-mail. “The original proposal went far beyond the direction Congress gave USDA in the 2008 Farm Bill. As a result, Congress had to intervene to correct the course USDA had so zealously taken.”

The issued rule has criteria on additional capital investment and provisions on a “reasonable” period of time to fix a breach of contract and arbitration. Today’s measure helps provide “fairness and transparency in the marketplace,” Agriculture Secretary Tom Vilsack said in a statement.

--Editor: Steve Stroth

To contact the reporter on this story: Elizabeth Campbell in New York at ecampbell14@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.


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