What is in this article?:
- Unfair practices targeted
- Competitive injury questioned
- Marketing reasons
The USDA estimated that the cost of paperwork required with regard to these new regulations would be about $500,000. In addition, their analysis showed that the benefits of the regulations are expected to exceed the costs by providing for more transparent, competitive markets.
The American Meat Institute’s (AMI) recently released a study of the economic impact of the rule came to the conclusion that the implementation of the GIPSA rule would cost about 104,000 jobs and reduce the U.S. Gross Domestic Product (GDP) by $14 billion and “cause a total of $1.36 billion in lost revenues to the Federal, state and local governments.”
On November 10, 2010, Informa Economics released a study conducted for the National Meat Association (NMA) in cooperation with the National Cattleman’s Beef Association, the National Pork Producers Council, and the National Turkey Federation that estimated the costs of complying with the new regulations to include a loss of 22,800 jobs, a reduction in annual GDP of $1.56 billion and a decline in tax revenues of $359 million ( http://nppc.org/uploadedfiles/GipsaReport-Final2,2010-11-09.pdf.).
In their conclusion to their report, “An Estimate of the Economic Impact of GIPSA’s Proposed Rules,” Informa writes: “During the course of this study, it became clear to us that the provision in the rule that relieves plaintiffs from the burden of proving competitive injury is by far the most damaging. Simply removing that one provision could reduce the economic damage expected from the rule by nearly 75 percent. All of the expected efficiency losses and demand decline that forms the basis for the largest portion of the costs are tied back directly to the packer/processors’ fear of increased litigation and an increased likelihood that a very large financial judgment will be rendered against them. That is the factor that will drive the packers to sharply reduce their use of AMAs, [alternative marketing agreements] which in turn creates large costs in terms of efficiency and product quality.”