House Small Business Committee Chairman Sam Graves (R-MO) and Agriculture, Energy and Trade Subcommittee Chairman Scott Tipton (R-CO) today sent a letter to U.S. Department of Agriculture Secretary Tom Vilsack calling on him to comply with the Regulatory Flexibility Act (RFA) in regards to the proposed Grain Inspection, Packer and Stockyards Administration (GIPSA) rule on livestock marketing practices. The USDA has proposed a rule to amend the Packers and Stockyards Act of 1921 (P&S Act), which if adopted, would cause harm to thousands of small family farms.

Graves and Tipton also request a thorough review of the Department’s initial RFA to address the concerns stated in the letter.  Once a revised RFA is issued, Graves and Tipton ask that the USDA publish their analysis for comment to ensure small businesses can inform the agency about its effects on their businesses.

Click HERE for the full text of the letter.  

Graves said, “At a time when our economy is struggling to make a recovery, all facets and outcomes must be examined—especially when it involves our best job creators. The proposed rule would be extremely damaging to small farms, kill jobs and hamper competition across the country. Small farmers, just like other small businesses, are already under the constant threat of higher taxes and more regulations from the Obama administration. The last thing family farms need is another costly requirement they are forced to comply with. We will continue to hold USDA accountable and ensure they follow the RFA as this process moves forward.”  

Tipton said, “The administration is forcing ill-conceived rules on our ranching communities that, according to one economic study, could cost billions of dollars in revenue and thousands of jobs.  Rather than taking steps to help create jobs, this administration continues to implement policies that bury America’s job creators with additional regulations.  The economic ramifications of the GIPSA rule could be potentially catastrophic for thousands of small businesses.”

Studies have shown that if the proposed rule is adopted it will reduce the GDP by just over $1.5 billion and cost the U.S. economy nearly 23,000 jobs. While a reduction in herds would increase the prices received for remaining producers and consumers, the provision could force many small producers and their packer customers out of business.

The GIPSA proposed rule would amend the P&S Act to "clarify conditions for industry compliance with the P&S Act and provide for a fairer marketplace." However, the provision will severely undermine the capability of small businesses to differentiate their products from larger competitors. Additionally, the provision may also force changes to a company’s asset structure as well as a broader change in industry structure that could lead to more vertical integration. This will result in less competition for livestock producers, packers and consumers—a result contradictory to the proposed rule.