DES MOINES – Iowa Secretary of Agriculture Bill Northey today submitted comments to the USDA Grain Inspection, Packers and Stockyards Administration regarding their proposed rules that would add several new sections to the regulations under the Packers and Stockyards Act of 1921, as amended and supplemented.  The deadline to comment is Nov. 22, 2010

The text of Northey’s comments follow here:

Tess Butler, GIPSA
U.S. Department of Agriculture
1400 Independence Ave., S.W., Room 1643-S
Washington, DC 20250-3604

To Whom it May Concern:

The livestock industry is vitally important to Iowa and the economic health of our state, so the proposed rule of the Grain Inspection and Packers and Stockyards Administration, 9 CFR Part 201, RIN 0580-AB07, are of critical importance.

As I have travelled around the state and visited with farmers, I have heard concerns from several producers that the final rules and implementation could significantly affect existing marketing arrangements that they already have in place.  I appreciate USDA's need and desire to assure a competitive marketplace for all producers, but I do have concerns about unintended consequences of the current proposal and stress that it is very important that negative effects on farmers are avoided.

As a result, a broad coalition of agricultural groups from Iowa has submitted extensive comments on the proposed rule and I would ask that you give their suggested changes full consideration.  I agree with the changes they propose and have attached their comments to my letter for your reference.

In addition, I wanted to highlight a few of their proposed changes that I believe are critically important and would greatly improve and strengthen the proposed rule.

First, there would be great benefit to separating or splitting of the current rule into species specific language.  The structure of each industry is so different that I believe in their current form the rules create unnecessary confusion.  Creating different sections for each of the species would add needed clarity and allow the rules to be more specific in each area.

Second, the proposed rule goes into great detail about requirements and conditions whereby “Capitol Investment” or “Additional Capitol Investment” can be required and prescribes value thresholds.  The rule could be simplified and clarified if it would only deal with the subject of “Additional Capitol Investment.”

When farmers are making a “Capital Investment” they have significantly more options, including the ability to simply decline the contract as being unfair or otherwise unworkable.  But, additional protections surrounding requirements for “Additional Capital Investment” after entering a contract are understandable and necessary.

Finally, I have concerns about the definition of a forward contract as a “fixed price or basis contract, oral or written, for the purchase of a specified quantity, or lot or lots of swine, where delivery will occur more than 14 days after the agreement is entered.”

The 14 day period as is currently proposed is too short and the definition should be set for both beef and pork as “greater than 30 days prior to delivery.”  Few industry forward contracts are entered into with as little as 15 days for delivery and as a result changing it to 30 days would better serve the industry.

I believe with these changes and the others highlighted by the Iowa agricultural groups that have weighed in will allow these new rules to better protect both farmers and packers and benefit the entire livestock industry.

Sincerely,

Bill Northey
Iowa Secretary of Agriculture