Common sense tells proponents of free markets that the rule proposed by the Grain Inspection, Packers and Stock Yards Administration (GIPSA) represents an economic albatross. Thanks to the American Meat Institute (AMI), there are numbers to substantiate the sense.

According to a study AMI commissioned, conducted by John Dunham and Associates, 104,000 Americans could lose their jobs if a new USDA regulatory proposal is finalized. This would reduce national GDP by $14 billion, and would cost a total of $1.36 billion in lost revenue to the federal, state and local governments.

Further, the study finds that the disruption and resulting inefficiencies in the market should the rule be implemented would increase retail meat prices by 3.33% at a national level, causing a 1.68% decrease in consumer demand for potentially lower quality meat and poultry products.

“At a time of record unemployment, slow economic recovery and rising poverty levels, it is unfathomable that the administration would propose a rule that could cost one American job, let alone 104,000,” says J. Patrick Boyle, AMI president and CEO. “As the analysis shows, these aren't just jobs in meat packing or livestock production, but in nearly every sector of the American economy. This is, quite simply, reckless regulation.”

Boyle adds that, according to Gallup's 2010 annual governance survey, an expanded proportion of Americans (59% – up 8% from a year ago) believe the government has overstepped its bounds and grown too intrusive and too powerful.

The study’s findings released last week also highlight the fact that livestock producers would be especially affected by the implementation of this rule, losing as many as 21,274 jobs, many in rural America.

Keep in mind, while private industry was willing to conduct an economic study of the rule’s impact, USDA has been unwilling to.

In fact, USDA Secretary Tom Vilsack ignored requests from 115 members of the U.S. House of Representatives and several U.S. Senators for a comprehensive economic analysis. That according to representatives of the National Cattlemen's Beef Association (NCBA).

The proposed GIPSA rule was written in response to a directive made by Congress in the 2008 farm bill. However, as the 115 House members cited in their request for the economic analysis, “GIPSA also included additional proposed regulations that greatly exceed the mandate of the Farm Bill.” The members also stated, “the analysis contained in the proposed rule fails to demonstrate the need for the rule, assess the impact of its implementation on the marketplace, or establish how the implementation of the rule would address the demonstrated need.”

“This government intervention will dismantle 20 years of progress that has helped the U.S. meat and poultry industry to deliver the safest, most affordable meat and poultry supply in the world,” Boyle says. “As our study shows, this protectionist policy proposal would do nothing but harm Americans who work every day to put food on our tables.”

“As an economist who makes his living studying and modeling the economic impact of government regulations on businesses and industries, I have seen firsthand the unintended consequences of misguided policy proposals like the one proposed by USDA,” notes John Dunham, president of John Dunham and Associates, which conducted the study. “It is noteworthy that USDA says this proposal will revitalize rural America, yet my analysis shows it will actually cause substantial job losses.”
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