If one was trying to capture the overriding sentiment in Washington, D.C. right now – besides the obvious “spend it now and figure out how to pay for it later” mentality – it might be that regulation/oversight is a good thing; or that industries and businesses are bad, government is good. The release of the new proposed Grain Inspection, Packers and Stockyards Administration (GIPSA) rules represent one of the most significant moves in this direction of anything ever proposed; and given the current environment, that’s saying a lot.
It would require a team of lawyers to explain everything being proposed. It is 66 pages long and probably will require several thousand pages of clarifications and a myriad of legal challenges before anyone fully knows what it all truly means. However, the impacts of these regulations have the potential to change our industry in dramatic ways.
Undoubtedly, in 66 pages there are probably some positive changes, but there’s no doubt there are some devastating changes as well; that is, if you believe in market differentiation, value-based marketing and choice.
Some of this is simply surreal; Big Brother at a level that most never thought would be proposed in America. It’s indicative of how we are not only in a different political climate these days, but we are in a brave new world with an administration that truly prefers government control to free enterprise.
Consider this scenario:
Every marketing arrangement would have to be disclosed and posted for everyone in the world to see. GIPSA then would become the judge to determine if the arrangement was fair. I am not making this up; just think about those implications.
The proposed rules would make it far easier for virtually any party to sue for grievances. Imagine if Joe sells his calves for $125 after concentrating for years on creating superior genetics in his herd, managing his cattle extremely well and collecting 10 years of historical data and information. His contract is posted and, after review, GIPSA determines that the weigh-up conditions were out of specs because they were shrunk 2.5% instead of 3% under the formula GIPSA created. GIPSA also informs the parties involved that gathering the calves and sorting them without access to water for two hours is inhumane and must be addressed next year.
Meanwhile, another producer sells similar weight calves on the same day, slightly different location, vastly different management and biological types, but is bid $110. He then sues the buyer for discrimination, citing GIPSA rules that indicate differentiation based on a contention that quality or quantity could be considered unfair preferential treatment.
I’m sure you think I’m making this up. Yes, it would open the door to frivolous lawsuits; it would cause buyers to lower bids because they would have to pay everyone exactly the same. It’s a complete rejection of value-based marketing and differentiation and legislates us back to a commodity marketplace where everyone must receive the same price. This is the world we are currently living in.
For more on this see “We’re From The Government; No Thanks” at beefmagazine.com/cowcalfweekly/0625-were-from-government.