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Published July 18, 2011, 09:58 PM

USDA, Justice Department will continue to collaborate on next steps for proposed GIPSA rule

WASHINGTON — The Justice Department will continue to advise the Agriculture Department on the USDA Grain Inspection, Packers and Stockyards Administration’s rewrite of the rule governing the Packers and Stockyards Act, outgoing Assistant Attorney General Christine Varney said July 12.

By: Jerry Hagstrom, Special to Agweek

WASHINGTON — The Justice Department will continue to advise the Agriculture Department on the USDA Grain Inspection, Packers and Stockyards Administration’s rewrite of the rule governing the Packers and Stockyards Act, outgoing Assistant Attorney General Christine Varney said July 12.

Justice Department officials are helping USDA “think through the next steps of where they want to be on the GIPSA rule,” Varney said in a speech to the Center for American Progress.

She noted USDA and the Justice Department have held four joint workshops on antitrust issues that were attended by 4,000 people, including one on livestock issues, and recently forced a settlement in the sale of a chicken plant that would have had anticompetitive effects. But she said officials also had learned that that there are “significant problems in agriculture that can’t be solved through the antitrust laws.”

Nevertheless, USDA and Justice have “formalized” the interagency comment process and would work together on the GIPSA rule, she said.

Groups divided on proposal

The rewrite of the regulation is required by the 2008 farm bill, but it has become one of the most divisive and contentious issues that the Obama administration is facing in rural America.

The National Farmers Union, R-CALF USA and the National Family Farm Coalition say that the rule the administration has proposed would make the marketplace fairer for livestock producers, while the National Cattlemen’s Beef Association, the National Pork Producers Council and poultry groups say the proposed rule would eliminate certain accepted practices and damage the industry for small and large producers alike.

Antitrust suit

Varney also noted that in May, the Justice Department filed a civil antitrust lawsuit challenging George’s Foods acquisition of Tyson Foods’ Harrisonburg, Va., chicken processing complex on the grounds that the acquisition would have reduced growers’ ability to receive competitive prices for their services.

June 23, the Justice Department announced that George’s had agreed to make capital improvements to the Harrisonburg plant that will lead to a significant increase in the number of chickens that will be processed there. The improvements include the installation of a special freezer and deboning equipment, which will allow George’s to produce a variety of products at both its Harrisonburg and Edinburg facilities in the Virginia’s Shenandoah Valley.

“As a result of these improvements, George’s will have the incentive and ability to increase local poultry production, thereby increasing the demand for grower services and averting the likely adverse competitive effects arising from the acquisition,” Varney noted.

Justice’s antitrust division will monitor the George’s effort to improve the plant until the new equipment is installed and operational, the agency added in a news release.

Katherine Ozer of the National Family Farm Coalition praised Varney for pursuing the George’s-Tyson case, but said that larger benefits could come from the GIPSA depending on how it is finalized. Ozer also said she wishes that Justice would act on a longstanding investigation into dairy industry practices.

In her general remarks, Varney said that she is proud to have revived Justice’s antitrust division after a period of lax enforcement during the Bush administration. She is leaving the Obama administration to become a partner in the New York firm of Cravath, Swaine & Moore.

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