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Northwest Iowa Dairy Outlooks

A local discussion of current science and issues concerning dairying in northwest iowa

A new economic analysis by John Dunham and Associates on behalf the American Meat Institute notes that the Proposed GIPSA rule will have unintended consequences throughout this area of Texas and across the nation with meat and poultry prices will increasing by 3.3 percent and cost Americans $2.7 billion in higher prices.

The regulation proposed by the Grain Inspection, Packers and Stockyards Administration (GIPSA) would harm parkers by increasing the risk associated with using marketing agreements because it would change longstanding judicial precedent and make it easier for a disgruntled producer to sue and win in a Packers and Stockyards Act lawsuit. In doing so, the proposed rule creates a disincentive for packers to use such agreements.

The proposed GIPSA rule would hurt local consumers by increasing their cost of the meat and poultry they currently purchase by about 3.33 percent, or $28.

The analysis also indicates that producers will lose jobs and face volatility on the spot market. Over the last 20 years, livestock spot prices have been 500 percent more volatile than retail meat prices. Consumer prices for meat and poultry have been fairly stable over time, while livestock spot prices vary wildly by day or even hourly. This volatility lead to occaissonly higher producer prices, or made production more difficult when producers sold livestock when market prices are low or had to keep inventory in hopes of receiving a higher price. Marketing agreements created a stable market for producers that eliminated the potential for high profits, and left the producer with marginal profits at best.

The meat industry is an integral part of the local Texas economy with area companies that produce, process, distribute and sell meat and poultry products having the potential to lose more than 110 jobs if the proposed GIPSA rule is implemented. In addition, almost 320 jobs in supplier and ancillary industries could also be lost.

The analysis totes that the economic benefit of the industry spreads throughout the congressional district noting that the proposed GIPSA rule could cost the congressional district as much as $59.2 million in economic activity.

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