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USDA Proposed Rule on Livestock Marketing Could Cost U.S. 104,000 Jobs and Reduces GDP by $14 Billion, New Economic Impact Study Shows

Thursday, October 21, 2010

Washington, D.C. –  An estimated 104,000 Americans could lose their jobs if a new U.S. Department of Agriculture (USDA) regulatory proposal is finalized, according to a study conducted by John Dunham and Associates and commissioned by the American Meat Institute (AMI).  The study highlights the vast potential damage that could be done to livestock producers, meat packers and American consumers and workers should USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) move forward with an obscure bureaucratic regulation that attempts to change dramatically the way livestock are procured and marketed in the United States.

The study found that the disruption and resulting inefficiencies in the market should the rule be implemented would increase retail meat prices by 3.33 percent at a national level, causing a 1.68 percent decrease in consumer demand for potentially lower quality meat and poultry products.  Therefore, not only will there be fewer opportunities for meat packers, wholesalers and retailers, but livestock and poultry producers and their suppliers will also see a reduction in demand and economic opportunities.

All told, it is estimated that about 104,000 Americans would lose their jobs following the implementation of this rule. This would reduce national GDP by $14 billion, and would cost a total of $1.36 billion in lost revenues to the federal, state and local governments.

The study’s findings 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. 

A portion of the proposed rule was mandated by Congress in the 2008 Farm Bill.  However, the actual proposed rule that appeared in the Federal Register June 21, 2010, went well beyond Congressional intent by proposing new regulatory restrictions and by lowering the standards of evidence required to sue meat companies, something that GIPSA’s own administrator has characterized as a “plaintiff lawyer’s dream.”

Not included in the proposal was an economic analysis, a fact that was criticized recently by 115 members of the U.S. House of Representatives in a bipartisan letter to Agriculture Secretary Vilsack.  That omission makes this new study the first to quantify the proposal’s potential impact. 

“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,” said AMI President and CEO J. Patrick Boyle.  “As the analysis shows, these are not just jobs in meat packing or livestock production, but in nearly every sector of the American economy.  This is, quite simply, reckless regulation.”

Boyle added that according to Gallup's 2010 annual Governance survey, an expanded proportion of Americans (59 percent – up eight percentage points from a year ago) believe the government has overstepped its bounds and grown too intrusive and too powerful.

“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,” said Boyle.  “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,” noted John Dunham, president of John Dunham and Associates, who 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.”

The study is presented in a new, interactive website that aggregates economic impact on national, state and congressional district levels.  The complete study, a methodology report and frequently asked questions and answers can be found at www.MeatFuelsAmerica.com/GIPSA

For more information on the proposed rule, visit: http://www.meatinstitute.org/GIPSA and http://www.themarketworks.org/



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