It would be nice to think that the long and deep recession has finally ended and that New Mexico has seen the end of its job losses.

Unfortunately, for major cattle-producing states like New Mexico, the United States Department of Agriculture has a surprise — in the form of a proposed rule — that could cost the state of New Mexico dearly in jobs and tax revenues and cost state residents more at the supermarket.

An obscure bureaucratic regulation is being proposed by USDA's Grain Inspection, Packers and Stockyards Administration. If enacted, it could have a significant impact in New Mexico by dismantling widely used business models between livestock producers and meat companies.

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 being pushed by GIPSA.

The American Meat Institute recently commissioned me to conduct a study on the economic impact of the proposed rule. My findings indicate that, if enacted, the rule will cost New Mexico more than
300 jobs, with lost wages totaling more than $8.6 million and the total economic impact surpassing the $33.4 million mark. While the rule will cost the economy and consumers, it is difficult to see how anybody will actually benefit. In fact, even the federal and state governments — like that of New Mexico — will be negatively affected due to lost business and personal tax revenues.

Nationwide, if the rule moves forward, the U. S. will lose 104,000 jobs, along with approximately $14 billion in total revenue, much of which is spent in small towns and rural areas. As our analysis shows, these are not just jobs in meat packing or livestock production, but in nearly every sector of the American economy. Real people with real jobs in industries as varied as paper and packaging, grain and feed production, advertising and business services, and even local butchers and grocery stores will be harmed by this regulation.

It's hard to imagine how a rule that imposes additional costs on rural America could help the farm economy in any way. In fact, it is hard to fathom why the federal government would promulgate a policy that would cost this country any jobs given the current state of the economy. Entrepreneurs and investors in industries ranging from livestock production, to meat packing to wholesalers and meat retailers are already dealing with an uncertain tax and health care environment, and just the contemplation of regulations like the one being proposed by GIPSA could dissuade them from making new investments in capacity and from hiring new workers.

USDA's own economic data from 2007 reveal that altering the status quo in the manner proposed by the new rule could cost consumers and producers $60 billion over the next 10 years. Furthermore, according to our study, New Mexico residents specifically would end up paying 3.3 percent more for their meat products. While this may seem small, it means that every New Mexico resident who goes to a grocery store, a butcher or a restaurant and chooses to eat meat will pay more as a result of these proposed rules — and not one of them will see any direct benefit.

From both an economic and practical viewpoint, when I look at the scope of the proposed rule, and the amount of damage it will inflict on America's meat and poultry industry, which generates $832.4 billion annually to the U.S. economy, or roughly six percent of the entire GDP, it convinces me that the rule should not be implemented. New Mexico simply cannot afford to lose more jobs and more tax revenues.

John Dunham authored a study on the economic impact of the USDA's proposal commissied by the American Meat Institute. He is a partner in John Dunham and Associates in New York City.