Agriculture Secretary Tom Vilsack today announced the third installment in a series of regulatory reforms under the Packers and Stockyards Act that, in combination with other updates finalized under the Biden-Harris Administration, is intended to level the playing field for farmers who raise chicken, turkeys, hogs, cattle, and sheep under contract or for sale to meat and poultry processing companies.
Specifically, the rule will give chicken farmers better insight into companies’ payment rates for their birds, will institute stability and fairness in what is commonly known as the ‘tournament system,’ will provide farmers with key information on capital improvements the companies require farmers to make in order to keep or renew contracts, and give farmers stronger leverage when companies do not adhere to the rules.
“During my time as Secretary of Agriculture, time and again USDA has been confronted with the stories of farmers who lost their life’s savings or went bankrupt because of an unfair system they entered into when they agreed to raise animals for a major meat conglomerate. It is USDA’s job to advocate for farmers, and these regulatory improvements give us the strongest tools we’ve ever had to meet our obligations under the Packers & Stockyards Act,” said Agriculture Secretary Tom Vilsack. “While there is still work to be done, I am immensely proud that the Biden-Harris Administration has taken historic action to level the playing field for farmers. This complements other ways we’ve worked to enhance competition across the agriculture sector, from investing in independent processing capacity, to shoring up domestic fertilizer production, to promoting transparency around seed technology and markets. As the bedrock of so much that our society depends on, and the pillar of rural economies, farmers deserve honesty, certainty and options when it comes to their hard work.”
Over the course of the Biden-Harris Administration, the U.S. Department of Agriculture has finalized two other rules that strengthen enforcement of the Packers & Stockyards Act and seek to create a fairer dynamic between integrated processing companies and the farmers who raise animals for them. These include:
- Transparency in Poultry Grower Contracting and Tournaments, finalized in November 2023, which requires Live Poultry Dealers —typically large processing companies — to give critical information about terms of their agreements to the poultry growers with whom they contract to raise birds. The final rule requires a “Live Poultry Dealer Disclosure Document” that provides growers with information they need to have a better understanding of realistic outcomes they can expect before making important financial decisions, such as capital-intensive facility improvements or taking out loans. In particular, the rule requires that dealers disclose earnings for growers by quintile, establish minimum flock placements, and explain variable costs growers may incur and how companies handle certain important circumstances such as sick flocks and natural disasters. It also establishes an accountability and governance framework that must be certified by the poultry company’s CEO.
- Inclusive Competition and Market Integrity under the Packers and Stockyards Act, finalized March 2024, which prohibits discrimination on the basis of certain other basic characteristics and bans companies from retaliating against farmers over basic activities like communicating with government agencies, joining producer or grower associations, and asserting legal and contractual rights; it also offers protection against deceptive contracting that are false, misleading, and result in harm to producers.
In June 2024, USDA proposed Fair and Competitive Livestock and Poultry Markets, which sought to define unfair practices under the Packers & Stockyards Act. USDA received more than 13,000 public comments on the proposal. Due to the complexity and length of time needed to finalize that regulation, USDA is withdrawing the proposal to preserve its ability to re-examine these important issues in the future and enable the Agency to explore with stakeholders regarding how best to implement the requirements of the Packers and Stockyards Act.
“This Administration’s landmark competition efforts show it’s possible to ensure that a little bit more of the food dollar stays with the farmers and ranchers who make America’s agricultural trading markets the envy of the world,” said Senior Advisor for Fair and Competitive Markets Andy Green. “This final Packers & Stockyards rule builds on a historic record of partnership between USDA and the Department of Justice, including landmark cases to reform the tournament system and to put a stop to unfair and anticompetitive practices in the poultry industry, as well as the extraordinary whole-of-government achievements of the White House Competition Council.”
USDA news release
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