One of the largest U.S. farm groups called for the incoming Biden administration to rescind a new fair play rule for livestock marketing, unveiled by the Agriculture Department on Thursday, that it sees as a setback for family farmers in dealing with the handful of companies that dominate the meat industry. In its early days in office, the Trump administration killed a broader-reaching Obama package that would have made it easier for producers to prove unfair treatment by processors.
“Rather than offer farmers the very basic safeguards they’ve been asking for, USDA’s rule will inexplicably offer even more power to meatpackers, further tipping the scales in their favor,” said Rob Larew, president of the National Farmers Union. “The incoming administration must reverse this harmful rule and replace it with one that actually protects farmers from unfair, deceptive, and discriminatory practices.”
The National Sustainable Agriculture Coalition (NSAC), a small-farm advocacy group, said it was counting on the Biden administration to rescind the Trump rule and bring back the Farmer Fair Practices package that was proposed in mid-December 2016 by the Obama administration.
More than a decade has been consumed by efforts to get the USDA to define undue and unreasonable preferences by meat companies when buying poultry and livestock from farmers. In the 2008 farm bill, Congress directed the USDA to write a definition, but then blocked action for years on what was known as the “GIPSA rule.” The Trump administration killed the 2016 Obama-era package in October 2017 and offered a much narrower rule at the start of this year. The final version of the rule will take effect 30 days after appearing in the Federal Register on Friday.
Under the new rule, the USDA will use four criteria to determine if a processor is giving an unreasonable preference — meaning excessively favorable conditions — to a producer or producers while reducing opportunities for others to secure optimal pricing and business success. The USDA would consider whether a preference can be justified on the basis of cash savings, meeting a competitor’s prices, meeting the terms offered by a competitor, or as a reasonable business decision.
“The establishment of these criteria is representative of USDA’s commitment to equity in the livestock, meat, and poultry industries,” said Greg Ibach, undersecretary for marketing. “These criteria further clarify USDA’s enforcement mechanisms under [the law] that ultimately work to benefit everyone in the supply chain.”
Under the Obama-era package, producers would have needed only to prove they were harmed by a meat company to win a legal remedy. The current standard requires proof that an unfair practice harms the entire market. The USDA said the question of competitive harm is a long-settled matter, so it did not address it in the new rule.
Besides its silence on competitive harm, the USDA rule failed to act against retaliation by processors or protect a farmer’s right to speak out about harmful practices, said NSAC policy director Eric Deeble. The Obama-era package included clarifications of what practices violate livestock marketing rules, and would have reformed the so-called “tournament” system that poultry processors use to decide how much to pay farmers for their birds.
The North American Meat Institute, speaking for processors, said the USDA rule respected the use of marketing agreements and similar tools by livestock producers and processors. Most of the chickens, turkeys, pigs, and cattle raised in the United States are sold under contracts or pre-arranged pricing formulas. Some reward producers for cattle with high-quality meat or for honoring such requirements as raising chickens without the use of antibiotics.
“We will move forward and continue to work to ensure livestock producers have a variety of tools available to market their animals and to ensure meat and poultry markets remain competitive,” said Julie Anna Potts, chief executive of the trade group.
The largest groups representing cattle and hog farmers have been leery of USDA rules that could interfere with their access to bonus revenue for premium livestock or that could inspire lawsuits by producers left out of lucrative marketing arrangements.
The 78-page rule was scheduled to appear here in the Federal Register.