At the same time it sent three fair-play rules to the White House for review, the USDA said it will accept public comment on the most consequential of its proposals: an interim final rule on how to judge a producer’s complaint of abuse by meat packers. The rule “clarifies that farmers need only prove they were treated unfairly by a company to secure legal remedy,” a much easier standard to meet than now in use, says a small-farm advocacy group.
Contents of the proposals, sent by USDA to the White House budget office, were not released. Nonetheless, the meat industry said they “could have a multi-billion dollar impact harming consumers, retailers, producers, meat packers and processors alike.” The National Farmers Union said, “Livestock producers and poultry growers have been waiting too long for much-needed protections against the fraudulent, anti-competitive practices they fall victim to in the marketplace.”
The groups have tussled over fair-play rules since 2010, when USDA proposed a set of revisions under the aegis of the 2008 farm law. Heeding the requests of the meat industry and the largest livestock groups, Congress repeatedly barred USDA from acting on the revisions. The prohibition lapsed at the end of 2015, giving the Obama administration the opportunity to put its ideas in place in the final months before it leaves office.
At present, to prove unfair treatment, producers are required to show that a particular practice reduced competition industry-wide. The National Sustainable Agriculture Coalition said USDA’s interim final rule “will clarify and under-score the plain language of the Packers and Stockyards Act, which requires no proof of harm to competition from a complainant.” NSAC said the set of rules would shield contract growers from retaliatory and abusive treatment.
Vilsack assured senators last month that there would be a chance for the public to comment on the fair-play rules before they become final. Vilsack repeated that assurance in a letter to industry groups last week. “USDA will consider all comments received and intendeds to publish a document that will include a discussion of any comments and whether any amendments will be made to the rule,” he wrote.
Poultry farmers have been the most vocal among livestock producers in saying they have too little power in dealing with processors. Growers say processors unilaterally deny contracts to growers, demand costly improvements to their barns and sometimes retaliate against growers who complain about terms of their contracts. The poultry industry is highly integrated with few chances for growers to find a buyer for broiler chickens raised outside of a contract with a processor.
The meat industry says USDA’s regulations could stifle agreements to pay a premium to producers who meet specifications such as no antibiotics. Besides the rule on unfair practices, the USDA proposed a rule on poultry tournament payment system and a rule on undue preference.
The National Pork Producers Council said the “potentially the most problematic” of the three proposals was the revised standard for unfair practices. “The Senate considered and rejected such a ‘no competitive injury’ provision during debate on the 2008 farm bill,” said NPPC. The North American Meat Institute said the “the interim final rule as described will open a floodgate of litigation.”
NFU president Roger Johnson called on lawmakers, who blocked USDA action for years, to let the USDA rules take effect this time. Senate Agriculture chairman Pat Roberts said earlier versions of the USDA rules would have been a tremendous burden on producers and processors. “I will continue to advocate for the interests of livestock, poultry and meat produces as these rules move forward due to the harm they will cause,” said Roberts.