Poultry processors would be barred from making deductions from the base prices that they list in contracts with growers under a rule proposed by the Agriculture Department on Monday. The USDA said the proposal aims to curb abuses of the so-called tournament system that determines a farmer’s revenue and processors’ demands for growers to make additional investments in their facilities.
“Poultry growers deserve a fair shake and consumers deserve a fair price,” said Andy Green, USDA competition adviser. “This proposed rule is intended to provide growers a clear base price in contracts, a contracting partner that designs and operates any comparisons fairly, and access to the information that growers—and USDA—need to identify and halt coercive investment demands before growers take on large debts.”
The tournament system ranks growers by their performance in raising broiler chickens, with payments to growers contingent on their ranking. Under the USDA proposal, processors could award bonuses to reward top growers but could not make deductions from the base price. They also would be required to make an even-handed comparison of growers.
“This new proposed rule is an important next step in bringing fairness to the contracting practices used by large poultry companies to contract with farmers who raise chickens for them,” said the Campaign for Contract Agriculture Reform. The National Chicken Council, a trade group for processors, said it strongly opposed the “anti-business” proposal that would increase costs and stifle innovation.
There will be a 60-day comment period after the proposal appears in the Federal Register in the next seven to 10 days.
Also, the USDA announced a data visualization tool, the Livestock Mandatory Reporting Live Cattle Data Dashboard. The dashboard would provide an easy-to-understand way to view cattle market information, it said.