The USDA will propose three rules to give cattle, hog and poultry producers more leverage in dealing with meat processors in an increasingly concentrated industry, said Agriculture Secretary Tom Vilsack. The initiatives would make it easier for a producer to prove unfair treatment by a processor and would write a new regulation on use of so-called tournament systems by processors to determine pay for poultry farmers.
“The pandemic and other recent events have revealed how concentration can take a painful toll on independent farmers and ranchers while exposing working family consumers to higher prices and uncertain output,” said Vilsack. “The process we’re beginning today will seek to strengthen the fairness and resiliency of livestock markets on behalf of farmers, ranchers and growers.”
Cattle ranchers called this spring for a Justice Department antitrust examination of the meatpacking sector. And three senators from cattle and hog-producing states filed a bill on Friday to create a “special investigator for competition matters” within the USDA agency that enforces the century-old Packers and Stockyards Act.
Farm activists and the National Farmers Union, the second-largest U.S. farm group, said the three proposals by Vilsack would bring stronger legal protection to producers and, in particular, restructure “the inequitable system that determines poultry growers’ wages.” They were listed as part of USDA’s regulatory agenda, with a brief description of each.
A similar set of regulations was proposed at the end of the Obama administration and was quashed after President Trump took office.
“The third proposed rule [on the scope of the Packers and Stockyards Act] is the most needed,” said Mike Eby, executive director of the Organization for Competitive Markets. “This regulation would clarify that parties do not need to demonstrate harm to competition in order to initiate legal action.” At present, producers must show harm across the market if they assert they were treated unfairly by a processor.
On tournament systems for ranking poultry growers, the USDA said it would withdraw an inactive proposal and write a new tournament rule. Some producers say the processors can sway the results by giving a grower sickly birds or poor-quality feed.
The USDA also would draft a new regulation describing unfair and deceptive practices, undue preferences and unjust prejudices by processors. Small-farm groups and independent growers say they need a stronger hand from USDA to assure fair treatment.
The largest groups representing cattle, hog and poultry producers said the Obama-era rules could have limited the options for marketing livestock by interfering with contracts or agreements that offer bonuses for animals that special standards. Processors often raise livestock on their own or contract with producers to feed them to slaughter weight. Some lawmakers say those practices give processors great influence in setting prices for livestock.
The proposal on the scope of the Packers and Stockyards Act is available here.
The proposed rule on poultry tournament systems is available here.
The proposal on unfair practices is available here.