As quickly as the Obama administration unveiled a package of rules meant to make it easier for livestock producers to prove unfair treatment at the hands of processors and packers, the largest cattle and hog groups called on the incoming Trump administration to blunt Obama’s impact. Agriculture Secretary Tom Vilsack said the new rules would level the playing field for producers and scoffed at an accusation that the rules were retaliation for Donald Trump’s election as president.
“That’s absurd. That’s absolutely absurd,” Vilsack told reporters. “This is a rule that is intended to complete the work of the 2008 farm bill. This has nothing to do with the election of 2016.”
The USDA package includes an interim final rule and two proposed rules, all open for public comment for 60 days, meaning the Trump administration will decide whether to carry the proposed rules to completion and how to administer the interim final rule. Under the interim final rule, producers need only prove they were treated unfairly by a company to win a legal remedy. That is a much easier standard than the one now used, which requires proof that harm has been done to the entire market because of an unfair practice.
The proposed rules would clarify what practices USDA views as violations of livestock marketing rules and would reform the “tournament” system that processors use in deciding how much to pay producers for their fowls. “These three rules are incredibly interconnected,” said Vilsack.
Under the tournament system, producers are judged in comparison to their neighbors in growing birds to market weight, almost always under contract to a processor who supplies the fowl and their feed. Some producers say the processors can sway the results by giving a farmer sickly birds or poor-quality feed. Critics say processors have the upper hand in writing contracts and can retaliate against growers who speak out.
“Every week,” said Mike Weaver, president of the Organization for Competitive Markets, a small-farm group, “farmers have money taken away from their pay” because of the tournament system. The president of the National Farmers Union, Roger Johnson, said processors have so much leverage, “farmers take on all the risk (while) integraters take on all the profits.”
The largest U.S. farm group, the American Farm Bureau Federation, said the new rules were ” an important step toward leveling the playing field in the poultry industry by ensuring companies follow the law and treat farmers fairly, without disrupting beef and pork markets.”
Both sides in the squabble over livestock marketing rule said it spoke for producers and stood closest to the populist promises of the president-elect. “We helped put him in office. We need some consideration,” said Weaver, pointing to the 2-to-1 vote in rural American for Trump.
The National Pork Producers Council, the National Cattleman’s Beef Association and the National Chicken Council said the new rules would up-end the livestock marketing system and generate countless lawsuits. The NCBA said the rules would limit the options for producers in selling their animals. For years, the ag groups have worried about interference with contracts or market agreements that offer bonuses, for example, for delivery of cattle that yield high-grading carcasses or chickens raised without use of antibiotics.
Vilsack said the new rules, revised from a 2010 iteration, would not preclude alternative marketing arrangements. The trade group North American Meat Institute said rules “would make the use of marketing and other contracting agreements between packers and livestock producers legally risky.” For several years, Congress passed an annual rider to block work on the marketing rules. It lapsed at the end of 2015, allowing USDA to draft the new rules.
The Pork Council said the USDA package, issued five weeks before Obama leaves office, was “an apparent attack on rural America for its role in helping elect Donald Trump.” It urged its members to write comments in opposition to the new rule. The NCBA said it “will be working staunchly with the new administration and new Congress to prevent these irresponsible regulations from harming our nation’s farmers and ranchers.” The Chicken Council said “all options are on the table.”
To read the proposed rules and a USDA question-and-answer sheet on them, click here.
To read a White House blog on the rules, click here.