Secretary Vilsack’s Chicken Rules May Come Too Late to Help Farmers

Posted Leah Douglas Chicken, Leah Douglas, Newsletter

Photo from Flickr user scrap_pile.

The Department of Agriculture last week finally proposed rules to protect poultry farmers from abusive and discriminatory practices by giant chicken processing companies. Called the Farmer Fair Practices Rules, the new rules come 6 years after the Obama Administration first attempted to regulate the industry, then retreated under heavy pressure from pro-Big Ag representatives in Congress. Some in the industry believe the USDA action comes too late to deliver any real change for farmers.

The proposed rules would make it easier for farmers to seek protection under the Packers and Stockyards Act, a 1921 law designed to preserve competition in the meat industry. The PSA is enforced by the Grain Inspection, Packers, and Stockyards Administration, which was formed in 1994. Congress, in the 2008 Farm Bill, ordered the Administration to complete rulemaking for GIPSA, and in 2010 the Obama administration held a series of hearings on the issue. But giant livestock corporations like JBS and Tyson successfully lobbied Congress to defund the USDA’s enforcement efforts.

Patty Lovera, assistant director of Food & Water Watch, says the USDA’s current effort is weaker than prior attempts. “We liked the 2010 rules better,” she says. Also of concern is that Agriculture Secretary Tom Vilsack waited so long to release the rules. She says “the clock is going to run out” before they can be confirmed.

Over the past several decades, farmers have faced an increasingly consolidated and vertically integrated poultry industry. The top four companies in the sector—Tyson, Pilgrim’s Pride, Perdue, and Sanderson Farms—control nearly 60% of the industry. In many regions of the country, a single company may control as much as 100% of the market for chickens. And those companies often control every stage of the growing process, from providing producers with chicks and feed, to slaughtering, packaging, and distributing the chicken.

The rules are designed to protect farmers against the contract-based “tournament system,” which pits farmers against one another in an opaque “competition” that they say is unfair and arbitrary. Farmers say that packers will retaliate against any grower who speaks out about the tournament system.

The USDA’s rules promise protection against “the most egregious retaliatory practices” used by packers. One rule would eliminate the need for farmers to prove competitive harm to the entire industry when attempting to take legal action against processors. The other two rules would outline what constitutes abusive business practices and what farmers’ rights are. The interim final rules are supposed to take effect 60 days from its date of publication, which will occur after Donald Trump assumes the Presidency.

The original rules proposed in 2010 would have guaranteed that growers raising the same types of chickens be paid the same base pay. The new rules, however, simply encourage that processors do a better job of “sharing…information with growers.” The latest version of the rules also allow the processors to provide a “legitimate business justification” for discriminatory practices, a loophole some experts say makes it easy for the processors to evade legal consequences.

President-Elect Trump has yet to announce any position on the rules. Some hope he will view them as a way to live up to his promises to improve the lot of America’s farmers. “If he wants to help the little guy, well, this is his chance,” says Dudley Butler, a lawyer and former GIPSA administrator. “These rules are about nothing more than fairness for farmers.”

But even if Trump supports stronger protections for farmers, Butler says it’s likely Congress will push back against the rules, because “that’s what they’ve always done” in recent years.

The new rules were welcomed by the National Farmers Union, the American Farm Bureau Federation, the Organization for Competitive Markets, and the Ranchers-Cattlemen Legal Action Fund.

Big Ag groups such as the National Chicken Council, the National Cattlemen’s Beef Association, and the National Pork Producers Council condemned the rules.

What We’re Reading

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  • A few weeks ago, we wrote about the Ranchers-Cattlemen Action Legal Fund’s attempt to halt the collection of the federal beef checkoff tax in Montana. The group’s complaint was heard by a federal magistrate, who last week recommended that a district court grant an injunction against the checkoff. This preliminary verdict could set the stage for major checkoff reform, pending the district court’s decision.

  • Monsanto shareholders approved the company’s $57 billion merger with Bayer. The merger would create a seed and agrochemical behemoth, with 80% of the U.S. corn seed market and 70% of the global pesticide market. Read our coverage about why the merger will be bad for farmers and consumers.

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