Earlier today, the USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) announced updated regulations designed to protect contract rights of farmers.
Per the USDA’s press release, the proposed rule addresses unfair practices and clarifies conduct violating the Packers and Stockyards Act. Arguably, these clarifications could protect farmers from retaliation or from contract terms impacting their business. The Farmer Fair Practices Rules include an interim final rule and two proposed rules to be published in the Federal Register. Critically, the interim final rule will establish that “it is not necessary to demonstrate that an unfair practice harms the entire market in order to prove a violation of the Packers and Stockyards Act.”
According to the USDA, the four largest processors in the U.S. poultry sector “control 51% of the broiler market and 57% of the turkey market.” As a result, poultry growers have few options to contract with local processors. Accordingly, processors “wield market power over the growers, treating them unfairly, suppressing how much they are paid, or pitting them against each other.”
Concerns over GIPSA rules have persisted for some time. In October of this year, NCBA President Tracy Brunner told meatingplace.com, “The GIPSA rules, as they pertain to cattle producers, are extremely troubling to our industry at a time when we are already grappling with volatile futures markets and a fragile cash market.”
News of today’s announcement was welcomed by National Farmers Union President Roger Johnson, who stated via a press release, “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. We applaud USDA for staying committed to publishing rules that seek to protect producers, growers, consumers and the industry alike.”
Officials at the National Pork Producers Council offered a different take. NPPC CEO Neil Dierks remarked via the organization’s website, “I can’t imagine a more devastating regulation on an industry. The rule, which creates legal uncertainty, will destroy opportunities for many in the U.S. pork industry, with no positive effect on competition, the regulation’s supposed goal.”
Copies of the Farmer Fair Practices Rules may be viewed here.