Center for Rural Affairs Applauds Long-Awaited Farmer Fair Practice Rules

LYONS, NEBRASKA - Today the U.S. Department of Agriculture took a key step forward by advancing the Farmer Fair Practice Rules under the Grain Inspection, Packers & Stockyards Administration. This action levels the playing field by providing protections to farmers in the poultry and livestock industry. The Center for Rural Affairs and others will continue to advocate on behalf of farmers until these rules go into effect.

The Farmer Fair Practices Rules, published today, are an important step forward in ensuring a fairer marketplace for contract poultry and livestock producers. The Center for Rural Affairs applauds USDA’s work in publishing these rules.  

“Contract growers of poultry and livestock suffer from unfair and anti-competitive marketplace practices where corporations often have all the power," said Anna Johnson, policy manager at the Center for Rural Affairs. "For too long, meat companies have imposed expensive, unfair and destructive restrictions on contract growers, and farmers have had no method for recourse. These rules will provide important and long-needed protections for contract growers and will benefit rural communities."

Much of the meat industry is vertically integrated, where one company might control the entire production chain from animal and feed to packaging. The same company will then contract out the raising of poultry and livestock, providing young animals and feed to farmers on contract. The corporation receives standard, guaranteed prices. The farmers are responsible for bringing animals to market weight. In doing so, the farmers shoulder all the risk. Contract language makes it impossible for them to seek recourse from the company or others in the face of disease, disaster, or market disruption. In this way, the companies hold all the power and the contract growers have none.  

All three of the rules that USDA is publishing in the Federal Register make an important contribution in making these markets fairer. One proposed rule addresses the tournament system where growers must compete against each other for poultry contracts, often used to retaliate against contractors when they have disagreements by selling them lower quality feed or chicks. The second proposed rule addresses “undue preference” and “unfair practices,” which give growers the power to file complaints if meat companies treat them unfairly. The interim final rule confirms that a farmer is not required to demonstrate injury to the entire sector in order to receive compensation from having been victim to anti-competitive practices. All three rules will have a 60 day comment period.

“Livestock operations are rural businesses, and when big corporations squeeze them, restrict them, and push them out of business, not only do the individual farmers suffer, but our rural communities are further weakened,” Johnson said. “These rules are an important step for providing long-needed protections for contract livestock producers and, in turn, their communities.”

“We cannot emphasize enough how important it is that that USDA has moved forward on this issue,” said Johnson.