USDA proposes new rules to protect poultry farmers
On June 22nd, USDA published proposed rules that would end many of the unfair practices that have become commonplace in poultry. The USDA is accepted comments on these rules until November 22, 2010.
Here are a few examples of what the rules would do if they were adopted:
Outlaw Retaliation
Company retaliation against growers who speak out about the problems with their contracts or within the industry has been a long-standing problem. This rule makes such retaliation an unfair practice and illegal.
Protect Growers' Investments in Poultry Houses
The proposed rules include significant new requirements to protect the substantial investments that growers are required to make by their poultry companies, and to make sure they are not forced into making unwise investments, or retaliated against for not doing so. The rule addresses both a grower’s initial poultry house investment as well as upgrades.
The rule includes a requirement that poultry contracts be long enough in term to allow growers to recoup at least 80 percent of the cost of their investments.
In addition, the rule prohibits a poultry company from:
- interfering with a grower’s ability to sell their farm, by requiring large upgrades to their poultry houses after the grower has announced their plans to sell their farm;
- requiring growers to make equipment changes if the existing equipment is in good working order, unless the company provides adequate compensation to the grower;
- cancelling a grower’s contract or reducing the number of birds placed on their farm based solely on the failure of the grower to make equipment changes, so long as existing equipment is in good working order.
USDA has also used the proposed rule to put companies on notice about additional company practices it considers “unfair” and therefore illegal. Such practices include:
- using coercion or retaliation to force growers to make upgrades;
- requiring a grower to make an upgrade while at the same time making plans to substantially reduce or end operations at the plant that processes the grower's birds;
- requiring one grower to make an upgrade at the same time as other similarly situated growers are not required to do so;
- requiring a grower to make an upgrade if the grower cannot reasonably be expected to be able to recoup the cost of the investment; and
- requiring a grower to make an upgrade without giving the grower a reasonable period of time to implement the upgrade.
Reform the Ranking System
The proposed rulse would help address growers’ concerns about the ranking system by:
- requiring growers to be “ranked” with other growers using the same type of poultry house, in order to make the ranking more fair;
- requiring the same base payment rate for all growers raising the same “type and kind of poultry” and prohibiting companies from paying growers below that base rate.
These two requirements apply only to those poultry companies using the tournament system for payment of their growers.
Require that Growers Be Given Information to Make Wise Business Decisions
Critical information that growers need to make wise financial decisions and to understand how they are paid is often kept from growers by their companies. The proposed rule starts to address this problem by:
- Requiring that companies give growers full access to data used to calculate their pay;
- Putting the companies on notice that USDA expects them to give growers at least 90 days notice before any suspension of delivery of birds to the grower’s farm, as well as an explanation for the suspension and the date the delivery of birds will resume.
Protect Growers’ Rights to Defend Themselves in Court Against Company Abuses
The proposed rule implements a provision in the 2008 Farm Bill to prohibit companies from forcing growers to give up their legal rights to defend themselves in court. Specifically, the rule requires that growers be given a clear and conspicuous right to “opt-out” of arbitration clauses in their contracts.
In addition, the proposed rule also makes it an unfair practice for companies to force growers to give up other legal rights as well, such as the right to a jury trial.
Cover All Poultry Growers, Not Just Broiler Growers
The Packers and Stockyards Act has been wrongly interpreted in the past to only provide protections for broiler growers, leaving breeder hen and pullet growers completely unprotected. The rule corrects the problem, and clarifies that the rules cover breeder hen and pullet growers too.
Page Updated 07.30.2010