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PITTSBORO, N.C., May 22, 2019—USDA released a notice of proposed rulemaking today indicating that in June the agency will begin writing rules critical to protecting contract poultry and livestock farmers from illegal and unfair corporate business practices including retaliation.
The vast majority of the meat produced in the United States is by farmers who are under contract with big companies. For example, according to the 2017 Census of Agriculture, 96% of broilers and other meat type chickens produced in the U.S. are grown under production contracts. RAFI-USA urges USDA to finally deliver for the tens of thousands of family farmers in this industry.
“We’ve heard story after story of processors retaliating against farmers who speak out against exploitation and abuse. Farmers should be able to speak their mind. They should not be subject to reprisal or retaliation when they push back on unfair treatment by processors. We hope USDA will help level the playing field for independent contract farmers with a new rule that effectively protects them from corporate abuse,” said RAFI-USA’s Executive Director, Edna Rodriguez.
North Carolina contract poultry farmer Rudy Howell says this is a chance for the agency to finally deliver for farmers. “Farmers all around are complaining about how we’re being treated, but are too scared to speak publicly. We farmers can’t set the record straight and speak the truth because we don’t have any protections from retaliation. That’s why this rule is so important.”
According to USDA, a draft rule will be released in June, followed by a 60-day public comment period.
The new rule will seek to clarify Section 202(b) of the Packers and Stockyard’s Act, which was passed into law in 1921 in response to rampant abuses in the meatpacking industry.
Section 202(b) of the P&S Act
It shall be unlawful for any packer or swine contractor with respect to livestock, meats, meat food products, or livestock products in unmanufactured form, or for any live poultry dealer with respect to live poultry to:
(b) Make or give any undue or unreasonable preference or advantage to any particular person or locality in any respect, or subject any particular person or locality to any undue or unreasonable prejudice or disadvantage in any respect
For USDA’s new rule to be effective in protecting farmers, the following general principles must be included:
– This rule must ensure that industry practices do not infringe on farmers’ freedom of speech. Any change in payment based on a producer’s public statements, or failure to make a public statement, especially to government officials, should be clearly defined as undue preference, and therefore illegal under the Packers and Stockyards Act.
– Producer pay should be based solely on issues within the producer’s control, and differences in payment between producers based on issues outside of the producer’s control is defined as undue preference. This specifically includes performance resulting from inputs supplied by the integrator.
– Packers and poultry processors have been allowed to develop “common practices” that should be considered violations of the undue preference provision of the Packers & Stockyards Act (P&SA). The rule MUST NOT simply accept as lawful these current common practices of the packing and processing industry. Even “common practices” MUST be evaluated for potentially creating undue preference.
– The criteria established by the rule must be detailed and specific enough to ensure that under factual scenarios a finding of a violation will be made.
– Because of the different types of vertical integration across poultry, hog, and cattle sectors, one set of criteria will not adequately address undue preferences in all livestock sectors. Therefore, there will need to be criteria that address production relationships where the processor owns the animals during the production phase, and separate criteria that address livestock sectors where producers own the livestock prior to slaughter.
– Regulatory criteria must establish different sets of criteria for analyzing different aspects of the dealings between packers/processors and livestock producers/farmers, which may lead to undue preferences.
Specific Rule Guidance: RAFI-USA recommends the following be included in USDA’s rule this June.
– The payment each poultry grower receives under the tournament system predominantly depends on the quality and timing of processor supplied inputs and services rather than their own performance. Therefore, any difference in the quality or timing of these inputs or services provided by the processor to the grower will result in a preference in the amount of payment made to one grower over another. For this reason, there is an inherent preference in any tournament contract if the inputs and services provided offer different impacts on bird performance. Thus, the tournament system of payment should be considered a violation of the P&SA’s prohibition of undue preferences or advantages.
– There have been past instances where live poultry processors have discouraged growers from sharing information about their experiences with processors or organizing. In some of these instances, poultry processors have even taken actions against growers that harm them, creating an undue or unreasonable prejudice in violation of the P&SA. Such actions by live poultry dealers provides an undue preference or advantage to other growers that do not exercise their rights. The rule must address in detail the protection of growers for exercising their rights as protected by law.
– The rules must explicitly state that it is not necessary to show an adverse effect on competition, a restraint of trade or commerce, or anti-competitive impact in order to find an action livestock dealers, packers, or processors to be unlawful as an undue or unreasonable preference or advantage.
To learn more about RAFI-USA’s Contract Agriculture Reform Program, visit www.rafiusa.org/programs/contract-agriculture-reform
About the Rural Advancement Foundation International-USA
The Rural Advancement Foundation International-USA mission is to cultivate markets, policies and communities that sustain thriving, socially just, and environmentally sound family farms. RAFI-USA works nationally and internationally, focusing on North Carolina and the southeastern United States. RAFI-USA is a 501(c)(3) nonprofit organization based in Pittsboro, North Carolina and incorporated in 1990.
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