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Blog | June 5, 2024

Farm Aid welcomes new USDA rule, an important step towards broader fairness for poultry growers in the U.S.

As a member of Campaign for Contract Agriculture Reform (CCAR), Farm Aid embraces USDA’s Packers and Stockyards Act proposed rule on “Poultry Grower Payment Systems and Capital Improvement Systems,” which will infuse basic fairness requirements into poultry grower payments systems and capital upgrade requirements.

On June 3, 2024, Secretary of Agriculture Tom Vilsack announced the new proposed rule under the Packers and Stockyards Act that will make significant reforms in the payment system, often referred to as the ‘tournament’ or ‘ranking’ system, commonly used by poultry companies to pay contract poultry growers. The rule also addresses circumstances where poultry companies unfairly force poultry growers with whom they contract to make expensive capital equipment upgrades to their poultry houses, at their own expense.

Specifically, the proposed rule would do the following:

  • Provide growers with a clear base price in contracts, by prohibiting deductions from the base price in contracts for broiler chicken growers, permitting only bonuses for performance;
  • Establish a “duty of fair comparison” to ensure that comparisons between growers are conducted in a reasonable and equitable way.
  • Establish disclosure requirements to enable growers to better identify risks that may arise on capital improvement practices and enhance the ability for USDA to enforce existing prohibitions on unfair capital improvement practices.

Steve Etka, the Policy Director for CCAR, says:

“This new proposed rule is an important next step in bringing fairness to the contracting practices used by large poultry companies to contract with farmers who raise chickens for them.”

It builds on a prior Packers and Stockyards rule that requires poultry companies to make full disclosures to prospective poultry growers about what they can expect if they sign a contract to grow chickens for the company, and to also disclose details to existing growers about how their pay is calculated.

The new proposed rule also builds on a July 2022 U.S. Department of Justice Consent Decree related to the merger between Sanderson Farms and Wayne Farms, in which the merged poultry integrator firms agreed to make certain reforms to address abusive practices in how they pay contract poultry growers.

This new proposed rule is the third of four important Packers and Stockyards Act rule updates being promulgated by USDA to address abusive and deceptive practices of poultry companies and meatpackers in their dealings with farmers and ranchers. Two rules, the ‘Transparency in Poultry Grower Contracting and Tournaments,’ and the ‘Inclusive Competition and Market Integrity Under the Packers and Stockyards Act,’ are now in effect. The fourth Packers and Stockyards Act rule, the proposed rule on “Unfair Practices, Undue Preferences, and Harm to Competition Under the Packers and Stockyards Act” is at the Office of Management and Budget awaiting clearance.

Visit the USDA’s website to read more about the proposed rule.

The Campaign for Contract Agriculture Reform (CCAR) is a national alliance of organizations working to provide a voice for farmers and ranchers involved in contract agriculture, as well as the communities in which they live. CCAR advocates for bringing equity to the contract negotiating process and against the exploitation of farmers, ranchers, and poultry growers in the meat and poultry industry.

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