Friday, June 18, 2010

USDA proposes sweeping rules to discourage meatpackers from abusing producers of livestock

The Department of Agriculture today proposed big changes that it said would protect livestock producers from "unfair, fraudulent or retaliatory practices" by meatpackers. "Concerns about a lack of fairness and commonsense treatment for livestock and poultry producers have gone unaddressed far too long," Agriculture Secretary Tom Vilsack in a press release, which said the rules would, among other things:
   * Provide further definition to practices that are unfair, unjustly discriminatory or deceptive, including outlining actions that are retaliatory in nature, efforts that would limit a producer's legal rights or representations that would be fraudulent or misleading.
   * Establish new protections for producers required to provide expensive capital upgrades to their growing facilities, including protections to ensure producers have the opportunity to recoup 80 percent of the cost of a required capital investment.
   * Prohibit packers from purchasing, acquiring or receiving livestock from other meatpackers.
   * Establish a fair and equitable process for producers who choose to use arbitration to remedy a dispute and require clear and conspicuous print in the contract to ensure producers are provided the option to decline arbitration.
   * Provide poultry growers with a written notice of a company's intent to suspend the delivery of birds under a poultry growing arrangement at least 90 days prior to the date it intends to suspend the delivery.
   * Improve market transparency by making sample contracts (except for trade secrets or other confidential information) available on GIPSA's Web site for producers.
   * Improve competition in markets by limiting exclusive arrangements between packers and dealers.
For more details, go to this USDA Web page.

"The 2008 Farm Bill required USDA to carry out specific rulemaking to improve fairness in livestock and poultry marketing," notes Rita Jane Gabbett of MeatingPlace. Vilsack told her and other reporters that some producers were afraid to participate in workshops held on the issue "for fear of retaliation" by packers. "He characterized recent court decisions upholding the need for a producer suing a processor for unfair practices to also show harm to the regional market as akin to having to show that the theft of your car impacted all your neighbors." He said companies who are "treating folks right ...  shouldn't be negatively impacted by these rules at all. But it certainly is a message to those who have maybe in the past taken advantage of folks that this is not going to be tolerated." (Read more)
 
"Producer groups praised USDA's dramatic proposals," Gabbett reports in a follow-up story. "R-CALF USA, which represents a group of cow/calf operators and feedlot owners ... specifically praised the proposed rule that would enable a producer to prove a violation of the Packers and Stockyards Act without the need to also prove predatory intent, competitive injury or likelihood of competitive injury."

The Campaign for Contract Agriculture Reform "praised the USDA proposals across the board," Gabbett reports. "These new rules will help greatly to level the playing field for contract poultry growers," Berryville, Ark., poultry grower Mickey Box said in a news release. "For too long, the chicken companies have been able to force farmers to sign unfair contracts that make it nearly impossible for us to make ends meet." Mike Weaver, president of the Contract Poultry Growers Association of the Virginias, said "The rules provide balance and fairness so that growers aren't always worried that the company will yank away their livelihoods without any notice or just cause."

The National Chicken Council called the plan "one-sided, unrealistic and not in accordance with court rulings." It said the regulations were "clearly drafted to satisfy a small number of activist growers and will do nothing to enhance the business of the great majority of broiler producers who are satisfied with the current system."

A spokesman for the National Meat Association "questioned the proposed ban on packers trading livestock," calling it "sweeping and arbitrary," Gabbett reports. "The American Meat Institute had the harshest words," saying "USDA is attempting to turn the clock back on the livestock and meat marketing practices that have made the U.S. meat production system the envy of the world." (Read more)

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