Friday, December 09, 2011

Final rule will protect contract chicken and hog farmers, but not as much as administration wanted

The U.S. Department of Agriculture on Thursday published a final rule that will "protect contract poultry growers and pork producers," Agri-Pulse reports. The rule is a shadow of an earlier one that "ran into heavy lobbying from the meat industry and opposition in Congress," the Daily Yonder notes. "The House cut off funds for enforcement of the original rule," and prevailed in negotiations with the Senate.

The rule will take effect 60 days after publication, and mimics parts of the 2008 Farm Bill. It allows contract growers to decline arbitration of contract disputes, now mandatory under most contracts, and sets criteria for the Grain Inspection, Packers and Stockyards Administration to determine if the arbitration process is meaningful for growers and producers. The rule sets criteria to require "reasonable notice" by a poultry processor to a farmer of "any suspension of the delivery of birds," how to determine if a requirement for additional capital investment violates the Packing & Stockyards Act, and whether a packer, swine contractor or poultry integrator has given adequate notice for a grower to remedy a possible breach of contract before termination.

"While the Final Rule is a good first step, it is certainly not a last step," National Farmers Union President Roger Johnson told Agri-Pulse. USDA's plan to requireme the collection and posting of sample contracts and the "need for producers to show harm to competition" were blocked by the 2012 agricultural appropriations bill, but the department says it remains "committed to promoting a fair and transparent marketplace," Agri-Pulse reports. (Agri-Pulse is a subscription-only newsletter but offers a free trial.)

"The rule focuses primarily on contract arrangements between poultry and hog growers, companies and packers, leaving out, for now, some of the most contentious provisions relating to beef cattle marketing," John Maday, managing editor of Drovers CattleNetwork writes.

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