WASHINGTON, Dec. 8 – USDA published a final rule today implementing 2008 farm bill provisions to protect contract poultry growers and pork producers under the Packers and Stockyards Administration Act.
The rule is a small part of the ambitious proposal made by USDA’s Grain Inspection Packers and Stockyards Administration (GIPSA) in June 2010, but blocked in large part by Congress after an outcry from poultry and meat processors and many commercial-scale producers.
Although he considered the congressional blockage a setback, Secretary of Agriculture Tom Vilsack said today that USDA would “implement these targeted protections and help provide more fairness and transparency in the marketplace.”
The final rule, to become effective 60 days after publication in the Federal Register, provisions follows the dictates of the 2008 farm bill. It includes criteria for GIPSA to consider when determining whether a poultry processor has provided reasonable notice to a grower of any suspension of the delivery of birds. It spells out how to determine whether a requirement of additional capital investment over the life of a poultry or swine production contract violates the P&S Act and how to determine whether a packer, swine contractor or poultry integrator has provided a reasonable period for a grower to remedy a breach of contract that could lead to termination of a production contract.
The rule also spells out that contracts that require arbitration to include language – on the signature page – that allows a producer or grower to decline arbitration and provides criteria for GIPSA to consider when determining if the arbitration process provides a meaningful opportunity for growers and producers to participate fully in the arbitration process.
USDA’s press release said that it had “planned to seek additional public comment on several other revised provisions” in the proposed rule, including changes in the tournament system of paying poultry growers, requirements to collect and post sample contracts and to “address the issue of need for producers to show harm to competition” to claim a P&S Act violation. USDA said that those “important provisions” were blocked by the fiscal 2012 agriculture appropriations bill. “Despite this setback, USDA and the Obama Administration remain committed to promoting a fair and transparent marketplace.”
“While the Final Rule is a good first step, it is certainly not a last step,” noted National Farmers Union President Roger Johnson. “In particular, it is critical that the competitive injury portion of the rule be implemented. Currently, a producer must prove that a packer’s anti-competitive practices damaged the entire marketplace. Clarification of competitive injury is needed so that the producer would only have to prove that his or her operation was hurt by such actions, a much more reasonable standard.
“In choosing to prevent the competitive injury portion of the rule from moving forward, Congress has clearly chosen to put the interests of large packers ahead of family farmers and ranchers,” Johnson added.
Secretary Vilsack said he was also concerned about industry concentration.
“As I travel throughout the countryside, I often hear from farmers and ranchers about their concerns with the marketplace becoming more concentrated,” Vilsack said. “While concentration certainly comes with some efficiencies, Congress recognized in the 2008 farm bill that additional protections for producers are warranted,” leading to today’s final rule.
The 61-page rule, pending publication in the Federal Register, is at https://s3.amazonaws.com/public-inspection.federalregister.gov/2011-31618.pdf
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