The Trump administration is seeking an 18-month delay of a Biden-era USDA poultry competition rule currently set to take effect on July 1.
Erin Morris, administrator of USDA's Agricultural Marketing Service, wrote in a Federal Register notice that USDA needs more time to consider the estimated costs and legal implications of implementing the rule, which would bar poultry integrators from reducing producer payments under tournament ranking systems while still allowing producers to receive bonuses. The agency is proposing to delay the date the rule becomes effective to Dec. 31 of next year.
The rule, finalized in January 2025 in the final days of the Biden Administration, also stipulates that a tournament can only result in 25% of a producer's total compensation. It was one of three new Packers and Stockyards rules finalized under that administration.
In the Federal Register notice, Morris said there is still uncertainty over whether the rule's benefits would outweigh its costs. She pointed to challenges gauging the impact on grower incentives of a provision capping variation in performance premiums and a provision that keeps integrators from applying performance discounts.
"At the time of publication, AMS estimated the final rule would result in significant costs to both [livestock poultry dealers] and poultry growers with no quantifiable benefits," Morris wrote. "AMS acknowledged it could not rule out the possibility of increased compliance costs, fewer growers participating in the market, and/or reduced production efficiencies, all of which could lead to higher consumer prices."
While "research indicates growers tend to raise broilers more efficiently with tournament contracts than with other forms of contracts or when LPDs raise broilers in their own facilities," there is "no literature addressing how growers’ incentives might change if performance discounts were not part of the tournament or if variability in performance payments were limited," she wrote. She added that if changes to tournament contracts made under one part of the rule "result in even very small decreases in feed efficiency, costs from implementation of the amendments could be considerably larger than the value of the benefits to growers due to reduced variability in compensation."
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According to the notice, AMS economists expect livestock poultry dealers will see $4.9 million in ongoing administrative costs for each of the first four years after the rule becomes effective and $4.1 million annually after. Growers would see approximately $249,000 in ongoing quantified administrative costs each year, it says.
In a statement, National Chicken Council President Harrison Kircher applauded the proposed delay and called for a full rescission of the rule, which he said was "un-American" and "threatened to dismantle an efficient and successful industry model that has worked well for decades and helps keep chicken affordable."
"The Poultry Grower Payment Systems and Capital Improvement Systems rule would effectively ban bonuses for the best chicken farmers," he said. "Eliminating this performance-based compensation system would pay all farmers the same, regardless of hard work, investments, housing conditions, or bird welfare practices. It would drive experienced farmers out of the industry and reduce efficiency and competition in rural markets."
In a statement, National Farmers Union President Rob Larew said delaying the rule "is a disservice to family farmers who deserve a fairer system."
"Growers have long raised concerns about the unfairness of tournament pricing and the amount and quality of information provided to them by poultry companies," Larew said. "The rule establishes guardrails on the tournament system, giving producers more certainty and transparency so they can operate their farm businesses successfully."
American Farm Bureau Federation President Zippy Duvall said, "the decision by the administration to tell contract poultry growers to take a back seat by delaying the effective date by a year and a half is disappointing."
"Growers have spoken on the need to level the playing field with more transparency surrounding how they are compensated and they believed progress was being made," Duvall said in a statement. "AFBF looks forward to reminding the administration during the public comment period that farmers come first and poultry companies should not be prioritized over the men and women who work to put food on the table for all of America’s families.”
Steve Etka, the policy director for the Campaign for Contract Agriculture Reform, also criticized the decision.
“The Poultry Grower Payment Systems and Capital Improvements Systems rule finally took meaningful steps to right the wrongs of the payment system," he said in a statement. "Just when it was scheduled to provide some relief and income predictability for U.S. poultry farmers, USDA has proposed to pull the rug out from under them to feather the beds of multi-billion-dollar meat conglomerates.”
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Editor's note: This story has been updated with additional reaction.
