Industry to review Farmer Fair Practices Rules

by Erica Shaffer
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WASHINGTON – The US Dept. of Agriculture released its Farmer Fair Practices Rules aimed at protecting the rights of farmers, but agriculture groups argued that the rules will lead to baseless litigation.

The Farmer Fair Practices Rules include an interim final rule and two proposed rules. The interim final rule will establish USDA’s long-time position that it is not necessary to demonstrate that an unfair practice harms the entire market in order to prove a violation of the Packers and Stockyards Act. USDA said that such an overly broad interpretation has put family farmers at a disadvantage when pursuing their rights under the Act.

A proposed rule regarding unfair practices clarifies what the Grain Inspection, Packers and Stockyards Administration (GIPSA) views as practices that clearly violate the act and would establish criteria to protect farmers. The third proposed rule establishes criteria that GIPSA would consider in determining whether a live poultry dealer has engaged in a pattern or practice to use a poultry grower ranking system unfairly. All three rules are subject to a 60-day comment period.

USDA said the trio of new rules would level the playing field for farmers. For example, in the poultry industry where the four largest processors control 51 percent of the broiler market and 57 percent of the market for turkey meat, the new rules would protect poultry producers from retaliatory practices. For example, if poultry producer attempts to organize other producers to bargain for better pay or publicly express dissatisfactions with their treatment by a processor, processors could require growers to make investments the grower can’t afford or terminate contracts with little notice.

“For years, American farmers have been calling for protections against the most damaging unfair and deceptive practices confronting family farms across the country,” Agriculture Secretary Tom Vilsack said in a statement. “Poultry growers in particular are vulnerable to market risks and concentration in the processor market. All too often, processors and packers wield the power, and farmers carry the risk. Today, USDA is taking a big step toward providing the protections that farmers deserve and need.”

But the National Chicken Council (NCC) came out strongly against the Farmer Fair Practices Rules, saying the new rules “threaten to upend the structure of the livestock and poultry industries,” raise prices for meat and poultry and cost jobs in rural areas.

NCC President Mike Brown said in a statement that the rules “…could lead to rigid, one-size-fits-all requirements on chicken growing contracts that would stifle innovation, lead to higher costs for consumers, and cost jobs by forcing the best farmers out of the chicken business. The interim final rule on competitive injury would open the floodgates to frivolous lawsuits.

“Some of these provisions would also have a detrimental impact on the welfare of the birds by eliminating competition and the incentive to provide the best care possible on the farm,” Brown continued. “The performance-based contract structure of modern poultry production was instinctively designed to put the well-being of the birds as the top priority, as incentives are given to farmers who raise the healthiest birds, take risks and work hard. It incentivizes farmers to do their best, to compete, just like every other business in America or any other free market.”

The Farmer Fair Practices Rules are especially troubling to the cattle industry, said Tracy Brunner, president of the National Cattlemen’s Beef Association (NCBA) in a statement.

“As we have consistently stated, if adopted, this rulemaking will drastically limit the way our producers can market cattle and open the floodgates to baseless litigation,” Brunner said. “In a time of down cattle markets, the last thing USDA needs to do is limit opportunity. The fact of the matter is we don’t trust the government to meddle in the marketplace.”

Brunner went on to say that USDA has exceeded its statutory limitations, in addition to limiting marketing options for beef products. “If USDA was interested in real solutions rather than increased government regulations, they wouldn’t have rushed these rules out the door at the very close of the Administration’s term, bypassing any input from industry. Cattlemen and women don’t appreciate Secretary Vilsack throwing a grenade in the building as he abandons it.”

NCBA said the organization “will be working staunchly with the new Administration and new Congress to prevent these irresponsible regulations from harming our nation’s farmers and ranchers.”

“We will be reviewing these rules with a fine-tooth comb and providing comments to the agency,” Brown said. “Beyond that, all options are on the table. We will be working with the new administration and Congress to create jobs and help rural America prosper, rather than imposing more government regulations that stifle business and growth and threaten American jobs.”

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