Poultry industry objects to new USDA rules on contracts – Big companies hate rules that reduce their abusive power …

Poultry industry objects to new USDA rules on contracts

Jeremy Cox , jcox6@dmg.gannett.com 5:34 a.m. EST December 19, 2016

(Photo: Staff photo by Ralph Musthaler)

Family farmers could get more leverage in their dealings with chicken processors under new rules proposed by the outgoing Obama administration. But a Delmarva-based trade group doubts incoming Trump regulators will finalize the protections.

The rules, if enacted, would give the U.S. Department of Agriculture "considerable power to inject the federal government into voluntary business arrangements between growers and chicken companies," Bill Satterfield, executive director of the Delmarva Poultry Industry, said in a statement.

The group argues that the measures would weaken incentives for farmers to work hard and produce healthy birds. That could spell a decline in the welfare of chickens and turkeys raised by so-called "contract growers," the industry says.

Supporters of the new rules say they will protect family farmers from abusive, competition-killing contracts. In the eyes of some groups, they don’t go far enough.

"Hopefully, these rules can provide a foundation for strengthening farmer protections in the face of an increasingly consolidated poultry, hog and cattle slaughter and processing industry," Food & Water Watch, a Washington-based environmental group, said in a statement of its own.

The Grain Inspection, Packers and Stockyards Administration rules, announced Dec. 14, consist of one interim final rule and two proposed rules — all dealing with the business relationships struck between processors and farmers.

The interim final rule would make it easier for farmers to sue meat packers over unfair practices. Under the rule, farmers would no longer have to prove that the practices in question harm the entire market.

One of the proposed rules outlines the kinds of practices regulators will deem to be unfair, and the other puts pressure on processors to treat farmers fairly in the ranking systems that partially determine their pay.

"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," Agriculture Secretary Tom Vilsack said. "Today, USDA is taking a big step toward providing the protections that farmers deserve and need."

The regulations could have a broad economic reach on the Delmarva Peninsula, home to nearly 1,600 farm families under contract to five chicken processors.

The federal changes are similar to a raft of measures that stalled in the Maryland General Assembly last spring. The Maryland Farmers’ Rights Act included a requirement of 90 days’ written notice of a contract cancellation and barred companies from retaliating against growers.

READ MORE: Why the Farmers’ Rights Act ran into opposition in Annapolis.

READ MORE: How Maryland’s chicken industry fared during the last state legislative session.

While the federal rules apply to the hog and cattle industry as well, it is practices within the poultry industry that have received the most criticism over the years.

The industry is highly integrated, with chicken companies supplying the birds and the feed and the farmers offering the housing and the day-to-day care of the birds. The growers are subject to a "tournament" system that allots higher pay to those who raise bigger chickens for less cost.

“For too long, family livestock producers and poultry growers have endured a heavily concentrated market with little protection against unfair, anti-competitive practices," said National Farmers Union President Roger Johnson. "Both producers and consumers benefit when the markets are competitive and the practices and process are transparent."

The USDA’s efforts to craft the rules dates back to 2008, when that year’s Farm Bill gave the agency the go-ahead to strengthen the Stockyards Administration’s regulations.

For its part, the National Chicken Council blasted the proposed regulations as solutions in search of a problem.

Bill Satterfield is the executive director of the Delmarva Poultry Industry, based in Georgetown. (Photo: File photo)

“Let’s call the recently rebranded ‘Farmer Fair Practices Rules’ what they really are — the ‘Gift to Trial Lawyers Rules’ that USDA is trying to get rammed through in the last weeks of this administration, ignoring years of congressional intent in the process," said Mike Brown, the council’s president.

About 96 percent of the nation’s meat chickens are raised by contract farmers, Census figures show. The agreements between chicken companies and growers are voluntary and don’t require any further government policing, Satterfield said.

"They are not forced to grow chickens against their will," he said. "These contracts provide incentives for chicken growers to do a better job and be rewarded for their hard work and success."

Each rule faces a 60-day public comment period that doesn’t expire until after President-elect Donald Trump takes office.

Satterfield said he hopes the new administration follows its own party’s written platform, which states that the "draconian rules" regarding the marketing of poultry and livestock must be curbed through a "fundamental restructuring" of the rules system.


On Twitter @Jeremy_Cox

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