Wall Street Journal: USDA Drops Tighter Rules on Meatpackers

USDA Drops Tighter Rules on Meatpackers

Move is blow to farmers and advocacy groups that have sought checks on meatpackers’ clout in rural America

Secretary of Agriculture Sonny Perdue addressed the School Nutrition Association convention in Atlanta in July. PHOTO: ASSOCIATED PRESS

By Jacob Bunge and Heidi Vogt

Oct. 17, 2017 1:45 p.m. ET

The U.S. Department of Agriculture has dropped efforts to tighten regulations governing how meat companies deal with the farmers who raise the nation’s poultry and livestock.

The move is a blow to farmers and advocacy groups that for years have sought checks on meatpackers’ clout in rural America, where nearly one million producers raise animals for the U.S. meat industry. Meatpackers argued that the rules would have mired both meat processors and farmers in costly litigation and made U.S. meat more expensive.

The Agriculture Department on Tuesday dropped the rules outlined last December, citing “serious legal and policy concerns” if they were implemented.

The planned changes aimed to give livestock and poultry producers a freer hand to challenge potential anticompetitive practices by meat companies. Nearly all domestic chickens are owned by companies like Tyson FoodsInc. and Pilgrim’s Pride Corp. , and raised by farmers under contract. A large portion of hogs are raised under similar deals, and while a smaller proportion of cattle are raised under such contracts, the beef industry had been monitoring the rules’ potential impacts.

For years, some farmers have complained about meat companies’ broad control over animals and supplies, and said existing regulations gave them limited options to contest prices or perceived retaliation by meatpackers such as influencing supplies of feed or animal drugs to affect disfavored farmers’ income.

In December, the USDA completed a rule that would have let farmers call on the agency to intervene when they believed that a meatpacker had underpaid or treated a producer unfairly. Other rules proposed at the time would have further detailed unfair practices in the meat business, and protected farmers from potential meatpacker retaliation

The agency had yet to implement the rules, and said in a series of regulatory notices that it wouldn’t proceed. Officials said they were worried about conflicting federal court precedents, and that these would “inevitably lead to more litigation in the livestock and poultry industries,” according to Randall Jones, acting administrator of the USDA’s division overseeing meatpackers.

Some poultry farmers who had pushed for the rules said they felt abandoned by the new administration and USDA Secretary Sonny Perdue, previously governor of Georgia, one of the largest chicken-producing states.

“I am extremely disappointed in the Trump administration and I’d like to know how this applies to making America great again,” said Mike Weaver, a West Virginia chicken farmer who said he posted Trump campaign signs in his front yard last year. “All this does is support the big corporations, not the farmers.”

Mr. Weaver, who also heads the Organization for Competitive Markets, said the Nebraska-based agricultural policy group will call on President Donald Trump to issue an executive order to immediately move ahead with the rules.

Meat trade groups said the USDA’s move helped the industry avoid billions of dollars in additional costs that could have arisen from farmer litigation, and avoided the threat of making U.S.-produced meat pricier for domestic consumers and foreign buyers.

"It is clear the administration took into account the thousands of comments it received and recognized these rules would have come with deep economic consequences for American poultry and livestock producers,” said Mike Brown, president of the National Chicken Council, a Washington-based group representing the U.S. poultry industry.

Write to Jacob Bunge at jacob.bunge and Heidi Vogt at heidi.vogt