By Skylar Schneider, NFU Executive Assistant
Nearly 100 years ago, Congress passed the Packers and Stockyards Act of 1921, which was written to both address abuses by major livestock and poultry meatpackers as well as ensure effective competition within the market. The act prohibits unfair practices and undue preferences, and aims to shield producers from anti-competitive practices that emerge in highly concentrated markets.
Markets are considered non-competitive when just a few companies control more than 40% of the market share. Concentration among the top four companies in the beef, pork and poultry industries are currently 85%, 74%, and 54%, respectively. This consolidation has given these large companies near-limitless power when dealing with individual producers, who consequently have almost no control over the prices they are paid or the way in which they raise their animals. Unfortunately for producers, the “unfair practices and undue preferences” prohibited by the Packers and Stockyards Act were never defined, thus leaving the act open to interpretation; these interpretations have generally favored the interests of multinational meatpackers over those of individual producers.
In 2008, Congress directed the U.S. Department of Agriculture (USDA) to clarify what constituted unfair practices and undue preferences in the Farm Bill. A series of field hearings were subsequently held, followed by the release of proposed rules in 2010, which garnered more than 60,000 public comments. While National Farmers Union and others lobbied to ensure these rules contained strong and enforceable language, the multinational meatpackers and their industry front groups fought back, lobbying Congress to block the rules. For the next six years, a congressional rider – known as the GIPSA rider – was attached to the federal appropriations bills, effectively blocking the USDA from finalizing the rules. The GIPSA rider was finally excluded from the appropriations bill passed at the end of 2015, allowing the USDA to begin writing new rules. In December 2016, USDA released the Farmer Fair Practice Rules.
The Farmer Fair Practice Rules consist of one interim final rule and two proposed rules. The interim final rule deals with competitive injury disputes for contract growers. Currently, contract poultry growers must prove harm for the entire $48 billion chicken industry rather than harm to themselves when seeking relief from poultry companies for abusive contract practices. This outrageous interpretation of the Packers and Stockyards Act not only places undue burden on individual growers – it also allows the meatpacking industries to continue abusive practices largely free of consequences. The interim final rule eliminates that burden, thereby taking some power from the multinational meatpackers and placing it with the individual farmers.
The two proposed rules bring more clarification to the Packers and Stockyards Act by defining what constitutes unfair practices and undue preferences. Included in these definitions are well-documented abuses like retaliating against a producer for starting an association of producers and intentionally giving a contract poultry grower lower quality feed or chicks.
Please consider standing up for family farmers and ranchers by submitting comments to urge the USDA to quickly implement the Farmer Fair Practices Rules. While the meatpacking industry will invest substantial resources towards blocking these rules, NFU will continue to fight for these basic protections for American farmers and ranchers.