A new final rule from USDA’s Agricultural Marketing Service would prohibit companies from taking retaliatory or discriminatory action against producers.
USDA’s new Inclusive Competition and Market Integrity under the Packers and Stockyards Act final rule, rolled out Tuesday by the department, specifically outlines several practices that would be off the table for the integrator companies doing business with growers that produce the nation’s pigs, chickens, and other animals under contract with agribusinesses.
“This is going to help producers receive protection against packers, swine contractors and live poultry dealers who may be trying to terminate them on a pretext — for example, claiming that a poultry termination is on animal welfare grounds, or perhaps refusing to deal someone because they say their cattle quality is poor when it's not,” Ag Secretary Tom Vilsack told reporters.
An AMS fact sheet specifically spells out several protections the rule offers for producers, including protection from discrimination based on race, sex, disability, marital status and more. There’s also language prohibiting retaliation if a producer is found to have communicated with a government entity, joined a producer or grower association, explored a business relationship with another entity, or asserted any rights spelled out in a contract or under the law.
Finally, the rule bans “false or misleading statements or omissions of material information” when companies form — or terminate — contracts with producers or when performance is being evaluated. Companies would also be barred from such statements regarding refusal to offer a contract.
The rule is one of several USDA has been working to finalize since first pledging to update the enforcement of the PSA in 2021. USDA began rolling out proposals to do so in 2022.
The issue has split the ag industry, with many producer and packer groups concerned about the potential for additional litigation that could come under the new PSA language.
Just last week, National Cattlemen’s Beef Association President Mark Eisele penned an op-ed that argued “these Packers and Stockyards rules could endanger this success and send cattle producers back to the days of low-quality beef — or worse — put them out of business.” National Farmers Union Vice President Jeff Kippley countered with an op-ed of his own, arguing that “given the abundant evidence of price fixing and unfair practices in the livestock industry, it's clear that maintaining the status quo won't foster innovation, competition, or robust market oversight.”
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The National Sustainable Agriculture Coalition echoed NFU's thoughts. NSAC Policy Specialist Billy Hackett called the rule "an important and long-awaited step to protect the rights and agency of livestock and poultry farmers."
“The deceptive and unfair tactics of corporate integrators in recent decades – tactics that writers of the century-old P&SA could not have predicted – have led to many instances of discrimination and retaliation or otherwise imbalanced contractual relationships against producers who until now had no explicit protections or avenues for recourse,” he added.
But in a statement, North American Meat Institute President and CEO Julie Anna Potts argued the regulations, while addressing actions that “have no place in the meat industry,” are unnecessary as “other federal statutes and state laws already exist to address the rare instances” the practices laid out in the text might occur.
“The Biden Administration says these changes to the PSA’s regulations are about increasing competition, but they have nothing to do with competition,” she said. “These changes are simply an attempt to assert even more federal authority to regulate the equities of industry business practices, clogging the federal courts with every contract dispute.”
For his part, National Chicken Council President Mike Brown said the new regulation was part of an agenda “being driven by far-left activists, anecdotes from a handful of disgruntled growers, and trial attorneys who are seeking to shape the regulatory environment to line their own pockets.”
The rule is slated to go into effect 60 days after being formally published in the Federal Register.
Story updated to include NSAC, NAMI and NCC reactions.
Steve Davies contributed to this story.
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