The Agriculture Department has finalized a final rule limiting poultry integrators from paying reduced rates to producers through tournament ranking systems while still allowing for bonuses.
The rule, which was proposed in June and released in final form Tuesday, will require "processors to fairly and transparently pay broiler growers and limit excessively variable compensation, to operate tournaments such that growers can be more confident that comparisons are fair, and to provide growers with key information when they request growers make upgrades,” according to a press release.
The regulations will take effect July 1, 2026.
“This is a rule that is essentially creating a much more balanced and fair tournament system in which producers can earn additional bonuses but won’t necessarily be penalized,” Agriculture Secretary Tom Vilsack told reporters. He said the rule will provide producers with "additional input concerning their responsibilities" and “a better understanding of what the integrators’ responsibilities are relative to input requirements."
The prohibition on deductions based on the tournament system was inspired by a 2023 settlement between the Justice Department and poultry processors including Cargill and what are now Wayne-Sanderson Farms in response to a lawsuit brought by the Justice Department, said Andy Green, USDA senior adviser for fair and competitive markets. It also stipulates that a tournament can only result in 25% of the total compensation, a concept also included in the settlement.
The rule is the third Packers and Stockyards Act rulemaking finalized by the agency during the Biden administration. The first requires poultry integrators to disclose average gross payments over a five-year span, as well as other information to growers, while the second prohibits packers and contractors from taking actions based on a producer’s race, color, religion, national origin, sex, disability, marital status and age.
A fourth rule was proposed by the agency last September and would have further defined practices that can be deemed "unfair" under the Packers and Stockyards Act, allowing the livestock antitrust law to prohibit conduct that “harms market participants” and “harms the market.” On Monday, the agency said it was withdrawing this rule, citing the “complexity and length of time needed to finalize that regulation."
“Knowing that we didn’t have enough time to finish the process, we thought is was the wisest course to withdraw the rule,” Vilsack told reporters.
When asked by a reporter if he had concerns an incoming administration might try to roll back the finalized tournament system rule, Vilsack pointed to the DOJ settlement’s inclusion of many of the same provisions. “When one of the largest entities that’s engaged in a tournament system has agreed to these provisions, I think it’s an indication that in fact, this does work and can create a fair market for both producers and integrators.”
He added that he believes some farmer groups will express support for the rule “because they understand and appreciate that the current system is not a level playing field.”
“This rule basically addresses many of the concerns that we’ve heard from rank-and-file producers who just want a fair shake,” Vilsack said. "They don’t want the field necessarily tilted in their direction. They just don’t want to have to work uphill."
The Campaign for Contract Agriculture Reform applauded the finalized rule in a release.
Contract poultry growers enter the business expecting a fair working relationship with their poultry company, only to realize the payment system is inherently stacked against them and penalizes them over things beyond their control,” said Steve Etka, the organization's policy director. “This rule establishes some important guardrails around the ‘tournament’ payment system to end deceptive aspects of the system and require the use of commonsense fair business practices.”
National Chicken Council President Harrison Kircher, however, said the rule "will lead to rigid, one-size-fits-all requirements on chicken growing contracts that would stifle innovation, lead to higher costs for consumers, decrease competition, and cost jobs by driving some of the best farmers out of the chicken business."
“The vast majority of chicken farmers in rural America are happy and prosper raising chickens in partnership with companies, and they don’t want the government meddling on their farms and telling them how they should run their businesses," Kircher said in a statement.
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This story was updated to include additional reaction.
