By TIM THORNBERRY
Kentucky Correspondent WASHINGTON, D.C. — In June, the USDA’s Office of Grain Inspection, Packers and Stockyards (GIPSA) issued a proposed rule that would effectively “increase fairness for poultry farmers and protect competition in poultry markets.”
That proposal has created some stir between groups, that basically represents the interest of farmers versus those in the industry. According to the USDA, the proposed rule, required by the 2008 farm bill through existing authority under the Packers and Stockyards Act, would provide significant new protections for producers against unfair, fraudulent or retaliatory practices.
“Concerns about a lack of fairness and commonsense treatment for livestock and poultry producers have gone unaddressed far too long,” said USDA Secretary Tom Vilsack. “This proposed rule will help ensure a level playing field for producers by providing additional protections against unfair practices and addressing new market conditions not covered by existing rules.”
Those concerns – which have been discussed for years, noted the USDA – include the increasing consolidation and vertical integration in the livestock and poultry marketplace, and shrinking farm numbers.
In the poultry industry, most farmers contract with companies that provide everything from the feed to the chicks. Producers, in turn, raise the chickens to processing weight, then those contracted companies pick up the chickens and take them to processing facilities they often own.
The farmers most likely have invested heavy amounts of money into their operations, often putting up their farms for collateral to be able to produce at such a large scale. Often they need to make upgrades to their operations under the directive of the contracted companies.
Some producers have said their contract companies have threatened to stop bringing chickens to them if the upgrades aren’t made. This all leads to the possibility of unfair practices, argue many, and the sooner the rules are adopted, the better. “These rules are well within both the original intent of the Packers and Stockyards Act, as well as the specific language in the 2008 farm bill directing rulemaking on undue preference and other issues critical to achieving fair markets for family-sized farmers,” said Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition.
“The rules will also clarify for the courts that a basic intent of the Packers and Stockyards Act is to provide a legal remedy and redress for individual farmers and ranchers who show that they have been harmed by unfair or deceptive practices. The farmers and ranchers we represent strongly support this proposed rule as an important first step to address corporate control of the livestock sector, and restore a degree of fairness to the marketplace.”
“Clarifying for the courts” may be the operative words. The National Chicken Council (NCC), a nonprofit trade association representing the U.S. chicken industry, states the rule proposal could “bring about radical change in the relationship between the poultry companies and the farmers who work for them.”
In a prepared statement listing the implications that could occur if the rule is placed into effect, the NCC suggested it will only create a “tidal wave” of litigation.
The statement closes by stating, “The broiler industry has prospered by growing chickens to meet the market demand for quality products. The proposed rules will make it much more difficult to reward growers who meet quality-related objectives.”
“Prospered” is an understatement if figures quoted by the USDA are correct.
The agency notes “in the poultry industry today, a grower makes 34 cents per bird, while the processing company, however, on average makes $3.23 a bird.”
The NCC pointed out one of the major sticking points in the rules is the so-called “tournament” system of performance-based compensation, in which growers are rewarded or penalized based on their performance in raising chickens efficiently.
The USDA rule states: “No live poultry dealer shall offer a poultry growing arrangement containing provisions that decrease or reduce grower compensation below the base pay amount.” The base payment, as defined by the USDA, is a fixed fee per pound of live meat produced.
The NCC notes in its statement that “to say that no one could make less than the average ‘base’ pay is the same as saying that no one’s performance is below average, which is not true. If below-average growers are compensated the same as average growers, then there will be no money left for above-average growers.
“If growers can no longer compete for above-average compensation, what is their incentive to work hard and invest in their facilities, which is necessary to achieve above-average performance?”
Becky Ceartas, Contract Agriculture Reform Program director with the Rural Advancement Foundation International-USA (RAFI) said the chicken companies are using fear and intimidation to coerce growers to act against their own self-interest and, because the companies have so much control over the operations, the guidelines are necessary. “The company has a lot of control over what the grower gets that determines how they are paid,” she said. “These rules will simply level the playing field between the grower and the companies. It clearly defines what is an unfair practice and what is prohibited, that will help both the companies and the growers.”
The RAFI has accused the NCC of distributing misleading information about the rule proposal.
The comment period has been extended to Nov. 22. For a list of the proposed rules or for those interested in commenting, go to www.gipsa.usda.gov
For more on the RAFI, visit www.rafi usa.org and details from the NCC is at www.nationalchickencouncil.com |
