USDA to Issue Livestock Competition Rules

USDA plans in June to propose rules that would bar meatpackers from unfairly favoring big cattle feedlots when they buy animals for slaughter, and to give poultry producers more leverage when dealing with processors.

USDA plans in June to propose rules that would bar meatpackers from unfairly favoring big cattle feedlots when they buy animals for slaughter, and to give poultry producers more leverage when dealing with processors.

Section 11006 of the 2008 farm bill requires USDA to issue rules that will enable the department to determine whether packers or processors have exercised an "undue or unreasonable preference" in their acquisition of animals. It also seeks to uncover whether any other questionable activities have taken place regarding poultry and swine producers who have entered into production contracts with processors.

Specifically, the proposal would establish criteria USDA's Grain Inspection, Packers and Stockyards Administration will consider in determining whether a live poultry dealer has provided reasonable notice to poultry growers of any suspension of the delivery of birds under a poultry growing arrangement; when a requirement of additional capital investments over the life of a poultry growing arrangement or swine production contract constitutes a violation of the Packers and Stockyards Act of 1921. 

Other criteria will specify how GIPSA can determine whether a live poultry dealer or swine contractor has provided a reasonable period of time for a poultry grower or a swine production contract grower to remedy a breach of contract that could lead to termination of the poultry growing arrangement or swine production contract. 

The 2008 farm bill also instructed USDA to issue regulations to ensure that producers and growers are afforded the opportunity to fully participate in the arbitration process if they so choose.

In addition to proposing regulations in accordance with the farm bill, GIPSA is proposing regulations that would prohibit certain conduct because it is unfair, unjustly discriminatory or deceptive, in violation of the P&S Act. These regulations are intended to address the increased use of contracting in the marketing and production of livestock and poultry by entities under the jurisdiction of the P&S Act, and practices that result from the use of market power and alterations in private property rights, which violate the spirit and letter of the P&S Act. 

The effect increased contracting has had, and continues to have, on individual agricultural producers has significantly changed the industry and the rural economy as a whole, making these proposed regulations necessary, proponents note.

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