
U.S. Agriculture Secretary Tom Vilsack announced the third installment in a series of regulatory reforms under the Packers and Stockyards Act that was drafted with the intention to give chicken farmers better insight into companies’ payment rates for their birds, as well as institute stability and fairness in what is commonly known as the tournament system.
The rule, known as the Poultry Grower Payment Systems and Capital Improvement Systems, is designed to provide farmers with key information on capital improvements the companies require farmers to make in order to keep or renew contracts, and give farmers stronger leverage when companies do not adhere to the rules, USDA explained in a press release.
“During my time as Secretary of Agriculture, time and again USDA has been confronted with the stories of farmers who lost their life’s savings or went bankrupt because of an unfair system they entered into when they agreed to raise animals for a major meat conglomerate. It is USDA’s job to advocate for farmers, and these regulatory improvements give us the strongest tools we’ve ever had to meet our obligations under the Packers & Stockyards Act,” said Vilsack.
“As the bedrock of so much that our society depends on, and the pillar of rural economies, farmers deserve honesty, certainty and options when it comes to their hard work.”
This rule takes effect on July 1, 2026, following publication in the Federal Register. A preview of the final rule can be found on the Poultry Grower Payment Systems and Capital Improvement Systems webpage.
Poultry industry responds
The National Chicken Council (NCC) expressed its opposition to the rule.
NCC President Harrison Kircher, in a statement, said this rule is an example about how the administration of President Joe Biden and Vice President Kamala Harris is “racing to impose the last pieces of its anti-business regulatory agenda,” with only six days remaining in the current administration.
“This rule – which Congress never asked for – 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,” said Kircher.
“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.”
However, the president of one contract grower organization said he felt the rule could be beneficial.
"We applaud the USDA for finalizing their third rule reform to the Stockyards and Packers Act,” said Jonathan Buttram, president of the Alabama Contract Poultry Growers Association. “With so much outside of the control of contract poultry growers, it makes common sense to not base so much of their compensation on the tournament system.”
The American Farm Bureau Federation (AFBF) also applauded the USDA for the rule.
“Farm Bureau appreciates USDA’s commitment to bringing greater fairness to farmers who raise poultry under the tournament system. AFBF has long advocated for more stability in the sector and for increased transparency in how farmers are paid. This rule takes a step in the right direction, including requiring companies to provide insight into payment rates and details on capital improvements as part of a contract renewal," said AFBF President Zippy Duvall.
“The final rule will benefit contract poultry growers nationwide. We stand ready to work with the new administration and Congress to emphasize the importance of leveling the playing field for farmers, and we will oppose any future legislative or regulatory efforts to weaken or destabilize protections for America’s contract poultry growers.”
Earlier USDA rules
Prior to drafting the most recent rule, Vilsack and the Biden-Harris administration finalized two other rules regarding the enforcement of the Packers & Stockyards Act with hopes of creating a fairer dynamic between integrated processing companies and contract farmers.
- Transparency in Poultry Grower Contracting and Tournaments, finalized in November 2023, which requires live poultry dealers to give critical information about terms of their agreements to the poultry growers with whom they contract to raise birds. The final rule requires a “Live Poultry Dealer Disclosure Document” that provides growers with information they need to have a better understanding of realistic outcomes they can expect before making important financial decisions, such as capital-intensive facility improvements or taking out loans. In particular, the rule requires that dealers disclose earnings for growers by quintile, establish minimum flock placements, and explain variable costs growers may incur and how companies handle circumstances such as sick flocks and natural disasters. It also establishes an accountability and governance framework that must be certified by the poultry company’s CEO.
- Inclusive Competition and Market Integrity under the Packers and Stockyards Act, finalized March 2024, which prohibits discrimination on the basis of certain other basic characteristics and bans companies from retaliating against farmers over basic activities like communicating with government agencies, joining producer or grower associations, and asserting legal and contractual rights. It also offers protection against deceptive contracting that are false, misleading, and result in harm to producers.
Also, in June 2024, USDA proposed Fair and Competitive Livestock and Poultry Markets, which sought to define unfair practices under the Packers & Stockyards Act. USDA received more than 13,000 public comments on the proposal. Due to the complexity and length of time needed to finalize that regulation, USDA withdrew the proposal and announced it would re-examine these issues in the future.