The U.S. Department of Agriculture has introduced a proposal outlining new criteria to determine whether meat producers are being treated unfairly by packers or integrators, raising industry concerns from both sides of the issue.
The proposed rule, published Monday in the Federal Register, specified criteria for the agriculture secretary to consider when determining if a meatpacker, dealer or contract farmer has engaged in activity resulting in "undue or unreasonable preference or advantage" in violation of the Packers and Stockyards Act of 1921.
The rule was established to satisfy provisions of the 2008 Farm Bill. The Obama administration's "GIPSA rule," named after the Grain Inspection, Packers and Stockyards Administration, was proposed in 2010 and 2016 before being withdrawn. The Grain Inspection, Packers and Stockyards Administration has since merged into the USDA's Agricultural Marketing Service.
Industry groups were staunchly against the Obama-era proposal. It would have "opened the floodgates to frivolous and costly litigation," inflicting billion of dollars of economic harm to American agriculture, said National Chicken Council President Mike Brown in the fall of 2017.
Farmers and ranchers, dealing with consolidation in the meatpacking industry, have long been seeking stronger rules, and the move by the Trump administration is a step in the right direction, the National Sustainable Agriculture Coalition said. However, the group added, there is a lot that the proposed rule does not address, such as harm to competition and retaliation or a farmer's right to speak out.
Candace Spencer, a policy specialist with the farm coalition, said she is concerned that the language would judge undue preference by whether or not such behavior can be considered customary for the industry.
"Unfair competition and undue preference has unfortunately become customary for the industry -- that does not mean it should be endorsed," Spencer said in a statement. "In order to ensure this rule is fair and effective for contract farmers, this criterion must be either deleted or heavily revised."
Another farm advocacy group, the Rural Advancement Foundation International-USA, argued that the Trump-era rule is based on business considerations and allows undue or unreasonable industry practices while codifying justification of them in law.
"The criteria laid out in this rule are heavily skewed in favor of large, transnational corporations rather than the farmers and ranchers laboring to produce our food," Edna Rodriguez, executive director of RAFI-USA, said in a statement Monday. "We urge the USDA to take action that balances the distorted power dynamics between farmers and corporations."
Consolidation in the industry has caught the eye of Democratic presidential hopefuls including Bernie Sanders and Elizabeth Warren, who are calling for breaking up big agribusinesses and giving farmers more bargaining power.
Meanwhile, the North American Meat Institute, which represents Tyson Foods, JBS USA and other businesses responsible for the lion's share of America's red meat and poultry, said it will review the proposal.
Julie Anna Potts, Meat Institute president and chief executive officer, said the rule must protect marketing agreements that provide stability to the industry and lower meat prices to shoppers.
If longtime requirements soften, she said, "frivolous lawsuits could flood the courts and hurt the producer-processor relationship, ultimately harming those the law is intended to protect."
Business on 01/14/2020