USDA has announced the first of three proposed rules to create fairer markets for poultry, livestock and hog producers under the Packers and Stockyards Act.
The first proposed rule affects the poultry industry and would require poultry companies and live poultry dealers to revise the list of disclosures and information for contract producers to make contract decisions best suited to their businesses. USDA is also seeking stakeholder input through a separate policy-making decision to determine whether the current tournament-style system used in poultry growing could be modernized.
“We welcome USDA’s release of this proposed poultry rule because we know the concentrated beef packers are working to capture control of the live cattle supply chain just as they already control the poultry supply chain,” said Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF USA) CEO Bill Bullard.
USDA also released its plan to support more fair and competitive markets, which will more directly affect cattle producers and will lead to a second and third proposed rule. The 34-page plan is in response to President Joe Biden’s executive order to promote competition in the American economy, which required USDA to submit a report no more than 180 days after the executive order’s date with a plan to promote competition in the ag industries.
“The Packers and Stockyards Act is crucial for protecting farmers and ranchers from excessive concentration and unfair, deceptive practices in the poultry, hog, and cattle markets. But after 100 years, it needs to take modern market dynamics into account,” said Agriculture Secretary Tom Vilsack in a statement.
The report reveals that USDA plans to release a second proposed rule later this summer, which will cover issues related to discrimination, retaliation and deception. Following the second rule, the department will release a third rule that will focus on certain unfair practices and undue preferences and will explain when a showing of harm is required under sections 202(a) and (b).
“These rules will facilitate the development of a robust enforcement agenda that will promote fair and competitive markets for the benefit of consumers and producers, competitive markets and price discovery, and supply chain resiliency, among other goals,” according to the report.
The remainder of the report details USDA’s other approaches to promoting competition in ag markets. Highlights include:
• Enhancing value-added market access and protecting those markets from consumer confusion.
• Promoting competition in transportation networks.
• Providing technical assistance and support as Congress looks at market transparency and price discovery legislation.
• Partnering with the Department of Justice to enforce antitrust laws.
• Reviewing USDA programs to encourage fair competition.
• Working with the Federal Trade Commission to enhance access to retail markets for farmers and smaller food processors.
• Working with the White House and other agencies to hold “bad actors” accountable who profit at the expense of producers.
• Launching a multibillion-dollar investment plan to directly incentivize competition in food processing and fertilizer production.
R-CALF USA applauded the initiatives, and the group plans to submit comments for the two rules more directly impacting the cattle industry.
“If USDA restores competition in the captured poultry industry through effective reforms, then similar reforms can more readily be implemented to prevent any further erosion of competition in the cattle industry,” Bullard said.
However, the North American Meat Institute (NAMI) spoke out against USDA’s report and proposed rules. “Despite what the White House says, the meat and poultry industry proved to be remarkably resilient during the pandemic,” said Julie Anna Potts, NAMI president and CEO.
“Unfortunately, due to the Biden inflationary economy, producers don’t benefit as much from higher prices because they struggle with high input costs for feed, fuel and fertilizer,” Potts said.
She added the Biden administration is “once again” blaming businesses for higher consumer prices.
“Industry concentration is not the reason for higher consumer prices for beef; as the Meat Institute has proved time and again, the four-firm concentration ratio has been in place for nearly 30 years, holding prices low for consumers,” Potts said. — Anna Miller, WLJ managing editor
