USDA has rolled out its latest Packers and Stockyards (P&S) Act rule to tackle anticompetition in the marketplace, this time emphasizing discrimination in contracting.
The rule, coined “Inclusive Competition and Market Integrity under the Packers and Stockyards Act,” is designed to promote inclusive competition and marketing integrity in livestock, meats and poultry markets, according to the Agricultural Marketing Service (AMS).
The rule establishes clearer and effective standards under the P&S Act related to discrimination, retaliation and deception in contracting, AMS said.
“The rise of concentration and changes in contracting practices in livestock and poultry markets over the last four decades have facilitated and exposed producers and growers to increasing economic harms from exclusionary, prejudicial, or otherwise discriminatory conduct, as well as deceptive conduct, by packers, swine contractors, and live poultry dealers,” the final rule read.
The rule seeks to address the following deceptive practices:
• Discriminatory prejudices relating to a producer’s characteristics.
• Retaliation for engaging in certain acts as part of being a producer.
• False or misleading statements or material omissions in certain contexts.
Regarding discrimination, the final rule will prohibit actions that inhibit market access based on race, color, religion, national origin, sex, disability, marital status or age. In addition, the rule prohibits actions that interfere with lawful communications, assertion of rights, associational participation and other protected activities.
The rule also prohibits companies from making false or misleading statements or omitting information in contract formation, performance or termination. Additionally, the rule prohibits companies from giving false or misleading representations regarding refusal to contract.
Finally, the rule mandates recordkeeping to support USDA monitoring, evaluation and enforcement of compliance.
“This final rule also affirms the importance of a clear and direct regulatory framework with respect to prohibited conduct, thus protecting producers in the marketplace,” the rule read.
The rule goes into effect May 6. More information on the final rule can be found at tinyurl.com/3ckwacud.
Industry reactions
The National Cattlemen’s Beef Association (NCBA) said it is concerned with the rule’s unforeseen impacts on standard business practices.
“We have remained consistently opposed to any discriminatory practices in the marketplace,” said NCBA Vice President of Government Affairs Ethan Lane in a statement.
“We continue to urge USDA to ensure this rule remains focused on its stated objective—with which we wholeheartedly agree—and does not stray into extraneous, unrelated subject matter discussed in the proposal’s preamble.”
The North American Meat Institute (NAMI) said the updated rule does nothing to encourage competition and instead gives the USDA more authority to exert control over business contracts.
“These changes are simply an attempt to assert even more federal authority to regulate the equities of industry business practices, clogging the federal courts with every contract dispute,” said Julie Anna Potts, NAMI president and CEO in a statement. “Congress never intended to give the agency such broad-ranging authority over meat industry contracts and practices, regardless of their effect on competition—and the courts have agreed.”
Andy Green, senior adviser for fair and competitive markets at USDA, said the P&S Act stands for the basic proposition that producers should be able to compete in the marketplace without fear of retaliation. “To deliver the best products and the most competitive prices, we need competitive markets and markets with integrity,” Green said. “That’s what this final rule is designed to deliver.”
The final rule is the latest in a series of rules USDA has been working to finalize since pledging in 2021 to update P&S Act enforcement. USDA announced the first rule in the summer of 2022, which was directed mostly at the poultry industry. The second rule came later in the fall, which prohibited prejudices against “market-vulnerable individuals.” — Anna Miller, WLJ managing editor
