1. I support the proposed rule’s definition for “undue preferences” that require packers and processors to reveal and have a rationale for differential pricing or deviations from contracts for livestock and poultry. This measure does not prevent farmers and ranchers from receiving premiums for higher grade animals, special livestock breeds or other measurable qualities. This provision does not prohibit packers from paying a price premium for grass fed, organic, family farm label or other quality based niche markets. It does prevent packers and processors from practices such as giving premiums for large volumes of animals that are not justified by cost differentials, giving secret sweetheart deals to select feedlots, or providing special terms in production contracts that are not justified by any cost or quality differences. The rule must clearly end price discrimination against small and mid-sized producers by outlawing any price preference based upon size alone;
2. I support the proposed rule’s ban on packer to packer sales. This practice is a common means of sharing price information between packers and results in price setting and collusion.
3. I support the elimination of the need for farmers and ranchers to demonstrate a “competitive injury” prior to filing suit over an uncompetitive trade practice. Recent court cases have required farmers to show competitive injury to the market as a whole as a prerequisite to filing suit. The proposed rule clarifies that farmers and ranchers who bring an action under the Packers and Stockyards Act for unfair practices such as false weighing of animals, or retaliatory behavior only need to show individual harm. I applaud USDA for removing this undue barrier to seeking relief under the law.
4. I support the proposed rule’s provisions that clearly describe a number of unfair or deceptive practices by processors, including:
- interfering with a grower’s ability to sell their farm, by requiring large upgrades to their livestock or poultry houses after the grower has announced their plans to sell their farm;
- requiring growers to make equipment changes if the existing equipment is in good working order, unless the company provides adequate compensation to the grower;
- cancelling a grower’s contract or reducing the number of birds or hogs placed on their farm based solely on the failure of the grower to make equipment changes, so long as existing equipment is in good working order.
5. I support the proposed rule’s provision outlawing retaliation against growers who speak out about problems with their contracts or within the industry. Retaliating against growers who speak out by withholding birds, delivering poor feed or even cancelling contracts has been a long-standing problem. This rule makes such retaliation an unfair practice and illegal.
6. I also support the new requirements to protect the substantial investments that growers are required to make by their poultry companies, and to make sure they are not forced into making unwise investments, or retaliated against for not doing so. I support the rule’s requirement that poultry contracts be long enough in term to allow growers to recoup at least 80 percent of the cost of their investments. Farmers bear the lion’s share of the capital investment necessary to produce poultry. It’s unfair to allow poultry companies to pull the rug out from under producers before they have recouped that investment, leaving them with nothing but debt and a specialized facility.
I urge you to move forward to a final rule that restores competitive markets and fair contracts for family farmers and ranchers.
Today, a few large-scale meatpackers and poultry processors dominate the markets, making it hard for an individual farmer or rancher to get a fair deal or equitable price for their cattle, hogs, or chickens. Packers and processors enter into sweetheart deals with a few insiders and shortchange farmers and ranchers. Packers feed their own livestock or control the marketing of cattle they have under contract and they can use their market power and deals between each other to manipulate the market prices paid to independent livestock producers. Poultry processors retaliate against farmers who protest the terms of “take-it-or-leave-it” production contracts, demands for increased investment in poultry housing or short-weighing of their birds.
Packers and processors are telling Congress and USDA that these rules threaten niche markets for grass fed, organic or family farm label livestock. Nothing could be further from the truth. This industry thrives on the standardization of livestock as a commodity. Those packers who are willing to pay a price premium for the quality that sustainable farming practices can produce will not be prohibited from doing so under these rules.
This Action Alert includes a sample comment letter that you can use in your organization’s comments, with some suggestions for tailoring your comments as appropriate for your organization. Adding information specific to your organization or membership is important. If your organization includes farmer and rancher members, we encourage you to work with them on individual comments as well.
For more information on the how the GIPSA rules help poultry producers, go to the Rural Advancement Foundation International USA (RAFI) website.
For more information on how the GIPSA rules help livestock producers, go to the Center for Rural Affairs website.