New rules to protect US farmers from unfair buyers

Will Green is news editor of Supply Management
20 December 2016

New rules have been proposed to protect livestock farmers in the US from unfair buying practices by meat processors.

The US Department of Agriculture (USDA) Farmer Fair Practices Rules, which cover swine, beef cattle and chicken growers, seek to address an imbalance in the market caused by a concentration in the processing industry that has weakened farmers’ bargaining position.

The USDA has announced a list of unfair practices for which growers can get compensation. This includes inaccurate or false weighing, abuse of arbitration procedures and the termination of a contract without an opportunity for a farmer to get back into compliance.

“By continuing to move forward with finalising these rules, USDA will make important progress in ensuring that farmers get a fair shake and can push back on inappropriate and unfair treatment by the processors,” said the USDA.

The four largest poultry processors control 51% of the broiler market and 57% of the turkey market, while 52% of growers have only one or two processors in their state or region to whom they can sell. “That means processors often wield market power over the growers, treating them unfairly, suppressing how much they are paid or pitting them against each other,” said the USDA.

“Processors can require growers to make investments that are not economically justifiable for the grower or can terminate contracts with little notice.”

The USDA said the rise of poultry contract growing, where processors own the birds, provide inputs such as feed and choose whether to provide bad feed or sickly birds, “cuts deeply into a grower’s opportunity to earn income on those birds”.

There are three new rules. The first makes it easier for farmers to win court cases by removing a legal standard that previously meant claimants had to demonstrate that an unfair practice had affected an entire industry in order to prove a violation of the law. The second includes a non-exhaustive list of unfair practices and the third attempts to make the practice of “tournament” poultry contract growing, where farmers are played off against each other, fairer and more transparent.

A public consultation will be carried out on the rules and a discussion document produced.

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