US government releases new regulations for poultry farmers

The US Department of Agriculture has a new final rule for the poultry industry to protect farmers from situations in which buyers back out on promises to make large purchases after producers invested in supplying the birds.

It takes effect on Jan. 4, 2010.

"This new rule will provide much-needed information and basic protections for poultry growers that will enable them to make better business decisions and safeguard their livelihood," USDA Secretary Vilsack said in a prepared statement.

The new federal rule specifies that live poultry dealers must provide a written copy of a purchase contract before the farmers invest in production costs, farmers must be allowed to discuss the terms of production contracts with financial and legal advisors, and farmers must be given a 90-day notification when buyers plan to terminate a contract.

"Currently, it is not uncommon for growers to have their contracts terminated with, little or no notice," according to a USDA summary of the rule. "Yet, these growers have significant debt from financing their poultry houses and equipment upgrades at the behest of the company."

Fred Stokes, chief executive of the Organization for Competitive Markets, which was one of the initial backers of such federal rules, said producing companies routinely did not provide a written contract to the farmer prior to investments of up to US$1 million for the single-use buildings and other facilities. Then, confidentiality clauses prevented them from even consulting with their closest family members, lawyers or other growers before signing.

Under the new rules the contract also will have to spell out performance standards and list ways to correct failure to meet the standards, Stokes said.