January 13, 2020

USDA proposes change to sharpen fair competition rules

The US Department of Agriculture has taken a "small step" forward toward enhancing farmer protections by introducing a proposed change to language in the Packers and Stockyards Act of 1921 that deals with undue preference, the National Sustainable Agriculture Coalition (NSAC) said.

This came following a decades-long debate concerning the rules governing the meatpacking industry.

For years, American livestock and poultry producers have spoken out about the "unfair and abusive" practices of contract agriculture, stressing that those rules needed strengthening.

Last Friday, Jan. 10, the USDA's Agriculture Marketing Service (AMS) introduced four criteria aimed at making it easier to determine whether a meatpacker's actions were such that they could be construed as providing an "undue or unreasonable preference or advantage" to one producer over another.

The rule does not, however, address several other important aspects of undue preference, such as harm to competition and retaliation or a farmer's right to speak out, according to NSAC, a grassroots alliance that advocates federal policy reform supporting the long-term social, economic, and environmental sustainability of agriculture, natural resources, and rural communities.

"After much delay, we are very pleased to see AMS finally moving forward on the undue preference rule", said Candace Spencer, policy specialist at NSAC. "Their proposed criteria focus solely on business justifications, which could be very helpful depending on how they are interpreted and whether or not they are actively enforced".

Spencer said, however, that one major concern they have about the criteria is that they include language that would judge undue preference by whether or not such behavior can be considered customary for the industry. "Unfair competition and undue preference has unfortunately become customary for the industry—that does not mean it should be endorsed. In order to ensure this rule is fair and effective for contract farmers, this criterion must be either deleted or heavily revised".

The undue preference rules represent only a small part of a larger package of reforms advanced under the Obama administration in 2016, known as the "Farmer Fair Practices Rules". These rules were strongly supported by contract producers and advocates like the NSAC.