May 28, 2022
US proposes new rule requiring meatpackers to be transparent in dealings with contract chicken farmers
The US Biden Administration has proposed a new rule that will make it mandatory for meatpackers to be transparent in their dealings with contract chicken farmers to improve competition in this highly consolidated sector, Reuters reported.
For decades, farmers and consumer organisations have contended that consolidation in the beef, hog, and poultry sectors, where four companies dominate between 55% and 85% of the market, decreases farmer wages and raises consumer costs.
In January, the Biden administration promised to address these issues by proposing new rules to strengthen enforcement of the Packers and Stockyards Act, a century-old law designed to protect farmers from unfair market practises.
The proposed new rule would compel poultry firms to be more honest with contract chicken producers, who are paid per pound of chicken they raise for slaughter and obtain their chicks, feed, and other inputs from the companies.
The regulation would mandate that contracts guarantee a particular number of chickens every year and that the companies give a number of disclosures to farmers, including information on the inputs they provide to each farmer and how much they can expect to be paid.
The USDA is also investigating whether certain features of poultry farmer contracting "are so unfair that they should be outlawed or otherwise regulated."
According to a USDA source, two more rules will be announced this summer and autumn.
In 2017, the Trump administration reversed an Obama administration initiative to enact comparable standards, angering farmers who had advocated for such laws for years.
The agency is also investing additional US$200 million toward funding independent meat processing companies, on top of the US$500 million announced in July.
In a statement, Agriculture Secretary Tom Vilsack said the financing and new regulation being proposed will eventually help the government provide farmers and ranchers a fair shake, improve supply networks, and make food pricing fairer.