Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 6/18/10

Agriculture Secretary Tom Vilsack has proposed sweeping changes in the way USDA uses its existing authority under the Packers and Stockyards Act that he said would "provide significant new protections for producers against unfair, fraudulent or retaliatory practices.

"Concerns about a lack of fairness and commonsense treatment for livestock and poultry producers have gone unaddressed far too long," said Vilsack in a statement. "This proposed rule will help ensure a level playing field for producers by providing additional protections against unfair practices and addressing new market conditions not covered by existing rules."

The proposed rules, which will be published in the June 22 Federal Register for a 60-day comment period, would provide the following protections for livestock and poultry producers:

Provide further definition to practices that are unfair, unjustly discriminatory or deceptive, including outlining actions that are retaliatory in nature, efforts that would limit a producer's legal rights or representations that would be fraudulent or misleading.

Additionally, the proposed rule reiterates USDA's position that a producer need not overcome unnecessary obstacles and have to always prove a harm to competition when they have suffered a violation under the Act.

Define undue or unreasonable preferences or advantages.

Establish new protections for producers required to provide expensive capital upgrades to their growing facilities, including protections to ensure producers have the opportunity to recoup 80 percent of the cost of a required capital investment.

Prohibit packers from purchasing, acquiring or receiving livestock from other packers, and communicate prices to competitors.

Enable a fair and equitable process for producers that choose to use arbitration to remedy a dispute. Additionally, clear and conspicuous print in the contract will be required to ensure producers are provided the option to decline the use of arbitration to settle a dispute.

Require that companies paying growers under a tournament system provide the same base pay to growers that raise the same type and kind of poultry, including ensuring that the growers pay cannot go below the base pay amount.

Provide poultry growers with a written notice of a company's intent to suspend the delivery of birds under a poultry growing arrangement at least 90 days prior to the date it intends to suspend the delivery.

Improve market transparency by making sample contracts (except for trade secrets or other confidential information) available on GIPSA's Web site for producers.

Outline protections so that producers can remedy a breach of contract.

Improve competition in markets by limiting exclusive arrangements between packers and dealers.

Workshop feedback

The 2008 farm bill required USDA to carry out specific rulemaking to improve fairness in livestock and poultry marketing. As part of that process, USDA and the Department of Justice held a series of workshops on competition in the meat and poultry industry. Vilsack told reporters on a teleconference that some producers were afraid to participate in the workshops "for fear of retaliation" by the packers they sell to.

He characterized recent court decisions upholding the need for a producer suing a processor for unfair practices to also show harm to the regional market as akin to having to show that the theft of your car impacted all your neighbors.

Asked if USDA was aiming to set price minimums, Vilsack said, "I don't think this is an issue where we are suggesting producers should get a better price or a worse price," but rather to ensure that special deals are not made with certain producers that are not transparent and that others don't have the chance to receive if they meet the same requirements.

On the issue of packer buyers having unfair access to pricing information by representing more than one packer, USDA officials explained that under the new rules, a packer buyer could only buy for one packer.

Vilsack concluded by saying, "There are a number of great companies, and they are treating folks right. They shouldn't be negatively impacted by these rules at all. But it certainly is a message to those who have maybe in the past taken advantage of folks that this is not going to be tolerated."

To comment

USDA will consider comments received by Aug. 23. Comments may be sent via email to comments.gipsa@usda.gov or sent by mail to Tess Butler, GIPSA, USDA, 1400 Independence Ave., SW, Room 1643-S, Washington, D.C. 20250-3604.

Copies of the proposed rule and additional information can be found by clicking here.

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