U.S. seeks to protect contract chicken growers

Reuters – The United States government has proposed a rule requiring meatpackers to be more transparent in their dealings with contract farmers in efforts to enhance competition in the highly consolidated industry.

Farmers and consumer groups have argued for decades that consolidation in the beef, pork and chicken sectors, where four companies control 55 to 85 per cent of the market, suppresses farmer pay and results in higher prices for shoppers.

The administration pledged in January to address these concerns with proposed rules to enhance enforcement of the Packers and Stockyards Act, a century-old law meant to protect farmers from unfair market practices.  

The rule, announced May 26, would require poultry companies to be more transparent with contract chicken growers, who receive their chicks, feed and other inputs from the companies and are paid per pound of chicken they raise for slaughter.

The rule would require that contracts guarantee a certain number of chickens per year and that the companies make several disclosures to farmers, including details of inputs they provide to each farmer and what farmers can expect to get paid.

USDA is also opening an inquiry into whether aspects of chicken farmer contracting “are so unfair that they should be banned or otherwise regulated,” said an agency press release.

Two additional rules will come this summer and fall, said a USDA official.

A previous government effort to implement similar rules was unwound by the Trump administration in 2017, angering farmers who had pushed for such rules for years.  

The agency is also putting another $200 million, on top of $500 million pledged last July, toward financing independent meat processing plants.

“The funding and new rule we’re announcing today ultimately will help us give farmers and ranchers a fair shake, strengthen supply chains, and make food prices fairer,” said Agriculture Secretary Tom Vilsack in a statement.