November 22, 2016
The Office of Management and Budget (OMB) is currently reviewing a set of three rules from the U.S. Department of Agriculture (USDA) that, if finalized, could easily be an early win for the Trump Administration. USDA’s Grain Inspection, Packers & Stockyards Administration (GIPSA) has been working on the “Farmer Fair Practices” rules with the support of rural communities, farmers, and family farm advocacy groups across the country. The rules seek to protect independent contract farmers and rural communities by stopping abusive practices by a few large multinational poultry and livestock corporations. If President-Elect Trump plans to continue riding the populist wave that brought him into office, finalizing these rules would be an obvious choice for his first 100 days.
American contract farmers live in some of the most economically depressed counties in the nation. Big Meat corporations often take advantage of the economic downturn in rural communities by making those areas their prime recruiting grounds and convincing farmers to take on millions in debt for the promise of a brighter future. In order to enter the industry, many would-be contract farmers must mortgage their farms and land in order to build housing and facilities for the animals – but they do not actually own them. In fact, once they enter into a contract arrangement, farmers have little-to-no control over anything about their operation, including how the animals are raised or how much they are paid for raising them.
The Life of a Contract Farmer
Most farmers who enter into the poultry and livestock industries are not seeking to strike it rich, rather they are looking for a way to support their families that also allows them to remain on the land and in the communities where they grew up. The current model of contract agriculture presents these farmers with the false promise of prosperity, and then sends them into an unending cycle of debt.
In order to house the birds or livestock from the contracting corporation and develop other required facilities, farmers often spend more than $1 million of their own money. Since most family farmers are cash poor and land rich, they often mortgage their family lands in order to secure the needed start-up funds. What many do not realize, however, is that they have little chance of every paying off their loans and a very good chance of losing their lands and farm in the process.
Even as farmers struggle to earn enough money to make their loan payments, they face frequent demands from the company providing the poultry or livestock to make additional upgrades to their barns and facilities, causing them to slide even further in debt. Because contract farmers have no control over the quality of the animals and feed they receive or the prices they are paid, the amount of money they are able to make is almost entirely out of their control.
Farmers who speak out against Big Meat for sending them poor quality or sick animals, not paying them fairly, or coercing them to take on increasing amounts of debt are often retaliated against. Some corporations, for example, have been accused of cutting off or delaying farmers’ delivery of animals, forcing them to make a choice between standing up for their rights or losing the land that puts food on their family’s tables.
Given the focus candidate Trump placed on reviving rural America, we expect this would be a top priority for his administration come 2017.
How Can These Rules Help Farmers?
The Farmer Fair Practice rules will help to ensure that these multinational poultry and livestock corporations treat American contract farmers fairly. GIPSA’s set of three rules is comprised of two proposed rules and one interim final rule. The proposed rules address the poultry tournament payment system and issues of undue preference, while the interim final rule clarifies that farmers need only prove that they were treated unfairly by a company to secure legal remedy.
Currently, farmers seeking legal justice for industry abuses are required to prove harm done to themselves and/or their businesses, as well as proving that the result of the harm impacted competition industry-wide – a nearly impossible standard for an individual farmer to meet. The interim final rule will clarify and underscore the plain language of the Packers and Stockyards Act, which requires no proof of harm to competition from a complainant.
These rules are designed to balance the power between farmer and corporate contractor, a balance that is currently skewed entirely on the side of industry and against farmers. The Farmer Fair Practice rules will help level the playing field and give farmers a fair shot at earning a decent living.
Contract Farm Concentrations
The vast majority of contract farmers are located in rural communities that supported then candidate Trump. Many supported the President-Elect based on his promises of economic revitalization, a promise we hope and expect he will keep.
Electoral map of the 2016 election by party
Eight of the top ten states (listed in the chart below) for broiler chicken production, which are almost exclusively grown under contract, supported President-Elect Trump and are some of the most rural states in the country. These ten states represent more than half of the 8.6 million broiler chickens raised in the United States in 2010.
Top Ten Broiler Producing States, 2010 (Source: National Chicken Council)
Hope for the Future of Rural America
Secretary of Agriculture Tom Vilsack has indicated that USDA plans to issue these rules before the end of 2016. The interim final rule will go into effect immediately after being issued, so it will be up to President Trump’s USDA to ensure that it is fully supported, and that GIPSA is able to protect American livestock and poultry farmers. The two proposed rules will be open for a public comment period after they are released.
We hope that the Trump Administration sees these rules for what they are, as a win for American farmers and rural America, and that will move to quickly express support for the interim final rule and to review and finalize the proposed rules.
Categories: Competition & Anti-trust
Contract farmers are often held in very difficult situations because of their large investments. Might this help?