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Release: NSAC Applauds Proposed Rule to Reform Poultry Tournament Payment System

June 8, 2022


FOR IMMEDIATE RELEASE

Contact: Laura Zaks

National Sustainable Agriculture Coalition

lzaks@sustainableagriculture.net 

Tel. 347.563.6408

Release: NSAC Applauds Proposed Rule to Reform Poultry Tournament Payment System

Reforms Would Bring More Transparency and Fairness for Contract Poultry Growers

Washington, DC, June 8, 2022 – Today, the National Sustainable Agriculture Coalition applauded Secretary of Agriculture Tom Vilsack for the publication of a long-awaited proposed rule regarding “Transparency in Poultry Growing Contracts and Tournaments.” This is the first of several expected rules to strengthen the century-old Packers and Stockyards Act (PSA) announced in President Biden’s Executive Order on Promoting Competition in the American Economy

“The National Sustainable Agriculture Coalition (NSAC) applauds this long-delayed step toward leveling the playing field for family farmers and rural communities and improving the poultry sector. Today in the US, just four companies represent 73 percent of beef processing, 67 percent of pork processing, 54 percent of chicken processing, and 45 percent of the retail grocery market. This concentration hurts farmers and consumers while returning maximum profits to corporations. Farmers deserve a fair shake.” said NSAC Policy Specialist, Billy Hackett.

The poultry tournament system pits farmer against farmer, ensuring that half of all farmers in the tournament will always lose, and bases the selection of winners and losers on factors outside the control of contracted producers and determined solely by big chicken companies (e.g., the quality of feed and chicks). Integrators have been known to manipulate these two variables in order to punish contract growers who have spoken out against industry abuses, almost systematically against farmers of color, which exemplifies the need for the proposed rule to prohibit retaliation against growers.

“The proposed ‘Transparency in Poultry Growing Contracts and Tournaments’ rule will improve the poultry payment system by guaranteeing some important transparency measures for producers. This rule, however, does nothing to address the fundamental structural issues of the poultry tournament system,” added Hackett

Specifically, the transparency measures announced in the proposed rule include: 

  • Requiring poultry companies to disclose the number of flocks and minimum flock stocking density that they will contractually guarantee annually, as well as any “sale of farm” policies. 
  • Requiring poultry companies, when finalizing a new contract, to disclose to prospective growers the income range, broken down by quintiles, of current growers in a prospective grower’s region. 
  • Requiring poultry companies to disclose information about the quality of the inputs they provided, and any relevant feed discrepancies, to growers both when inputs are delivered and on settlement sheets, when growers receive their pay.
  • Requiring poultry companies to provide each grower anonymized information about the quality of the inputs provided to every other grower in their “tournament group” on settlement sheets. 
  • Requiring poultry companies to disclose how their tournament system formulas account for input quality variability.
  • Requiring poultry company CEOs to sign agreements that require the implementation of internal controls frameworks necessary to provide accurate disclosures, and compliance with USDA audits of disclosed data.

The PSA was passed a century ago to combat anticompetitive practices in the livestock and poultry industries as corporate meatpackers and processors (also known as integrators) consolidated and amassed substantial power over producers. The commitment to begin a new rulemaking process to strengthen the PSA follows on the heels of an announcement from the United States Department of Agriculture (USDA) last year.   

USDA also issued an Advanced Notice of Proposed Rulemaking (ANPR) today. The purpose is to collect input in response to numerous complaints from poultry growers about the use of tournament systems. Comments in response to this request would help AMS tailor further rulemaking in addition to that already planned and under way to address specific industry practices in relation to tournament systems.

USDA is seeking public comments on the proposed rule and the ANPR. The comment periods end on August 8, 2022 and September 6, 2022, respectively.  

To learn more about livestock consolidation and concentration reform, read NSAC’s blog series.

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About the National Sustainable Agriculture Coalition (NSAC)

The National Sustainable Agriculture Coalition is a grassroots alliance that advocates for federal policy reform supporting the long-term social, economic, and environmental sustainability of agriculture, natural resources, and rural communities. Learn more: https://sustainableagriculture.net/


Categories: Competition & Anti-trust, Implementation & Rule-making, Press Releases, Sustainable Livestock


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