NSAC's Blog

What’s all the Flapping About: What do HBO’s John Oliver, Chicken Farmers, and Congress have in Common?

May 29, 2015

There has been a lot of social media buzz lately about a piece on HBO’s Last Week Tonight with John Oliver about the plight of chicken farmers (note: does contain adult language, please use discretion) who raise birds on behalf of large integrators, aka the chicken companies (Tyson, Pilgrims Pride, Perdue, and JBS) who own and process most of the chickens in this country. It has been great to see more attention drawn to the activities of the large poultry companies and their allies, but what is the “GIPSA Rider” that created the flap in the first place?

As the House and Senate get set to take up an agricultural appropriations bill to fund the U.S. Department of Agriculture (USDA), it is widely expected that the bill will include a policy rider to continue to prevent USDA from issuing rules — on issues like the right of farmers to free speech or freedom of association and the right to know how they will be paid — for contract poultry and livestock production.

So we thought we would provide more information on what exactly the “GIPSA Rider” is and how it functions.

No, we didn’t say gypsy rider, we said “GIPSA Rider.”

“GIPSA” is a reference to USDA’s Grain Inspection Packers and Stockyards Administration (GIPSA), the agency in charge of enforcing the Packers and Stockyards Act, which was passed to provide basic protections for farmers who sell livestock to processors.

“Rider” refers to a legislative provision tacked onto the annual agriculture funding bill, something that was uncommon and frowned upon until recent years. Legislating is supposed to be the province of authorizing committees while appropriators are supposed to stick to appropriating money. The House and Senate rejected attempts to eliminate the GIPSA rules during debate on the 2014 Farm Bill, but that has not kept industry from pushing the backdoor, more hidden from view policy rider approach to legislating.

A small handful of huge meat and poultry companies have been able to use their market power for years to get away with the fraudulent, deceptive, and anti-competitive and abusive practices that have allowed them to profit at the expense of small, independent farmers. They do not want USDA to interfere with rules to ensure a basic level of fairness. Hence, they work with friendly members of Congress to push the rider that ties USDA’s hands and prevents the government from enforcing the law.

If you would like more information, we provide details on the market competition and contract reform rules that the GIPSA rider is attempting to forestall in this post on last year’s rider.

We have not yet seen this year’s version of the rider, but expect to see it by mid-June, and will keep our readers posted.

Action to Oppose the “GIPSA Rider”

In the coming weeks it is likely that the House Agriculture Appropriations Subcommittee will consider an appropriations bill for Fiscal Year 2016 that will contain a “GIPSA Rider.”

NSAC has joined with our allies across the country to stand in opposition to the House GIPSA rider and in support efforts to strip the rider from the appropriations bill.

Click here to learn how you can take action and urge your members of Congress to support these efforts to protect farmers’ rights. Action is likely to heat up in just a few weeks!

Background in Brief

Contract Livestock and Poultry Production — Poultry producers often get into the business by obtaining a contract that guarantees the delivery of chickens for a few years. Based on that contract they obtain large loans, often backed by the federal government, to build poultry houses on their own land.  The poultry company delivers chickens and feed and tells the farmer how to raise the chickens.

In exchange, the farmer has to dispose of the chicken’s waste, while competing against neighbors for pay, which they use to pay off the debt they took on to get into the chicken farming business. They commonly are on a flock-by-flock contract, with no guarantee of future bird deliveries. Well before the loans for the buildings are paid off, they could lose the contract. This gives the companies great leverage over the farmers, since the chicken houses are basically useless other than to raise chickens, and the farm has a construction loan that needs to be paid off.

These challenges don’t just impact poultry farmers, they are also seen in hogs, but the issues are most acute with poultry because chicken production has operated under the integrated system the longest. In fact, many refer to what is happening in the pork industry as the “chickenzation” of the pork industry. Signs of similar changes are beginning to occur in cattle markets.

“GIPSA Rider” in Brief — To address these problems, the 2008 Farm Bill required USDA to write regulations, under the Packers and Stockyards Act. The Packers and Stockyards Act is the primary law governing livestock and poultry markets. The goal of the Packers and Stockyards Act — which became law way back in 1921 — is to make livestock and poultry markets open, transparent, and competitive and to protect farmers and ranchers from fraudulent, deceptive and abusive practices in their dealings with the meat industry.

Though the law has been on the books for nearly a century, it has never gone through the rulemaking process that is normally part of the basic implementation of any statute. The lack of rules has made it very difficult over the years for the government to enforce key portions of the Act.

Hence, the corrective action that Congress took in the 2008 Farm Bill was critical and long overdue. The farm bill directed to agency to finally go through the rulemaking process. This landmark decision in 2008 held out the promise of having clear ground rules to prevent unfair, discriminatory, and deceptive practices within the livestock and poultry industries.

USDA issued the proposed rules in 2010. To date, however, only a very few of those proposed rules have been finalized. The delay has been due to the riders attached to the annual appropriations bills ever since the proposed rules came out. In essence, the big meat and poultry companies have used the backdoor approach of annual riders on the appropriations bills to reverse, on a year-by-year basis, the congressional decision made in the 2008 Farm Bill.

The Appropriations Committees do not have jurisdiction over policy, only over spending. Hence, their job is to determine the annual funding level for GIPSA and its Packers and Stockyards Program, but not to determine its policies. The policy job is the responsibility of the Agriculture Committees.

In the lead up to what became the 2014 Farm Bill, the House Agriculture Committee passed a provision that would have repealed the 2008 Farm Bill section of the Packers and Stockyards Act, prevented any of the proposed rules from being finalized, forced the rescission of most of the rules that have already been finalized, and directed GIPSA to stop taking any action to enforce the law.

Thankfully, this complete giveaway to the big meat and poultry companies was rejected in the House-Senate conference on the 2014 Farm Bill and therefore there is no repeal of the 2008 provision or any other farm bill interference with USDA’s job to enforce the law.

When Congress rejected the gutting of the Packers and Stockyards Act in the 2014 Farm Bill, that should have been the end of it. The authorizers had spoken and the issue should not come up again until the next consideration of the Farm Bill in 2018.

But such was not the case. The big companies went right back to work and convinced the House Agriculture Appropriations Subcommittee to put the rider back in last year. Senate appropriators did not include the rider in their bill, but the rider was adopted during negotiations between the House and Senate and remains in place for Fiscal Year 2015. In the coming weeks, the House Agriculture Appropriations Subcommittee will be voting on its spending bill for Fiscal Year 2016.

Information and Action — Again, if you want to learn more about the details about the Packers and Stockyards Act and the GIPSA rider, read this post on last year’s rider. And if you want to get involved, click here to learn how you can take action and urge your members of Congress to support efforts to protect farmers’ rights.

Categories: Budget and Appropriations, Competition & Anti-trust, Farm Bill

One response to “What’s all the Flapping About: What do HBO’s John Oliver, Chicken Farmers, and Congress have in Common?”

  1. Aimee Polekoff says:

    I wonder if there’s any organization that can help pay off contract farmers’ debts to get them off dependence on the big poultry companies, then give them heritage chicken varieties and training. Something like that would go a long way towards ending Tyson, Perdue, etc. dominance of the market and restoring the independence of America’s family farmers.