The Agriculture Department proposed new rules on Thursday requiring poultry companies to be more transparent about how farmers are paid, part of the Biden administration’s broader push to tackle consolidation in the meatpacking industry.
The measures would require poultry processors, such as
Tyson Foods Inc.
and
Pilgrim’s Pride Corp.
, to disclose compensation information for chicken farmers who are paid under so-called tournament systems, which pit farmers against one another to determine payment.
The White House has frequently accused the biggest U.S. meat companies of using their market power to increase prices for restaurants and supermarkets, while underpaying farmers. In January, the administration called for $1 billion to be dedicated to expanding independent meat processing to foster more competition in the industry, where the four largest companies control an estimated 85% of beef production and 54% of poultry, according to the White House.
Meatpacking officials have pushed back against the administration’s criticisms, saying industry consolidation has held steady for years. Some officials at the big meatpackers said that because many processing plants remain short-staffed, they can’t buy and process as many cattle or chicken, reducing their ability to purchase livestock and pushing prices lower for farmers.
On Thursday, the USDA said it would mandate that poultry companies give more information to farmers about the feed and the birds supplied by companies, and to provide contracts guaranteeing a certain number of chickens a year. The agency’s proposed rules would also require poultry processor chief executives to sign off on the compliance process, steps USDA officials said would increase accountability in the industry.
The National Chicken Council, a poultry industry trade group, said the proposed rules would do nothing to lower food prices, increase competition or reduce inflation. The group said chicken farmers already are treated equally by companies as far as the quality of chicks, feed and access to veterinary care, and that raising chickens under contract is a reliable source of income for farmers.
“This is a solution in search of a problem,” said NCC President Mike Brown. “The performance-based structure of how chicken farmers are compensated is literally the definition of competition.”
Shares of poultry companies, including Tyson, Pilgrim’s Pride and
Sanderson Farms Inc.,
were up about 2% in midday trading, in line with major stock indexes.
The proposed regulatory changes will be posted for public feedback during a 60-day comment period, among other steps, before final versions are released.
The USDA also said it was opening an inquiry into whether some practices of processors in the tournament system are so unfair that they should be banned or otherwise regulated.
The USDA said it separately plans to make available $200 million under a new Meat and Poultry Intermediary Lending Program to provide financing to independent meat and poultry processors to start up and expand operations.
“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,” Agriculture Secretary Tom Vilsack said in a statement.
One of Agriculture Secretary Tom Vilsack’s top goals has been to strengthen a 1921 antitrust law designed to protect farmers from the market power of that era’s meat giants.
Photo:
leszek szymanski/Shutterstock
One of Mr. Vilsack’s top goals has been to strengthen an antitrust law known as the Packers and Stockyards Act of 1921, which was designed to protect farmers from the market power of that era’s meat giants.
Department officials hope the proposed measures, aimed at increasing transparency in the tournament system rather than outlawing or restricting it, will be more palatable to the industry, USDA officials said. They said the department sees Thursday’s rules as a more targeted approach that is less likely to face the same pushback that followed previous efforts to strengthen anticompetitive rules against meatpackers in 2010. Those efforts ultimately were stymied after lawmakers blocked funding.
The NCC said Thursday’s rule proposals reflect ideas that were already deemed poor policy during the Obama administration.
Farmer groups including the American Farm Bureau Federation and National Farmers Union cheered the USDA’s proposed rules, saying farmers have long needed more transparency from meat companies.
“Poultry growers have endured an unfair contracting system for far too long, and all livestock producers continue to face heavily concentrated markets with insufficient protections from anticompetitive practices,” said NFU President Rob Larew. “This rule will ensure poultry growers have a fair marketplace.”
The proposed rules, mostly aimed at the poultry industry, are one of three planned rounds of rule making. Later this summer, the department intends to publish a rule that will cover issues relating to discrimination and retaliation against farmers, officials said. A third rule will focus on certain unfair practices by processors.
The meat industry has also faced pressure from lawmakers and regulators. Last week, the House Agriculture Committee approved a bill that would form a special position at USDA to investigate allegations of antitrust practices within the meat and poultry processing industry. Meat industry groups criticized the bill as a waste of resources that would try and bring as many cases as possible, warranted or not, to test and expand the legal limits of the new rules.
The Justice Department has been pursuing an antitrust price-fixing case against several high-profile poultry company executives. After two mistrials since late 2021, the government is trying the case again in June, after the top U.S. antitrust enforcer,
Jonathan Kanter,
appeared before the Denver court to explain why the case should be tried for a third time.
Write to Patrick Thomas at Patrick.Thomas@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
The Agriculture Department proposed new rules on Thursday requiring poultry companies to be more transparent about how farmers are paid, part of the Biden administration’s broader push to tackle consolidation in the meatpacking industry.
The measures would require poultry processors, such as
Tyson Foods Inc.
and
Pilgrim’s Pride Corp.
, to disclose compensation information for chicken farmers who are paid under so-called tournament systems, which pit farmers against one another to determine payment.
The White House has frequently accused the biggest U.S. meat companies of using their market power to increase prices for restaurants and supermarkets, while underpaying farmers. In January, the administration called for $1 billion to be dedicated to expanding independent meat processing to foster more competition in the industry, where the four largest companies control an estimated 85% of beef production and 54% of poultry, according to the White House.
Meatpacking officials have pushed back against the administration’s criticisms, saying industry consolidation has held steady for years. Some officials at the big meatpackers said that because many processing plants remain short-staffed, they can’t buy and process as many cattle or chicken, reducing their ability to purchase livestock and pushing prices lower for farmers.
On Thursday, the USDA said it would mandate that poultry companies give more information to farmers about the feed and the birds supplied by companies, and to provide contracts guaranteeing a certain number of chickens a year. The agency’s proposed rules would also require poultry processor chief executives to sign off on the compliance process, steps USDA officials said would increase accountability in the industry.
The National Chicken Council, a poultry industry trade group, said the proposed rules would do nothing to lower food prices, increase competition or reduce inflation. The group said chicken farmers already are treated equally by companies as far as the quality of chicks, feed and access to veterinary care, and that raising chickens under contract is a reliable source of income for farmers.
“This is a solution in search of a problem,” said NCC President Mike Brown. “The performance-based structure of how chicken farmers are compensated is literally the definition of competition.”
Shares of poultry companies, including Tyson, Pilgrim’s Pride and
Sanderson Farms Inc.,
were up about 2% in midday trading, in line with major stock indexes.
The proposed regulatory changes will be posted for public feedback during a 60-day comment period, among other steps, before final versions are released.
The USDA also said it was opening an inquiry into whether some practices of processors in the tournament system are so unfair that they should be banned or otherwise regulated.
The USDA said it separately plans to make available $200 million under a new Meat and Poultry Intermediary Lending Program to provide financing to independent meat and poultry processors to start up and expand operations.
“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,” Agriculture Secretary Tom Vilsack said in a statement.
One of Agriculture Secretary Tom Vilsack’s top goals has been to strengthen a 1921 antitrust law designed to protect farmers from the market power of that era’s meat giants.
Photo:
leszek szymanski/Shutterstock
One of Mr. Vilsack’s top goals has been to strengthen an antitrust law known as the Packers and Stockyards Act of 1921, which was designed to protect farmers from the market power of that era’s meat giants.
Department officials hope the proposed measures, aimed at increasing transparency in the tournament system rather than outlawing or restricting it, will be more palatable to the industry, USDA officials said. They said the department sees Thursday’s rules as a more targeted approach that is less likely to face the same pushback that followed previous efforts to strengthen anticompetitive rules against meatpackers in 2010. Those efforts ultimately were stymied after lawmakers blocked funding.
The NCC said Thursday’s rule proposals reflect ideas that were already deemed poor policy during the Obama administration.
Farmer groups including the American Farm Bureau Federation and National Farmers Union cheered the USDA’s proposed rules, saying farmers have long needed more transparency from meat companies.
“Poultry growers have endured an unfair contracting system for far too long, and all livestock producers continue to face heavily concentrated markets with insufficient protections from anticompetitive practices,” said NFU President Rob Larew. “This rule will ensure poultry growers have a fair marketplace.”
The proposed rules, mostly aimed at the poultry industry, are one of three planned rounds of rule making. Later this summer, the department intends to publish a rule that will cover issues relating to discrimination and retaliation against farmers, officials said. A third rule will focus on certain unfair practices by processors.
The meat industry has also faced pressure from lawmakers and regulators. Last week, the House Agriculture Committee approved a bill that would form a special position at USDA to investigate allegations of antitrust practices within the meat and poultry processing industry. Meat industry groups criticized the bill as a waste of resources that would try and bring as many cases as possible, warranted or not, to test and expand the legal limits of the new rules.
The Justice Department has been pursuing an antitrust price-fixing case against several high-profile poultry company executives. After two mistrials since late 2021, the government is trying the case again in June, after the top U.S. antitrust enforcer,
Jonathan Kanter,
appeared before the Denver court to explain why the case should be tried for a third time.
Write to Patrick Thomas at Patrick.Thomas@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8