The Obama administration may be winding down but it isn’t going away quietly. On Wednesday (Dec. 14), the USDA announced an interim final rule and two proposed rules largely aimed at helping poultry producers.

Under the Packers and Stockyards Act, the interim final rule says violations of the act can be proven by producers without having to show an unfair practice harms the entire market.

The two proposed rules would provide oversight for pricing and payments to producers who’ve signed contracts with vertically integrated livestock companies.

“This has been a long journey that began with the passage of the 2008 farm bill and the Obama administration’s efforts to implement that farm bill,” said Agriculture Secretary Tom Vilsack during a press call. “During that period of time, we listened to producers expressing concerns about what was perceived to be an unrealistic and difficult burden for (those) who felt they were being treated unfairly, unjustly or in a discriminatory way … to get a measure of justice. (They had to) show actions against their individual operations – especially in the poultry sphere – not only harmed them but the entire industry. That was an extraordinarily high burden.

“We’ve seen throughout the process that packers have been held to a standard that’s very consistent with the rule we’re announcing today. What we haven’t been able to do is have a means of enforcement against live poultry dealers.”

Currently, the USDA’s Grain Inspection, Packers & Stockyards Administration has “regulatory criteria to determine whether a live poultry dealer has violated the Packers and Stockyards Act,” said Vilsack. “But it has no means of enforcement against that live poultry dealer. The proposed regulation will specify that GIPSA will apply the criteria to determine whether the conduct or action is unfair, unjustly discriminatory or deceptive. 

“The interim file rule we’re filing today will inform the courts the conduct or action can violate the Packers and Stockyard Act without – I emphasize ‘without’ – a finding of harm to competition. This is just common sense.”

Criticism

Anticipating criticism of the late-in-the-game proposed rules, Vilsack admitted “Some may question the timing to all this. We’ve received tens of thousands of comments on the rules that have been proposed. At the same time, we’ve received an inconsistent message from Congress. At times, Congress has said to go forward and times Congress has told us not to go forward. Recently, Congress again indicated to us they wanted to see action in connection with these rules.”

Criticism of the rules was especially harsh from the National Pork Producers Council (NPPC). In a statement, the council said the proposed rules are “an apparent attack on rural America for its role in helping elect Donald Trump as president.”

Vilsack dismissed the claim as “absurd, absolutely absurd. It’s unfortunate they’d use such unfortunate rhetoric. I say it’s absurd because this is a rule designed to finish the work of the 2008 farm bill, passed during the Bush administration. … This has nothing to do with the election of 2016. This has everything to do with what’s fair for producers.”

Neil Dierks, NPPC CEO, claimed the rules “will be a boon to trial lawyers and a weapon activist groups will use to attack segments of the livestock industry. The inevitable costs of the regulation could lead to further vertical integration of the pork industry, driving packers to produce more of their own hogs. That will reduce innovation, quality and competition, with no benefit to consumers. Coupled with the current strong headwinds buffeting pork producers, the net effect of this destructive, unnecessary and illegitimate midnight rule would be a crushing blow to hog farmers of all sizes and to America’s rural economies.”

Rules doomed?

With a Trump administration and new Congress waiting in the wings, will these new rules ever see the light of day?

“These regulations are designed to protect American family farmers,” said Mike Weaver, president of Contract Poultry Growers Association of the Virginias, who was also on the call. “American family farmers came out of the woodwork to support Trump. We helped put him in office. We need some consideration.

“In my opinion, he isn’t paying consideration to family farmers anyway. The transition team he’s picked to select the new Secretary of Agriculture doesn’t (include) one small family farmer. That needs to change.”

Roger Johnson, president of National Farmers Union, said for years “farmers and a number of farm and food groups have advocated for basic fairness rules. (Those include) providing producers and growers with access to information about how their pay is calculated and not requiring a producer to show competitive injury to the entire industry in order to prove they were harmed.

“In the poultry industry, in particular, the absence of basic protections coupled with an absurd legal basis for addressing unfair practices in our judicial system has locked many poultry growers in a state similar to serfdom. In poultry contracts, farmers take on all the risk – including the risk of losing their farm or house if the farm fails – based on factors out of their control like the quality of chicks or feed they’re provided by the integrators, who take all the profit. Farmers hover around the poverty line for a job that keeps them on call 24/7 and deeply indebted.”

Roll back promise

Texas Rep. Mike Conaway, chairman of the House Agriculture Committee, was very unhappy with the late rules maneuver. “I’m disappointed that the generally productive and non-partisan relationship I’ve developed with USDA over the past two years has culminated in a last minute effort to push through a partisan trio of rules -- even despite assurances that they would be tabled for more thorough and appropriate consideration by the incoming (Trump) administration,” he said in a statement. “It is particularly troubling given Congressional disapproval with the overreach of these costly rules dating back to their original proposal in 2010.”

Further, Conaway said he will make it “a priority to roll back these, and other midnight regulations from the Obama administration, as soon as Congress returns in January.”

The American Farm Bureau Federation backed the proposed rules. Zippy Duvall, the group’s president, said they are “an important step toward leveling the playing field in the poultry industry by ensuring companies follow the law and treat farmers fairly, without disrupting beef and pork markets. … A one-size-fits-all approach doesn’t work here, and that’s why we have also worked to preserve the contract arrangements and marketing practices that make the beef and pork industries competitive.

“These proposed rules will strengthen GIPSA’s ability to evaluate business practices in the poultry industry and better protect individual farmers from discriminatory treatment. America’s chicken farmers have long called for greater transparency and a level playing field in our industry, and we appreciate USDA’s efforts to hold companies accountable and give farmers a voice.”