Following the Agriculture Department’s release Monday of the Poultry Grower Payment Systems and Capital Improvement Systems proposed rule, several groups representing contract poultry growers released statements praising it.

The National Chicken Council announced Monday it will oppose the rule.

Steven Etka, policy director of the Campaign for Contract Agriculture Reform, said the new proposed rule under the Packers and Stockyards Act would “make significant reforms in the payment system, often referred to as the ‘tournament’ or ‘ranking’ system, commonly used by poultry companies to pay contract poultry growers.”

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“The rule also addresses circumstances where poultry companies unfairly force poultry growers with whom they contract to make expensive capital equipment upgrades to their poultry houses, at their own expense.” Etka said.

“This new proposed rule is an important next step in bringing fairness to the contracting practices used by large poultry companies to contract with farmers who raise chickens for them,” he continued.

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“It builds on a prior Packers and Stockyards rule (now final) that requires poultry companies to make full disclosures to prospective poultry growers about what they can expect if they sign a contract to grow chickens for the company, and to also disclose details to existing growers about how their pay is calculated.

“The new proposed rule also builds on a July 2022 U.S. Department of Justice Consent Decree related to the merger between Sanderson Farms and Wayne Farms, in which the merged poultry integrator firms agreed to make certain reforms to address abusive practices in how they pay contract poultry growers.

“This new proposed rule is the third of four important Packers and Stockyards Act rule updates being promulgated by USDA to address abusive and deceptive practices of poultry companies and meatpackers in their dealings with farmers and ranchers,” Etka said.

“Two rules, the ‘Transparency in Poultry Grower Contracting and Tournaments,’ and the ‘Inclusive Competition and Market Integrity Under the Packers and Stockyards Act,’ are now in effect. The fourth Packers and Stockyards Act rule, the proposed rule on ‘Unfair Practices, Undue Preferences, and Harm to Competition Under the Packers and Stockyards Act’ is at the Office of Management and Budget awaiting clearance,” Etka said.

The Alabama Contract Poultry Growers Association, Organization for Competitive Markets and Competitive Markets Action released a joint statement.

“We applaud the USDA for finally stepping up to prevent exploitation of contract poultry growers across America and hope to see these regulations swiftly finalized,” said Marty Irby, president at Competitive Markets Action and secretary at the Organization for Competitive Markets. Irby also represents the Alabama Contract Poultry Growers Association as their lobbyist.

“American family farmers are in peril and this encouraging news gives our producers hope amidst the fallout of House Agriculture Committee Chairman Glenn Thompson’s farm bill that would decimate small and medium sized producers,” Irby said.

The National Farmers Union said the rule “addresses abuse by the poultry industry of broiler chicken producers under the ‘tournament’ ranking system as well as situations where poultry companies make coercive facility investment demands of growers.”

“Today’s announcement also includes greater openness in cattle contracts with new reports and tools through the Livestock Mandatory Reporting Live Cattle Data Dashboard,” NFU said.

“Family farmers and ranchers deserve to operate in a fair and transparent marketplace,” said NFU President Rob Larew.

“This proposed rule aims to ensure poultry growers receive an honest price for their hard work and that they have access to adequate information before investing in major capital upgrades.

“NFU looks forward to reviewing the proposed rule to make sure it offers producers the protections they need.”