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Third Packers and Stockyards Act contract rule released, another withdrawn

Agriculture Secretary Tom Vilsack will today, Jan. 14, announce the Poultry Grower Payment Systems and Capital Improvement Systems  final rule, the third installment in a series of regulatory actions under the Packers and Stockyards Act that, in combination with other updates finalized under the Biden-Harris administration, is intended to level the playing field for farmers who raise chicken, turkeys, hogs, cattle and sheep under contract or for sale to meat and poultry processing companies. 

“Specifically, the rule announced today will give chicken farmers better insight into companies’ payment rates for their birds, will institute stability and fairness in what is commonly known as the ‘tournament system,’ will provide farmers with key information on capital improvements the companies require farmers to make in order to keep or renew contracts, and give farmers stronger leverage when companies do not adhere to the rules,” USDA said in a news release. 

In the news release, Vilsack said, “During my time as secretary of agriculture, time and again USDA has been confronted with the stories of farmers who lost their life’s savings or went bankrupt because of an unfair system they entered into when they agreed to raise animals for a major meat conglomerate.”



“It is USDA’s job to advocate for farmers, and these regulatory improvements give us the strongest tools we’ve ever had to meet our obligations under the Packers & Stockyards Act,” Vilsack said.

“While there is still work to be done, I am immensely proud that the Biden-Harris administration has taken historic action to level the playing field for farmers. This complements other ways we’ve worked to enhance competition across the agriculture sector, from investing in independent processing capacity, to shoring up domestic fertilizer production, to promoting transparency around seed technology and markets.



“As the bedrock of so much that our society depends on, and the pillar of rural economies, farmers deserve honesty, certainty and options when it comes to their hard work,” Vilsack said.

COMPETITIVE PAYMENTS

In a call to reporters on Monday, Vilsack said that the rule “will end the capacity” of companies to reduce the base pay to growers but will allow them to pay competitive premium payments under the contract. The rule also allows that only 25% of the payment can be based on the tournament system, Vilsack added. 

The rule incorporates the policies from the consent decree that the Justice Department, with the assistance of USDA, obtained with Cargill, Sanderson, and Wayne Farms around antitrust wage-fixing and violations of the Packers & Stockyard Act, USDA said.

In addition to the $85 million to poultry workers to make up for suppressed wages and a court-imposed antitrust monitor, the consent decree barred Sanderson and Wayne Farms from deducting farmers’ base pay based on performance, imposed a 25% cap on tournament performance relative to total grower pay, and required certain additional disclosures to growers consistent with USDA rules.  

The Poultry Grower Payment Systems and Capital Improvement Systems  final rule “requires processors to fairly and transparently pay broiler growers and limit excessively variable compensation, to operate tournaments such that growers can be more confident that comparisons are fair, and to provide growers with key information when they request growers make upgrades,” USDA said. 

This rule takes effect on July 1, 2026, following publication in the Federal Register. Because the rule is being released so late in the Biden-Harris administration, the Trump administration can easily withdraw it.

But in the call to reporters Monday, Vilsack said that groups that represent farmers are going to express support for this rule. The farmers “understand the current system is not a level playing field. This rule addresses many of the concerns,” Vilsack said.

The farmers don’t want a system “tilted toward them but they don’t want to work up hill,” he added. 

OTHER RULES

The third rule will work in conjunction with two other rules:

  • The Transparency in Poultry Grower Contracting and Tournaments rule, which was finalized in November 2023 and requires live poultry dealers — typically large processing companies — to give critical information about terms of their agreements to the poultry growers with whom they contract to raise birds. 
  • The Inclusive Competition and Market Integrity under the Packers and Stockyards Act rule, which was finalized in March 2024 and prohibits discrimination on the basis of certain other basic characteristics and bans companies from retaliating against farmers over basic activities like communicating with government agencies, joining producer or grower associations, and asserting legal and contractual rights; it also offers protection against deceptive contracting that are false, misleading, and result in harm to producers.   

Vilsack also announced that he was withdrawing the Fair and Competitive Livestock and Poultry Markets rule, which the Agricultural Marketing Service proposed on June 28, 2024, and sought to specify general practices that are unfair and in violation of section 202(a) of the Packers and Stockyards Act, 1921 (“P&S Act”). The proposed rule defined unfair conduct to encompass the spectrum of conduct that harms market participants and harms the market.   

Vilsack said the Biden-Harris administration did not have time to finish that rule. 

“Although this proposal is being withdrawn, AMS continues to support the intent and purpose of the proposed rule, and the department is not withdrawing this proposed rule based upon a change in agency interpretation of its authority of the P&S Act. This withdrawal action does not affect AMS’ ongoing application of existing statutory and regulatory requirements or its responsibility to faithfully administer the P&S Act,” USDA said. 

Asked why the Biden-Harris administration did not leave the proposed rule in place so that the Trump administration could finish it, Vilsack said that leaving it in place would mean the Trump administration could “fundamentally change the rule.”

Andy Green, Vilsack’s senior adviser for fair and competitive markets, added that by withdrawing the rule all the underlying case law and other statements on the issue remain intact. 

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