Today, the United States Department of Agriculture (USDA) is taking some major steps forward to protect farmers – including swine, beef cattle, and especially poultry growers – from unfair treatment by the often much larger processors who purchase their fully grown hogs, cattle, and chickens. These three rules are another step forward in response to the President’s Competition Initiative announced in April, which has the goal of enhancing competition to help consumers, workers, and small businesses get a fair shake in the economy.
What’s the problem being addressed?
The poultry, pork, and beef industries include growers who raise chickens, turkeys, hogs, and cattle, and processors who buy the full-grown animals from the growers, package up the meat, and ship it to your local butcher, supermarket, or restaurant. In recent years, similar to what has been occurring across a number of other industries, processing has become increasingly concentrated, with fewer companies controlling a larger share of the market. This has inhibited farmers’ ability to get a fair deal from the processors.
For example, the four largest poultry processors control 51 percent of the broiler market and 57 percent of the turkey market. In part due to this concentration, poultry growers often have limited options for processors available in their local communities: 52 percent of growers have only one or two processors in their state or region to whom they can sell. That means processors can often wield market power over the growers, treating them unfairly, suppressing how much they are paid, or pitting them against each other.
For example, if a chicken grower attempts to organize other chicken growers to bargain for better pay or publicly expresses unhappiness with the way they are treated by a processor, they can suffer retaliation. Processors can require growers to make investments that are not economically justifiable for the grower or can terminate contracts with little notice. In contract growing (which has governed an increasing share of the market in recent years), the processors own the birds and provide inputs like feed, so they can choose to provide poultry growers with bad feed or sickly birds that have a higher mortality rate, which cuts deeply into a grower’s opportunity to earn income on those birds. Without much of a choice for where to sell their birds, poultry growers often have to either put up with the unfair behavior, take a pay cut, or take their case to court.
What do the rules do?
USDA is releasing three rules – collectively known as the Farmer Fair Practices Rules – to empower farmers so they get fair treatment by the processors or get their day in court:
These rules respond to the directive USDA was given in the 2008 farm bill but were only allowed to move forward with implementing this year, once an unnecessary and harmful rider that had been in place for years was defeated in this year’s appropriations bill. By continuing to move forward with finalizing these rules, USDA will make important progress in ensuring that farmers get a fair shake and can push back on inappropriate and unfair treatment by the processors. These are a meaningful step forward to make sure that rural Americans are getting paid what they deserve for supplying the high-quality chickens, turkeys, hogs, and beef that Americans enjoy around their dinner tables and at their local restaurants every single day.