USDA issues fair play rule on livestock marketing, part of White House competition drive

Farmers will have stronger protections against deceptive contracts and retaliatory tactics from meat processors under a new USDA rule on market integrity, said Agriculture Secretary Tom Vilsack. The new rule, which takes effect on May 6, is part of a USDA initiative for transparency and fair play in livestock marketing.

Release of the market integrity rule coincided with the White House’s announcement on Tuesday of a strike force against unfair and illegal pricing, led by the Justice Department and the Federal Trade Commission.

“President Biden is committed to making sure corporations are held accountable when they try to rip off Americans, including when they break the law while keeping prices high,” said the White House. Biden was to announce the strike force after a meeting of his Competition Council an interagency group that includes the USDA. “We’re cutting credit card late fees, we’re taking on big poultry and meat processors, and bulk billing by internet providers,” said Lael Brainard, director of the National Economic Council.

The market integrity rule is “the latest major milestone” in strengthening USDA oversight of livestock marketing, said Vilsack. “There is more to come,” he added. The market integrity rule was intended to provide clearer and more effective standards in prohibiting discrimination, retaliation, and deception by meat companies.

A new USDA rule took effect on Feb. 12 to reform poultry contracting and the so-called tournament system that pits farmers against each other in raising chickens under contract to a poultry processor. The USDA is also working on a rule that would make it easier for a producer to pursue a claim of unfair treatment by a processor. At present, the farmer must show harm across the market from a practice.

The USDA began work on the trio of regulations in 2021. A similar set of regulations, known as the “GIPSA rules,” was proposed at the end of the Obama administration but was quashed after President Trump took office. Meatpackers and the largest groups representing cattle and hog producers say the rules could get in the way of contracts or agreements that offer bonuses for animals that meet specific standards, such as grass-fed beef. Meatpackers also own and raise cattle and hogs.

“The Packers and Stockyard Act stands for the basic proposition that livestock producers and poultry growers should be able to compete, cooperate, communicate, and more without fear of retaliation and should never to subject to discrimination,” said Andy Green, USDA senior adviser for competition.

The USDA also has issued grants to expand meatpacking capacity by independent processors. It also has set up a cattle contract library so producers can compare terms they are offered with those given to other cattle producers.

Information about the market integrity rule is available here.

Information about the poultry contracting rule is available here.