Transparency in Poultry Grower Contracting and Tournaments

Source: DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

Final rule.

CFR Part: "9 CFR Part 201"

RIN Number: "RIN 0581-AE03"

Citation: "88 FR 83210"

Document Number: "Doc. No. AMS-FTPP-21-0044"

Page Number: "83210"

"Rules and Regulations"

Agency: "Agricultural Marketing Service, USDA."

SUMMARY: This final rule amends the regulations under the Packers and Stockyards Act, 1921 (Act), to add disclosures and information that live poultry dealers engaged in the production of broilers must furnish to poultry growers with whom dealers make poultry growing arrangements. The rule also establishes additional disclosure requirements for live poultry dealers engaged in the production of broilers who use poultry grower ranking systems to determine settlement payments for broiler growers. These requirements add targeted transparency to the market for grower services that will inhibit deceptive practices related to broiler contracting and performance. The Act protects fair trade, financial integrity, and competitive markets for livestock, meat, and poultry.

   DATES: This final rule is effective February 12, 2024.

   FOR FURTHER INFORMATION CONTACT: S. Brett Offutt, Chief Legal Officer/Policy Advisor, Packers and Stockyards Division, USDA AMS Fair Trade Practices Program, 1400 Independence Ave. SW, Washington, DC 20250; Phone: [phone]; or email: [email protected].

   SUPPLEMENTARY INFORMATION: At the beginning of the 20th century, a small number of meat packing companies dominated the industry and engaged in practices that were deemed anticompetitive and harmful to livestock producers. In response, Congress enacted the Packers and Stockyards Act, 1921 (Act), 7 U.S.C. 181 et seq., which seeks to promote fairness, reasonableness, and transparency in the livestock marketplace by prohibiting practices that are contrary to these goals. In the 100 years since the Act went into effect, livestock business practices have changed significantly, particularly in the poultry industry, for which provisions were added to the law in 1935 (Act of August 14, 1935, 49 Stat. 648).

Within the last 40 years, the poultry industry has become highly integrated, with most live poultry dealers operating as "integrators" who frequently own or control all segments of the production process except growout, where poultry growers raise young poultry to harvest size under poultry growing arrangements (contracts). Most integrators employ a relative performance or grower ranking system to determine grower payment, as explained later in this section. Thus, AMS's references to "integrator" in the discussion of...