1) Agricultural Competition: A Plan in Support of Fair and Competitive Markets
The COVID-19 pandemic brought home to farmers, workers, and consumers the harms caused by bottlenecks in the center of America’s agricultural and food systems. The pandemic exposed the risks and dangers created by many of today’s production systems, which value hyper-efficiency over competition and resiliency. Moreover, longstanding challenges of market concentration and unbalanced market power, which have been part of the agricultural sector for decades, have in many cases worsened. This report highlights the United States Department of Agriculture’s (USDA) robust and aggressive plan to decrease concentration and increase competition in the agricultural sector and to safeguard against future harm to our nation’s agricultural and food systems.
Concentration undermines economic resiliency and robust price competition. It lowers farmers’ and ranchers’ earnings, hamstrings their ability to compete, and limits the ability for rural economies to secure robust, self-sustaining prosperity. President Biden’s Executive Order on Promoting Competition in the American Economy puts competition at the core of the Biden-Harris Administration’s economic agenda and calls for a “whole-of-government approach” to promoting competition. [Executive Order 14036, Promoting Competition in America’s Economy, 86 FR 36987, July 9, 2021, sec. 2]
The historic Executive Order directs 72 specific actions across the Federal government and includes important directives to the USDA to support competition and fairness in livestock and poultry markets, seeds and other inputs, retail food markets, and more. The steps are complementary to and supportive of the goals of the Executive Order on America’s Supply Chains. [Executive Order 14017, America’s Supply Chains, February 24, 2021]
Since President Biden issued the Executive Order on Competition in July, USDA has taken a range of actions to tackle competition issues in agricultural markets. To address these large and complex problems, USDA is using all of the tools available, including working in concert with the rest of the Administration.
Among other USDA initiatives, the Order included the following directive: To ensure that farmers have greater opportunities to access markets and receive a fair return for their products, not later than 180 days after the date of this order, submit a report to the Chair of the White House Competition Council, with a plan to promote competition in the agricultural industries and to support value-added agriculture and alternative food distribution systems.
This report responds to that directive and lays out USDA’s approach to promoting competition in agricultural markets. Highlights of USDA’s efforts include:
Launching an unprecedented multibillion dollar investment plan to directly incentivize competition in food processing and fertilizer, creating more market opportunities and input options for producers.
Reinvigorating USDA’s century-old fair and competitive market laws to establish a regime that counters unfair and anti-competitive practices and empowers producers and growers.
Partnering with the Department of Justice (DOJ) to enforce antitrust laws vigorously. This includes standing up a new one-stop shop at FarmerFairness.gov to make it easier to report complaints of potential violations, with confidentiality protections and whistleblower protections against retaliation for reporting criminal antitrust concerns.
Working in concert with the White House and other agencies to call out bad actors and firms that are padding their profits at the expense of farmers, ranchers, workers, and consumers.
Partnering with the Federal Trade Commission (FTC) to enhance access to retail markets for farmers and smaller food processors.
Working with the Department of Commerce’s United States Patent and Trademark Office to promote access to affordable seeds, fertilizer, and other inputs.
Reviewing USDA programs to encourage fair competition and ensure that they are not inadvertently supporting systems and relationships that are prone to abuse.
Providing technical assistance and support as Congress considers legislation to modernize and improve transparency and price discovery in livestock markets.
Enhancing value-added market access and protecting those markets from consumer confusion.
Promoting competition in transportation networks that producers depend on.
News release: https://www.ams.usda.gov/reports/agricultural-competition-plan-support-fair-and-competitive-markets
2) Fighting for Fairness for Poultry Farmers (news release)
USDA today announced a proposed rule under the Packers and Stockyards Act to protect poultry growers from abuse. Today’s action is the first of three rulemakings that USDA will issue under the Packers and Stockyards Act under the President’s Executive Order on Promoting Competition in the American Economy in order to stop unfair, deceptive, discriminatory, and anticompetitive practices in the meat and poultry industry.
Currently, poultry processors exert control over much of the process of raising chickens through take-it-or-leave-it contracts with growers. Under these contracts, processors provide inputs like chickens and feed to poultry growers. Poultry growers, who often take on debt to build poultry growhouses, have limited visibility into the real range of outcomes and risks they face under these contracts. Moreover, once in the contracts, the processors then determine the payments that poultry growers receive for their services by weighing the chickens and ranking farmers based on how much the chickens grew. Pay is generally determined based on how a farmer compares to other farmers, but farmers currently have little insight into this comparison. For far too long, growers have complained that the “tournament” system is ripe for abuse.
The new rulemaking will require poultry processors to provide key information to poultry growers at several critical steps—increasing transparency and accountability in the poultry growing system. For example, processors would be required to disclose details of the inputs they provided to each farmer and information about the input differences among farmers being ranked. Furthermore, disclosures would cover the level of control and discretion exercised by the poultry processor and what financial returns the farmer can expect from the relationship based on the range of real experiences of other growers. Contracts would also be required to contain guaranteed annual flock placements and density. Poultry processor CEOs would be required to sign off on the compliance process for disclosure accuracy.
Simultaneously with issuing the proposed transparency rule, USDA is opening an inquiry into whether some practices of processors in the tournament system are so unfair that they should be banned or otherwise regulated. USDA seeks input from stakeholders to determine whether the current tournament-style system in poultry growing could be restricted or modernized to create a fairer, more inclusive marketplace.
News release: https://www.usda.gov/media/press-releases/2022/05/26/biden-harris-administration-announces-new-actions-strengthen-food
Transparency in Poultry Grower Contracting and Tournaments: The Agricultural Marketing Service is soliciting comments on proposed revisions to the regulations under the Packers and Stockyards Act, 1921. The proposal would revise the list of disclosures and information live poultry dealers must furnish to poultry growers and sellers with whom dealers make poultry growing arrangements. The proposal would establish additional disclosure requirements in connection with the use of poultry grower ranking systems by live poultry dealers to determine settlement payments for poultry growers. The proposals are intended to promote transparency in poultry production contracting and to give poultry growers and prospective poultry growers relevant information with which to make business decisions. https://www.ams.usda.gov/rules-regulations/transparency-poultry-grower-contracting-and-tournaments
Poultry Growing Tournament Systems: Fairness and Related Concerns: The Agricultural Marketing Service (AMS) seeks comments and information to inform policy development and future rulemaking proposals regarding the use of poultry grower ranking systems commonly known as tournaments in contract poultry production. AMS seeks this input in response to numerous complaints from poultry growers about the use of tournament systems. Comments in response to this request would help AMS tailor further rulemaking in addition to that already planned and under way to address specific industry practices in relation to tournament systems. https://www.ams.usda.gov/rules-regulations/poultry-growing-tournament-systems-fairness-and-related-concerns
3) June 8 -- Transparency in Poultry Grower Contracting and Tournaments -- Proposed Rule
The Agricultural Marketing Service is soliciting comments on proposed revisions to the regulations under the Packers and Stockyards Act, 1921. The proposal would revise the list of disclosures and information live poultry dealers must furnish to poultry growers and sellers with whom dealers make poultry growing arrangements. The proposal would establish additional disclosure requirements in connection with the use of poultry grower ranking systems by live poultry dealers to determine settlement payments for poultry growers. The proposals are intended to promote transparency in poultry production contracting and to give poultry growers and prospective poultry growers relevant information with which to make business decisions. Comments must be received by August 8, 2022.
Aug 8 -- comment period extended to August 23, 2022. https://www.federalregister.gov/d/2022-16871