The latest proposal omits an Obama-era effort that would have made it easier for livestock farmers to win lawsuits against meat processors.
01/14/2020 05:07 AM EST
Farmers who hoped President Donald Trump would side with them over meatpacking conglomerates were dealt a blow after the Agriculture Department proposed changing rules governing fair competition in the industry.
The latest proposal omits an Obama-era effort that would have made it easier for livestock farmers to win lawsuits against meat processors like JBS or Tyson Foods. For at least a decade, farmers have said there is an impossibly high bar to prove in court that the companies treated them unfairly or discriminated against them.
Critics worry that USDA’s new proposal, unveiled on Friday, would allow certain abuses to continue, like retaliation against contract poultry growers who share complaints with the press or lawmakers.
“Looks completely worthless to me,” said Dudley Butler, a Mississippi lawyer who helped develop USDA’s fair treatment rules during the Obama administration. “It has more holes than a shrimp strainer.”
The proposal follows several other policies issued by the Trump administration that have been attacked for harming family farmers and ranchers. They include a biofuels policy that corn and ethanol producers said undercuts demand for their products to the benefit of oil refiners, and a trade agenda that led China and other countries to slap retaliatory tariffs on a range of U.S. agricultural goods.
A USDA spokesperson did not return a request for comment. The public has 60 days to comment on the proposed rule.
Some 2020 Democratic candidates, like Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.), promise to strengthen antitrust enforcement in the agriculture sector because they say too few companies control the markets for meat, seeds and pesticides. Today, four meatpackers control the majority of cattle, pork and chicken supplies: Tyson Foods, Cargill, Brazilian-owned JBS and Chinese-owned Smithfield.
From 1986 to 2016, the conglomerates’ market share rose from 55 percent to 84 percent in beef processing, from 33 percent to 66 percent in pork and from 34 percent to 50 percent in chicken, according to USDA data.
“This proposed rule is yet another example of the Trump Administration catering to giant agribusinesses rather than enforcing our antitrust laws to protect family farmers,” Saloni Sharma, a spokesperson for Warren, said in an e-mail.
USDA’s latest proposal aims to clarify whether actions by meatpackers or swine and poultry dealers give “undue or unreasonable preference or advantages” to one farmer over another. The department outlined four criteria that would help determine whether conduct is so unfair it harms a farmer’s success, such as negotiating higher prices with a favored livestock supplier, even if another has a similar product, for no “reasonable business decision.”
It is part of a decade-long controversy over so-called GIPSA rules. The 2008 farm bill directed USDA’s Grain Inspection, Packers and Stockyards Administration to strengthen legal protections for contract farmers who said they had little power to challenge the increasingly consolidated meatpacking sector.
But since then, several attempts by the Obama administration to finalize new rules were either blocked by Congress in federal spending bills or withdrawn during the Trump administration by Agriculture Secretary Sonny Perdue — who also eliminated GIPSA as a standalone agency. Perdue shifted its responsibilities under a branch of USDA whose main mission is to promote sales of agricultural goods at home and overseas.
Advocacy groups like the Organization for Competitive Markets, National Farmers Union and Rural Advancement Foundation International say the new GIPSA proposal doesn’t go far enough to safeguard farmers against retaliation or discrimination.
These groups said the proposal’s language suggests a company could give advantages to certain livestock producers over others, as long as the business practice is “customary” in the industry.
“A a lot of the more abusive or exploitative practices are considered customary in the industry,” said Tyler Whitley, who manages RAFI’s contract agriculture reform program. “That doesn’t mean it isn’t an undue preference or advantage.”
USDA’s new proposal doesn’t go nearly as far as the Obama-era iterations issued at the end of 2016, which Perdue ultimately decided to scrap.
An interim final rule would have lowered the burden of proof for farmers who sue companies over violations of the Packers and Stockyards Act, clarifying that they don’t need to prove conduct harmed competition industry-wide. Two other proposals would have outlined a lengthy list of unjust or deceptive practices, as well as standards for ensuring poultry farmers’ are paid fairly.
Groups representing both major meatpackers and farmers, including the National Chicken Council, National Cattlemen’s Beef Association and National Pork Producers Council, said the interim final rule would have led to frivolous and expensive litigation, as well as bucked court precedent. They also defended the current system as encouraging efficiency and quality.
National Chicken Council Mike Brown said in a statement on Friday that the vast majority of growers are happy with their contracts, and that there is a waiting list to enter the industry. Poultry farmers also have one of the lowest loan default rates in all of agriculture. (USDA reported last year that between 3 and 4 percent of large-scale livestock operations, including poultry farms, were in extreme financial stress — the highest rate across all of U.S. agriculture).
Brown, along with the main lobbying group representing top meatpackers, the North American Meat Institute, endorsed USDA’s decision in its newest proposal not to cover competitive injury.
Meat Institute President and CEO Julie Anna Potts said that eight federal appellate courts have concluded that a plaintiff needs to prove conduct led to likely or actual harm to competition across the industry. Without this interpretation, lawsuits would flood the courts and upend farmers relationships with processors, she added.
Farmers and their advocates have long said stronger protections are needed in the poultry industry, in particular, because processing companies have retaliated against growers who speak to the press or lawmakers about their complaints. Poultry “integrators,” as they are known, often own the birds and the feed and deliver them to farmers, who are then paid based on how the chickens perform compared with others in the area. This dynamic gives integrators a lot of control over a farmer’s success.